United States
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 20-F
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the fiscal year ended December 31, 2005

Commission File Number 001-31819

GOLD RESERVE INC.
(Exact name of registrant as specified in its charter)

Yukon Territory, Canada
(Jurisdiction of incorporation)

926 West Sprague Avenue, Suite 200
Spokane, Washington 99201
(Address of Brisas Project corporate and principal executive offices)

Securities registered pursuant to Section 12(b) of the Act: Class A common
shares, no par value per share Preferred Share Purchase Rights
(Title of each class)

The Toronto Stock Exchange ("TSX")
American Stock Exchange ("AMEX")
(Name of each exchange on which registered)

Securities registered pursuant to Section 12(g) of the Act: None Securities
for which there is a reporting obligation pursuant to Section 15(d) of the
Act: None

The total number of the registrantis shares outstanding as of December 31,
2005:
Class A common shares, no par value per share: 34,902,200 Equity Units, no
par value per share: 610,745

Indicate by check mark if the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act. Yes __   No X

If this report is an annual or transition report, indicate by check mark if
the registrant is not required to file reports pursuant to Section 13 or
15(d) of the Securities Exchange Act of 1934. Yes __   No  X

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period as the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X

Indicate by check mark whether the registrant is a large accelerated filer,
an accelerated filer, or a non-accelerated filer. See definition of
accelerated filer and large accelerated filer  in Rule 12b-2 of the Exchange
Act. (Check one):
Large accelerated filer  __  Accelerated filer  X  Non-accelerated filer  __

Indicate by check mark which financial statement item the registrant has
elected to follow. X  Item 17  __ Item 18

If this is an annual report, indicate by check mark whether the registrant is
a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes __   No X

TABLE OF CONTENTS
--------------------
GENERAL INFORMATION
  Forward-Looking Statements
  Mineral Reserve Estimates
  Currency
  Glossary
  The Company
  Organizational Structure
  Corporate Reorganization
  The Brisas Project
Item 1. Identity of Directors, Senior Management and Advisors  Not Applicable
Item 2. Offer Statistics and Expected Timetable  Not Applicable
Item 3. Key Information
Selected Financial Data
Dividends
Risk Factors
Item 4. Information on the Company
History and Development of the Company
Properties
Venezuelan Mining, Environment and Other Matters Item 4A. Unresolved Staff
Comments-Not Applicable
Item 5. Operating and Financial Review and Prospects
  Overview
  Operations in Venezuela
  Critical Accounting Policies and Estimates Results of Operations
  Liquidity and Capital Resources
Item 6. Directors, Senior Management and Employees Compensation of Directors
  and Officers
Item 7. Major Shareholders and Related Party Transactions Control of
  Registrant
  Related Party Transactions
  Interest of Insiders in Material Transactions
Item 8. Financial Information
  Legal Proceedings
  Significant Changes
Item 9. The Offer and Listing
  Offer and Listing details
Item 10. Additional Information
  Memorandum and Articles of Association
  Material contracts
  Exchange Controls and Other Limitations Affecting Security Holders Taxation
Item 11. Quantitative and Qualitative Disclosures about Market Risk
Item 12. Description of Securities Other Than Equity Securities - Not applicable
PART II
Item 13. Defaults, Dividends Arrearages and Delinquencies - None
Item 14. Material Modifications to Rights of Security Holders and Use of
         Proceeds - None
Item 15. Controls and Procedures
Item 16. Reserved
Item 16A. Audit Committee Financial Expert
Item 16B. Code of Ethics
Item 16C. Principal Accountant Fees and Services
Item 16D. Exemptions From the Listing Standards for Audit Committees
Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers
PART III
Item 17. Financial Statements
  Index to Consolidated Financial Statements Management's Report
  AUDITORS Report
Item 18. Financial Statements Not Applicable
Item 19. Exhibits
  Signatures
Exhibit 12.1 Chief Executive Officers Section 302 Certification
Exhibit 12.2 Chief Financial Officer's Section 302 Certification
Exhibit 13.1 Chief Executive Officer's Section 906 Certification
Exhibit 13.2 Chief Financial Officer's Section 906 Certification
Exhibit 99.1 Consent of Independent Accountants
Exhibit 99.2 Consent of Pincock, Allen & Holt
Exhibit 99.3  Consent of SNC-Lavalin Engineers & Constructors, Inc.

PART I
GENERAL INFORMATION
--------------------
Forward-Looking Statements

The information presented or incorporated by reference in this Annual Report
on Form 20-F including Operating and Financial Review and Prospects in Item
5, contains both historical information and forward-looking statements
(within the meaning of Section 27A of the United States Securities Act of
1933, as amended (the "Securities Act"), and Section 21E of the United States
Securities Exchange Act of 1934, as amended (the "Exchange Act")). These
forward-looking statements involve risks and uncertainties, as well as
assumptions that, if they never materialize, prove incorrect or materialize
other than as currently contemplated, could cause the results of the Company
and its consolidated subsidiaries to differ materially from those expressed
or implied by such forward-looking statements. Numerous factors could cause
actual results to differ materially from those in the forwardlooking
statements. See - Item 3. Key Information - Risk Factors.

The words "believe," "anticipate," "expect," "intend," "estimate," "plan,"
"assume," "positioned," "may," "could" and other similar expressions that are
predictions of or indicate future events and future trends which do not relate
to historical matters, identify forward-looking statements. Any such
forward-looking statements are not intended to give any assurances as to
future results.

Investors are cautioned not to put undue reliance on forward-looking
statements, and should not infer that there has been no change in the affairs
of the Company since the date of this report that would warrant any
modification of any forward-looking statement made in this document, other
documents filed periodically with securities regulators or documents presented
on our Company website. 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.

Investors are urged to read the Company's filings with U.S. and Canadian
securities regulatory agencies, which can be viewed on-line at www.sec.gov,
www.sedar.com or at the Company's website, www.goldreserveinc.com.
Additionally, you can request a copy of any of these filings directly from
the Company.

Mineral Reserve Estimates
-------------------------
With the completion of the Brisas Project Bankable Feasibility Study in early
2005 described below, the Brisas Project is an advanced development-stage
project. The mineral reserves contained herein have been calculated in
accordance with CSA National Instrument 43-101, as required by Canadian
Securities Regulatory authorities. We believe that the calculation of such
mineral reserves is substantially the same as those under the U.S. Securities
and Exchange Commission Industry Guide 7. However, we advise U.S. investors
that definitions contained in National Instrument 43-101 differ in certain
respects from those set forth in the U.S. Securities and Exchange Commission
Industry Guide 7.

Currency
---------
All currency is in U.S. Dollars unless otherwise noted.

Glossary
---------
Certain technical terms used herein are defined in the glossary at the end of
this Annual Report.

The Company
-----------
Gold Reserve Inc. (the "Company") is a mining company incorporated in 1998
under the laws of the Yukon Territory, Canada. Gold Reserve Inc's. registered
agent is Austring, Fendrick, Fairman & Parkkari, The Drury Building, 3801
Third Avenue, Whitehorse, Yukon, Y1A 4Z7. Telephone and fax numbers for the
Company's registered office are 867.668.4405 and 867.668.3710, respectively.
The Company's Brisas Project corporate administrative office is located at
926 West Sprague Avenue, Suite 200, Spokane, WA  99201, U.S.A. and its
Venezuelan administrative and technical offices are located in Caracas and
Puerto Ordaz, Venezuela. Telephone and fax numbers for the Company's
administrative office are 509.623.1500 and 509.623.1634, respectively. The
Company also maintains technical staff in Toronto, Canada and Denver,
Colorado.

Organizational Structure
------------------------
Except as otherwise indicated herein, the terms "we," "us," "our," and the
"Company" throughout this report refer primarily to Gold Reserve Inc., Gold
Reserve Corporation, Gold Reserve de Barbados Ltd. (domiciled in Canada, the
U.S. and Barbados, respectively), Gold Reserve de Venezuela, C.A. ("GLDRV"),
Compania Aurifera Brisas del Cuyuni, C.A. ("BRISAS") (both domiciled in
Venezuela), and Great Basin Energies, Inc. ("Great Basin") and MGC Ventures
Inc. ("MGC Ventures") (both domiciled in the U.S.), which have no current
business activities. All of the consolidated companies noted above are wholly
owned except for Great Basin and MGC Ventures, which are approximately 47%
owned.

Corporate Reorganization
------------------------
In February 1999, the shareholders of Gold Reserve Corporation approved a
plan of reorganization whereby Gold Reserve Corporation became a subsidiary
of Gold Reserve Inc., the successor issuer (the "Reorganization"). Generally,
each shareholder of Gold Reserve Corporation received one Gold Reserve Inc.
Class A common share for each common share owned of Gold Reserve Corporation,
continuing to own an interest in the business that in aggregate was
essentially the same as before the Reorganization. Certain U.S. Shareholders,
for tax reasons, received equity units in lieu of Gold Reserve Inc. Class A
common shares. An equity unit is comprised of one Gold Reserve Inc. Class B
common share and one Gold Reserve Corporation Class B common share. The
equity units are substantially equivalent to a Class A common share and are
immediately convertible into Gold Reserve Inc. Class A common shares upon
compliance with certain procedures. Equity units are not listed for trading
on any stock exchange, but, subject to compliance with applicable federal,
provincial and state securities laws, may be transferred. Unless otherwise
noted, general references to common shares of the Company include Class A
common shares and Class B common shares as a combined group.

The Brisas Project
------------------
Our primary mining asset, the Brisas Project, is a gold/copper deposit
located in the Km 88 mining district of the State of Bolivar in southeastern
Venezuela. Approximately $100 million has been expended (includes costs
capitalized and costs expensed in the period incurred) on the Brisas Project
since its acquisition in 1992. In 2005, the Company, with the assistance of a
number of independent consultants, completed a Bankable Feasibility Study for
the Brisas Project. Based on the positive conclusions contained in the
Bankable Feasibility Study, the Board of Directors approved proceeding with
the financing and construction of the mine.

The Brisas Project consists of the following: a 500-hectare land parcel
consisting of the Brisas alluvial concession and the Brisas hardrock
concession beneath the alluvial concession (the "Brisas concessions").
Together these concessions contain substantially all of the mineralization
identified in the Brisas Bankable Feasibility Study. The Brisas Project also
includes a number of other existing or pending applications for concessions,
alfarjetas, Corporacion Venezolana de Guayana ("CVG") work contracts, land
use permits and easements, adjacent to or near the Brisas concessions
totaling another 13,000 hectares. These additional land parcels comprise the
bulk of the land required for the mining and milling facility and related
infrastructure contemplated in the Brisas Bankable Feasibility Study and
failure to obtain one or more of these properties could have a material
adverse affect on the Company. See "- Item 4. Information on the Company
-Properties -Brisas Project."

Item 1. Identity of Directors, Senior Management and Advisors - Not Applicable
Item 2. Offer Statistics and Expected Timetable - Not Applicable

Item 3. Key Information

Selected Financial Data
-----------------------
The selected financial data set forth below are derived from the Company's
audited financial statements and should be read in conjunction with the
Company's consolidated financial statements and notes thereto appearing in
Item 17 and Operating and Financial Review and Prospects in Item 5. The
following selected financial data have been prepared in U.S. Dollars on the
basis of accounting principles generally accepted in Canada.

                          2005          2004       2003        2002       2001
------------------------------------------------------------------------------
(in thousands of U.S. Dollars, except share and per share amounts)

Other income             $1,403        $900        $770        $703      $1,200
Net loss                 (9,027)     (5,483)     (3,707)     (3,008)       (851)
Loss per common
share (1)                 (0.26)      (0.19)      (0.15)      (0.13)      (0.04)
Total assets(2)          81,955      86,606      67,030      59,843      62,553
Net Assets -
 Shareholders' equity(3) 79,638      84,176      65,138      58,412      61,169
Capital stock           140,512     136,908     112,971     102,498     102,266
Common shares:(4)
Issued               35,196,287  33,715,795  27,750,258  22,996,158  22,655,122
Outstanding          34,902,200  33,421,708  27,456,171  22,702,071  21,361,035
Equity Units: (4)
Issued                1,110,020   1,157,397   1,237,880   1,289,980   1,313,016
Outstanding             610,745     658,122     738,605     790,705     813,741

1.  Basic and diluted.
2.  Total assets prepared in accordance with accounting principles
generally accepted in the U.S. at December 31, 2005, 2004, 2003, 2002, and
2001 were $45,033, $48,615, $35,379, $25,118, and $27,947, respectively. See
Note 11 to the Company's consolidated financial statements, "Differences
between Canadian and U.S. GAAP."
3.  Total shareholders' equity prepared in accordance with accounting principles
generally accepted in the U.S. at December 31, 2005, 2004, 2003, 2002, and 2001
was $42,716, $46,186, $33,487, $23,687,  and $26,563, respectively. See Note 11
to the Company's consolidated financial statements, "Differences between
Canadian and U.S. GAAP."
4.  Great Basin Energies Inc. and MGC Ventures Inc. are both a
part of the consolidated financial statements of the Company and own shares
of the Company. As a result, the Company has an indirect investment in
itself. The shares and equity units held by these entities represent the
difference between issued and outstanding shares.

Dividends
---------
We have not declared cash or share dividends since 1984 and have no present
plans to pay any cash or share dividends. We may declare cash or share
dividends in the future only if earnings and capital of the Company are
sufficient to justify the payment of such dividends.

Risk Factors
------------
Our mining assets are concentrated in a foreign country and, as a result,
our operations are subject to inherent local risks.

Our exploration and development activities in foreign countries are
affected by certain factors including those listed below, which are
beyond our control, any one of which could have a material adverse
affect on our financial position and results of operations.

Political and Economic Environment
----------------------------------
Our foreign operations, are subject to political and economic risks,
including:

The effects of local political, labor and economic developments, instability
and unrest;

Significant or abrupt changes in the applicable regulatory or legal climate;
Corruption, requests improper for payments or other actions that may violate
Canadian and U.S. foreign corrupt practices acts, uncertain legal enforcement
and physical security;
Invalidation or rescission of governmental orders, permits, agreements or
property rights;
Exchange controls and export or sale restrictions;
Currency fluctuations and repatriation restrictions;
Disadvantages of competing against companies from countries that are not
subject to Canadian and U.S. laws and regulations;
Laws or policies of foreign countries and Canada affecting trade, investment
and taxation.

Certain permits are required prior to obtaining financing and beginning
construction on the Brisas property.
-----------------------------------------------------------------------------
The Company is dependent on Venezuelan regulatory authorities to issue the
Company certain key permits relating to the Brisas Project prior to obtaining
sufficient financing and beginning construction on, and operating, the Brisas
property. Most importantly, the Company must obtain the Administrative
Authorization to Affect Natural Resources for Construction of Infrastructure
and Exploitation of Alluvial and Vein Deposits of Gold and Copper from the
Ministry of the Environment and Natural Resources (the "MARN"), which is
typically issued subsequent to a company obtaining approval of its operating
plan by the Ministry of Basic Industries and Mines ("MIBAM").

The Company's original operating plan was approved by the Ministry of Energy
and Mines ("MEM") (now MIBAM) in 2003. Since approval of the original
operating plan, the Company has submitted to MIBAM a number of modifications
to the plan in order to minimize impact to the environment and optimize
economics of the Brisas Project, including an increase in milling capacity up
to 70,000 tons per day and relocation of certain surface facilities and
infrastructure.

Management can give no assurance that the issuance of items the Company still
requires for proceeding with the Brisas Project will not be delayed or
withheld, or any existing rights or approvals already issued or granted to
the Company for its operations in Venezuela will not be rescinded, or
otherwise challenged. The reasons for any such action could relate to a
number of factors noted herein, which are mostly outside of the Company's
control or in response to the Company's lawful actions. As a result,
management is unable to provide any assurance as to if and when the remaining
required Venezuelan permits will be issued to the Company. Failure to obtain
any of these required permits will result in the Company not being able to
construct and operate the Brisas Project, which will result in a material
adverse affect on the Company's operations and investments in Venezuela and
continued operating losses. See "-Item 4. Information on the Company
-Properties -Brisas Project."

Government Review of Contracts and Concessions for Compliance
-----------------------------------------------------------------------------
In early 2005, Venezuela's Minister of MIBAM, Victor Alvarez, announced that
Venezuela would review all foreign investments in non-oil basic industries,
including gold projects. In September 2005, Venezuelan President Hugo Chavez
announced that the Venezuelan government planned to revoke gold and diamond
concessions and/or contracts and also that he planned to create a new state
mining company as part of an effort to increase government control over the
sector. President Chavez did not specify which concessions and/or contracts
would be revoked, but later Minister Alvarez said inactive and out of
compliance mines would be handed over to small mining cooperatives supported
by the government through a new government-mining corporation. The date for
the completion of the review and the announcement of the results of this
review has been deferred several times and it is unclear when such
announcement will take place or whether the final policy when announced will
be consistent with prior public statements. We believe all of our properties
are in compliance with applicable regulations, including our required and
voluntary commitments to various social, cultural and environmental programs
in the immediate and surrounding areas near Brisas. However, due to the
uncertainty regarding the creation of the new state mining company and
expected changes in the mining law, the we cannot provide any assurance that
the creation of a state mining company will not adversely affect its ability
to develop and operate its Venezuelan properties.

Currency and Exchange Controls
-----------------------------------------------------------------------------
In 2003, the Central Bank of Venezuela enacted exchange control regulations
as a measure to protect international reserves. The exchange rate was fixed
at approximately 1,600 Bolivars per one U.S. Dollar until February 2004 when
it was adjusted to 1,920 Bolivars per one U.S. Dollar. In March 2005, the
exchange rate was increased to approximately 2,150 Bolivars per one U.S.
Dollar, which is unchanged as of the date of this report. In February 2005,
the Venezuelan government announced new regulations concerning exports from
Venezuela, which required, effective April 1, 2005, all goods and services to
be invoiced in the currency of the country of destination or in U.S. Dollars.
To date these regulations have not adversely affected our operations as the
Company primarily transfers funds into Venezuela for its operations. However,
this will change in the future to the extent that the Company begins
production and exports gold from Venezuela and we are unable to predict the
future impact, if any, at this time. Future fluctuations of the Venezuelan
Bolivar against the U.S. Dollar and exchange controls could negatively impact
the Company's financial condition.

Small Miners
-----------------------------------------------------------------------------
A significant number of unauthorized small miners have occupied various
properties near the Brisas Project. However, there are no unauthorized small
miners currently located on the Brisas Project. The methods used by the small
miners to extract gold from surface material are typically environmentally
unsound and in general their presence can be disruptive to the rational
development of a mining project such as Brisas. The Company maintains
security guards and has implemented other procedures to mitigate the risk
that the small miners might try to occupy the Brisas Project, although
management can give no assurances that such activities will not occur in the
future.

Imataca Forest Reserve
-----------------------------------------------------------------------------
The Brisas Project is located within the boundaries of the Imataca Forest
Reserve (the "Imataca") in an area presently approved by Presidential Decree
for mining activities. On September 22, 2004, after public consultation,
Presidential Decree 3110 was published in the Official Gazette identifying
approximately 13% of the Imataca in the State of Bolivar to be used for
various activities, including mining. Decree 3110 was issued in response to:
1) legal challenges to prior Presidential Decree 1850 published in the
Official Gazette on May 28, 1997 which opened an even larger part of the
Imataca to mining and other activities, and 2) to a Venezuelan Supreme Court
prohibition issued on November 11, 1997 that prohibited MEM (now MIBAM) from
granting concessions, authorizations and any other acts relating to mining
activities, exploration, exploitation and infrastructure in the Imataca
pertaining to Decree 1850 until the Court rules on the merits of the nullity
action.

We have been advised by Venezuelan counsel that the legal proceeding before the
Venezuelan Supreme Court became moot upon the issuance of Decree 3110. Since
the issuance of Decree 3110, MIBAM and its predecessor MEM have, on a
selective basis, issued concessions, authorizations and other acts relating
to mining activities, exploration, exploitation and infrastructure in the
Imataca. However, the pending legal proceeding has not been formally
concluded in the Court and therefore management can give no assurances that
MIBAM and MARN's willingness to issue the required permits to construct and
operate the Brisas Project will not be adversely affected in the future by
this pending legal proceeding.

Venezuelan environmental laws and regulations
-----------------------------------------------------------------------------
Venezuela maintains environmental laws and regulations for the mining
industry that impose specific obligations on companies doing business in the
country. The MARN, which administers Venezuelan environmental laws and
regulations, proscribes certain mining recovery methods deemed harmful to the
environment and monitors mining activities to ensure compliance. Venezuela's
environmental legislation provides for the submission and approval of
environmental impact statements for certain operations and provides for
restrictions and prohibitions on spills, releases, or emissions of various
substances produced in association with certain mining industry operations,
such as seepage from tailings disposal areas which could result in
environmental pollution. Insurance covering losses or obligations related to
environmental liabilities is not maintained and will only be maintained in
the future if available on a cost-effective basis. Although we have adopted a
high standard of environmental compliance, failure to comply with or
unanticipated changes in such laws and regulations in the future could have a
material adverse impact on the Company.

Challenges to mineral property titles or contract rights
-----------------------------------------------------------------------------
Acquisition of title or contract rights to mineral properties is a very
detailed and time-consuming process under Venezuelan law. Mining properties
sometimes contain claims or transfer histories that examiners cannot verify,
and transfers can often be complex. The Company believes it has necessary
title and/or rights to all of the properties for which it holds concessions
or other contracts and leases. However, the Company does not know whether
someone will challenge or impugn title or contract rights to such properties
in the future or whether such challenges will be by third parties or a
government agency.

In addition to the Brisas alluvial and hardrock concessions, management has
also applied to the appropriate government agencies for various concessions,
alfarjetas, land use permits and easements allowing the use of certain land
parcels contiguous to and nearby the Brisas Project for infrastructure needs.
Although these applications for infrastructure needs were contained in an
operating plan that has already been approved by the appropriate regulatory
agencies, management can give no assurances when such applications will be
issued, if ever. From 1992 to late 1994 the Company was involved in a lawsuit
relating to ownership of the Brisas Project. The Company successfully defended
its ownership rights in the Venezuelan courts and subsequently settled the
lawsuit for a substantial sum. A claim that the Company does not have title
or contract rights to a property could have an adverse impact on the
Company's business in the short-term and a successful claim or the failure of
the Venezuelan government to approve the required permits could have a
material adverse impact on the future results of the Company.

Compliance with other laws and regulations
-----------------------------------------------------------------------------
In addition to protection of the environment, the Company's activities are
subject to extensive laws and regulations governing health and worker safety,
employment standards, waste disposal, protection of historic and
archaeological sites, mine development and protection of endangered and
protected species and other matters. Obtaining the necessary permits is
critical to our business. Obtaining and maintaining permits can be a complex,
time consuming process and as a result the Company cannot assess whether
necessary permits will be obtained or maintained on acceptable terms, in a
timely manner or at all. Any failure to comply with applicable laws and
regulations or failure to obtain or maintain permits, even if inadvertent,
could result in the interruption of our operations or material fines,
penalties or other liabilities.

Obtaining funding for project planning, construction and development and
related operating activities is essential to the Company's future plans.
-----------------------------------------------------------------------------
The Board of Directors approved a plan to proceed with financing and, if
successful, construction of the Brisas Project based on the results of the
bankable feasibility study completed in early 2005. The feasibility study
contemplates an initial capital investment to place the Brisas Project into
production of approximately $552 million excluding value added taxes and
import duties which could total as much as $50 million. Although management
is in the process of preparing applications for tax exonerations or payment
holidays for certain taxes including value added tax and import duty tax on
the initial capital costs, which are provided by law, there can be no
assurances that such exonerations will be obtained, the primary result of
which would be to increase initial capital. The timing and extent of funding
such investment depends on a number of important factors, including the
receipt of required permits, actual timetable of our development plan, the
price of gold and copper, results of our efforts to obtain financing, the
political and economic conditions in Venezuela, the ultimate capital costs of
the project including our ability to obtain tax exonerations or payment
holidays and our share price. See "-Our mining assets are concentrated in a
foreign country and, as a result, our operations are subject to inherent
local risks."

As of March 28 2006, the Company had approximately $22 million in cash and
investments. We currently do not generate revenue from operations and have
historically financed operating activities primarily from the sale of common
shares or other equity securities. In the near-term, management believes that
cash and investment balances are sufficient to enable the Company to fund its
pre-construction activities through 2007 (excluding any substantial Brisas
Project construction activities). These pre-construction activities are
expected to consist of detailed project engineering, development and
implementation of project related contracts such as engineering, procurement
and construction management, port facilities, concentrate sales contracts,
electricity and fuel supply contracts, and a number of other agreements
related to the construction and operation of the Brisas Project, obtaining
the required permits and identifying suitable funding sources.

Management provides no assurances that it will be able to obtain the
substantial additional financing that will be needed to construct the Brisas
Project. Failure to raise the required funds will mean the Company is unable
to construct and operate the Brisas Project, which would have a material
adverse effect on the Company.

Risks arising from the bankable feasibility study and construction of the
Brisas Project.
-----------------------------------------------------------------------------
The Brisas Bankable Feasibility Study was completed to determine the economic
viability of the Brisas mineralized deposit. Many factors are involved in the
determination of the economic viability of mining a mineralized deposit,
including the delineation of satisfactory mineral reserve estimates, the
level of estimated metallurgical recoveries, capital and operating cost
estimates, construction, operation, permit and environmental requirements,
and the estimate of future gold prices. Capital and operating cost estimates
are based upon many factors, including anticipated tonnage and grades of ore
to be mined and processed, the configuration of the ore body, ground and
mining conditions and anticipated environmental and regulatory compliance
costs.

While the Company is satisfied with the bankable feasibility study, each of
these factors involves uncertainties and the making of assumptions and, as a
result, the Company cannot give any assurance that the overall feasibility
study will prove accurate in preparation, construction and development of the
Brisas Project or that any key finding or underlying assumption will not prove
to be inaccurate, including changes in costs as a result of the passage of
time between the completion of the bankable feasibility study and the date
construction commences. It is not unusual in new mining operations to
experience unexpected problems during development. As a result, the actual
cost and time of placing the Brisas Project into production could differ
significantly from estimates contained in the bankable feasibility study.
Likewise, if and after the Brisas Project is developed, actual operating
results may differ from those anticipated in the feasibility study.

Future results depend on the Brisas Project.
-----------------------------------------------------------------------------
The Company is dependent on the Brisas Project, which is a development stage
project and which may never be developed into a commercially viable ore body.
Any adverse event affecting this property, or our ability to finance and/or
construct and operate this property, would have a material adverse impact on
the future results of the Company.

Our mineral resource and reserve estimates may vary from estimates in the
future.
-----------------------------------------------------------------------------
The mineral resource and reserve estimates have been calculated in accordance
with CSA National Instrument 43-101, as required by Canadian Securities
regulatory authorities.

This report uses the terms "measured,"  "indicated" and "inferred" resources.
We advise U.S. investors that while those terms are recognized and required by
Canadian regulations, the U.S. Securities and Exchange Commission does not
recognize them. We believe that the calculation of mineral reserves based on
Canadian regulations is substantially the same as it is under the U.S.
Securities and Exchange Commission Industry Guide 7. However, we advise U.S.
investors that definitions contained in National Instrument 43-101differ in
certain respects from those set forth in the U.S. Securities and Exchange
Commission Industry Guide 7. U.S. investors are cautioned not to assume that
mineralization ("mineral resource") not already categorized as mineral
reserves will ever be converted into reserves in the future.

As part of the completion of the bankable feasibility study, the Company's
methods and procedures for gathering geological, geotechnical, and assaying
information were evaluated by independent consultants  who concluded, along
with management, that the Company's methods and procedures met generally
accepted industry standards for a bankable feasibility level of study.
Notwithstanding the conclusions of management and its qualified consultants,
mineral reserve estimation is an interpretive process based on drilling
results and experience as well as estimates of mineralization characteristics
and mining dilution, metal prices, costs of mining and processing, capital
expenditures and many other factors. Grades of mineralization processed at
any time may also vary from mineral reserve estimates due to geologic
variations within areas mined. Actual quality and characteristics of deposits
cannot be fully assessed until mineralization is actually mined and, as a
result, mineral reserves change over time to reflect actual experience.

Risks inherent in the mining industry could have a significant impact on the
Company's future operations.
-----------------------------------------------------------------------------
Gold and copper projects are subject to all of the risks inherent in the
mining industry, including environmental hazards, industrial accidents,
fires, labor disputes, legal regulations or restrictions, unusual or
unexpected geologic formations, cave-ins, flooding, and periodic
interruptions due to inclement weather. These risks could result in damage
to, or destruction of, mineral properties and production facilities, personal
injury, environmental damage, delays, monetary losses and legal liability.
Insurance covering such catastrophic liabilities is not maintained and will
only be maintained in the future if available on a cost-effective basis.

Operating losses are expected to continue until we construct or acquire an
operating mine.
-----------------------------------------------------------------------------
We have experienced losses from operations for each of the last five years
and expect this trend to continue until the Brisas Project is operational as
the result of, among other factors, expenditures associated with the
corporate activities on the Brisas Project, as well as other unrelated
non-property expenses, which are recorded in the consolidated statement of
operations. Such losses may increase in the short-term if we obtain
additional financing and subsequently begin construction of the Brisas
Project. This trend is expected to reverse if and when gold and copper are
produced at the Brisas Project in commercial quantities at a prices equal to
or in excess of the prices assumed in the feasibility study. However,
management can give no assurances that this trend will be reversed in the
future, as a result of the operation of the Brisas Project or if we acquire a
profitable operating mine.

The Company may incur costs in connection with future reclamation activities
that may have a material adverse effect on the Company's earnings and
financial condition.
-----------------------------------------------------------------------------
The Company is required to obtain government approval of its plan to reclaim
the Brisas Project after the minerals have been mined from the site. The
Brisas Project reclamation plan has already been incorporated into the
environmental studies submitted to MARN. Reclaiming the Brisas Project will
take place during and after the active life of the mine. In accordance with
applicable laws, bonds or other forms of financial assurances have been and
will be provided by the Company for the reclamation of the mine. The Company
may incur costs in connection with these reclamation activities in excess of
such bonds or other financial assurances, which costs may have a material
adverse effect on the Company's earnings and financial condition. The Company
expects to established a reserve for future site closure and mine reclamation
costs based on the estimated costs to comply with existing reclamation
standards. There can be no assurance that the Company's reclamation and
closure accruals will be sufficient or that the Company will have sufficient
financial resources to fund such reclamation and closure costs in the future.

The volatility of the price of gold and copper could have a negative impact
upon our current and future operations.
-----------------------------------------------------------------------------
The price of gold and copper has a significant influence on the market price
of our common shares and our business activities. Fluctuation in gold and
copper prices directly affects, among other things, the overall economic
viability of the project, our ability to obtain sufficient financing required
to construct the Brisas Project, including the terms of any such financing,
and the calculation of reserve estimates. The price of gold is affected by
numerous factors beyond our control, such as the level of inflation,
fluctuation of the United States Dollar and foreign currencies, global and
regional demand, sale of gold by central banks and the political and economic
conditions of major gold producing countries throughout the world. Copper
prices also fluctuate and are generally affected by global and regional
demand and existing inventories. As of March 28, 2006, the closing price for
gold and copper was: Gold: $568 per ounce, copper: $2.40 per pound. The
following table sets forth the average of the daily closing price for gold
and copper for the periods indicated as reported by the London Metal
Exchange:

YEAR ENDED DECEMBER 31,
               5 Yr. Avg.   2005   2004   2003   2002   2001
-----------------------------------------------------------------------------
Gold ($
per ounce)        $360    $445    $410    $363   $310   $271
Copper
($ per pound)   $1.04    $1.67   $1.37   $0.81  $0.71  $0.72


Possible Dilution to Present and Prospective Shareholders
-----------------------------------------------------------------------------
In order to finance the future construction of the Brisas Project, the
Company will be required to raise funds through the issuance of common
shares, the issuance of debt instruments convertible into common shares or
other instruments, such as warrants. Any transaction involving the issuance
of previously authorized but unissued shares, or securities convertible into
shares, would result in dilution, possibly of a substantial nature, to
present and prospective holders of shares.

The market price of our common shares may experience volatility.
-----------------------------------------------------------------------------
Our Class A common shares and the November 4, 2004 Class A common share
purchase warrants are listed on the Toronto Stock Exchange (TSX). Our Class A
common shares are listed on the American Stock Exchange (AMEX). Our securities
and securities of similar companies have experienced substantial volatility in
the past, often based on factors unrelated to the financial performance or
prospects of the companies involved. These factors include economic and
political developments in North America, Venezuela and generally worldwide
and overall market perceptions of the attractiveness of particular
industries. Our share price is also likely to be affected by short-term
changes in gold and copper prices, our financial condition or results of
operations as reflected in our publicly filed reports, and the dilutive
effect of the sale of significantly more common shares in order to finance
the Company's activities.

Other factors unrelated to our performance that may have an effect on the
price of our Class A common shares and warrants include the extent, if any,
of analytical coverage of our business by investment banks' research
departments, lower trading volume relative to our peers as a result of a
lesser number of shares outstanding and general market interest or limited
public float in our securities, as well as new regulatory rules. As a result
of any of these factors, we believe the market price of our Class A common
shares and warrants at any given point in time may not accurately reflect our
long-term value.

Future hedging activities could negatively impact future operating results.
-----------------------------------------------------------------------------
The Company has not entered into forward contracts or other derivative
instruments to sell gold or copper that it might produce in the future.
Although the Company has no near term plans to enter such transactions, it
may do so in the future if required for project financing. Forward contracts
obligate the holder to sell hedged production at a price set when the holder
enters into the contract, regardless of what the price is when the product is
actually mined. Accordingly, there is a risk that the price of the product is
higher at the time it is mined than when the Company entered into the
contracts, so that the product must be sold at a price lower than could have
been received if the contract was not entered. The Company may enter into
option contracts for gold and copper to mitigate the effects of such hedging.

Changes in critical accounting estimates could adversely affect the financial
results of the Company.
-----------------------------------------------------------------------------
The Company's most significant accounting estimate relates to the carrying
value of its Brisas Project, which is more fully discussed in our annual
financial statements and related footnotes. Management regularly reviews the
net carrying value of its mineral properties. Estimates of mineral prices,
recoverable proven and probable reserves, and operating, capital and
reclamation costs are subject to certain risks and uncertainties which may
effect the recoverability of mineral property costs. Where estimates of
future net cash flows are not available and where other conditions suggest
impairment, management assesses if carrying value can be recovered. Although
management has made its best estimate of these factors as it relates its
mineral properties, it is possible that changes could occur in the near-term,
which could adversely affect the future net cash flows to be generated from
the properties.

Material weaknesses relating to our internal controls over financial
reporting could adversely affect our financial results or condition and share
price.
-----------------------------------------------------------------------------
The Company must, for its fiscal year ending December 31, 2006, begin to
comply with the requirements of Section 404 of the Sarbanes-Oxley Act of 2002
("Sarbanes-Oxley"), which among other things requires the Company's external
auditors to issue an opinion on the adequacy of management's assessment and
their own assessment of the effectiveness of internal controls over financial
reporting. Management believes that there are no reportable material
weaknesses in the Company's internal controls as defined by Section 404 of
Sarbanes-Oxley as of the date of this report. However, there can be no
assurance that material weaknesses regarding our internal controls will not
be discovered in the future, which could result in costs to remediate such
controls or inaccuracies in our financial statements. A material weakness in
controls over financial reporting may result in increased difficulty or
expense in transactions such as financings, or a risk of adverse reaction by
the market generally that would result in a decrease of our stock price.

U.S. Internal Revenue Service designation as a "passive foreign investment
company" may result in adverse U.S. tax consequences to U.S. shareholders.
-----------------------------------------------------------------------------
Because the Company is a Canadian corporation and more than 75% of its
consolidated gross income is classified as passive income, the U.S. Internal
Revenue Service considers it a passive foreign investment company under
Section 1297(a) of the U.S. Internal Revenue Code ("PFIC") for taxable year
ended December 31, 2005. Classification as a PFIC may result in adverse U.S.
tax consequences to U.S. shareholders. See "- Item 10. Additional Information
-U.S. Federal Income Tax Consequences."

Acquiring and retaining key personnel in the future could have a significant
impact on future operating results.
-----------------------------------------------------------------------------
We are and will be dependent upon the abilities and continued participation
of key management personnel, as well as the significant number of new
personnel that will be necessary to manage any construction and operations of
the Brisas Project. If the services of our key employees were lost or we are
unable to obtain the new personnel necessary to construct, manage and operate
the Brisas Project, it could have a material adverse effect on future
operations.

Management of Growth
-----------------------------------------------------------------------------
Management anticipates that if and when it constructs the Brisas Project and
puts it into production, the Company will experience significant growth in
its operations resulting in increased demands on its management, internal
controls and operating and financial systems. There can be no assurance that
management will successfully meet these demands and effectively attract and
retain additional qualified personnel to manage its anticipated growth. The
failure to manage growth effectively could have a material adverse impact on
the Company's business, financial condition and results of operations.

Item 4. Information on the Company
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------

History and Development of the Company
-----------------------------------------------------------------------------
The Company is engaged in the business of exploration and development of
mining projects and is presently focused primarily on its most significant
asset, the Brisas Project, and to a lesser extent the exploration of its
Choco 5 property, both located in Bolivar State, Venezuela. The Company has
no commercial production at this time.

Primary Mining Asset
-----------------------------------------------------------------------------
Brisas Project

Our primary mining asset, the Brisas Project, is a gold/copper deposit
located in the Km 88 mining district of the State of Bolivar in southeastern
Venezuela. Approximately $100 million has been expended (includes costs
capitalized and costs expensed in the period incurred) on the Brisas Project
since its acquisition in 1992. In 2005, the Company, with the assistance of a
number of independent consultants, completed a bankable feasibility study for
the Brisas Project. Based on the positive conclusions contained in the
bankable feasibility study, the Board of Directors approved proceeding with
the financing and construction of the mine. See-"PROPERTIES-Brisas Project"
for a detailed discussion of the Brisas Project.

Choco 5 Property

The Choco 5 property, is a grass-roots gold exploration property located in
the El Callao mining district in the State of Bolivar, southeastern
Venezuela. Since acquiring the property in 2000, the Company has invested
approximately $600,000 on acquisition and exploration costs and expects to
expend up to $750,000 on further exploration in 2006. See "PROPERTIES-Choco 5
Property" for a detailed discussion of the Choco 5 project.

Financial Position
-----------------------------------------------------------------------------
As of March 30, 2006, the Company held approximately $22 million in cash and
investments. The Company requires substantial additional funding in order to
finance the construction of the Brisas Project. To assist with financing
management engaged Endeavour Financial Corporation ("Endeavour") to provide
general corporate financial advice with respect to its corporate development
and obtain the required financing for the Brisas Project. With Endeavor's
assistance, we have evaluated a number of financing options during 2005 and
are continuing our efforts during the first half of 2006 in anticipation of
receiving the required permits to allow us to proceed with the construction
of the Brisas Project. At this time, although we have received indications of
interest and several initial debt funding proposals, we have no firm
commitments to proceed with financing the Brisas Project.

Properties
-----------------------------------------------------------------------------
Brisas Project

Location

The Brisas Project is located in the Km 88 mining district in the State of
Bolivar in southeastern Venezuela approximately 373 kilometers (229 miles),
by paved highway, southeast of Puerto Ordaz. The project, accessible by an
all-weather road, is 5 kilometers west of the Km 88 marker on Highway 10,
occupies an area of approximately 11,000 hectares.

Existing or Pending Concessions and Contracts and Applications for additional
Mining Rights and/or Land Use
-----------------------------------------------------------------------------
The Brisas Project consists of the following: a 500-hectare land parcel
consisting of the Brisas alluvial concession and the Brisas hardrock
concession beneath the alluvial concession (the "Brisas concessions").
Together these concessions contain substantially all of the mineralization
identified in the Brisas Bankable Feasibility Study. The Brisas Project also
includes a number of other existing or pending applications for concessions,
alfarjetas, CVG work contracts, land use permits and easements adjacent to or
near the Brisas concessions totaling another 13,000 hectares.

Generally a concession represents a privilege, license or mining title
granted by MIBAM or its predecessor MEM, pursuant to Venezuelan mining law,
to explore and, if warranted, produce minerals from a specified property. An
alfarjeta is a right similar to a concession except that the area of the land
parcel is insufficient in size to be designated a concession. A CVG work
contract is similar to rights granted pursuant to a concession, however,
contract law governs such rights. In 2003 CVG's authority to grant new mining
contracts was eliminated. Land use permits and easements are generally the
right to temporarily occupy or expropriate land required for mining
activities.

The Brisas alluvial concession is for the exploitation of alluvial gold
granted by MEM, the predecessor to the MIBAM, through a title published in
the Official Gazette of the Republic of Venezuela No. 33,728 on April 4,
1988. In September 2000, the Company also made application to MEM for the
copper and silver mineralization contained within the area of this
concession. The Brisas hardrock concession (which is beneath the Brisas
alluvial concession) is for the exploitation of vein gold, copper and
molybdenum and was granted by MEM through a title published in the Official
Gazette of the Republic of Venezuela No. 36,405 on March 3, 1998. The Brisas
hardrock concession is the main ore-body, comprising substantially all of the
gold and copper mineralization contained within the properties.

The Company's original Brisas Project operating plan was approved by MIBAM in
2003 and, since that approval, the Company has submitted to MIBAM a number of
modifications in order to minimize impact to the environment and optimize
economics of the Brisas Project, including an increase in milling capacity up
to 70,000 tons per day and relocation of certain surface facilities and
infrastructure. Contained within the approved operating plan are a number of
existing or pending applications for concessions, alfarjetas, CVG work
contracts, land use permits and easements, adjacent to or near the Brisas
concessions. These additional land parcels comprise the bulk of the land
required for the mining and milling facility and related infrastructure
contemplated in the Brisas Bankable Feasibility Study. A number of these
parcels are integral to our current operating plan and others may be
necessary for future needs. Failure to obtain rights to one or more of these
land parcels could have a material adverse affect on the Company.

The 1999 Mining Law contemplated the conversion of the CVG Work Contracts
into mining concessions and based on those provisions, the Company applied to
MIBAM in a timely manner for conversion of the CVG contracts noted above.
MIBAM previously indicated that it would act on these conversion
applications, however the government has recently announced its intention to
organize a state-owned mining company and no longer issue any concessions. If
this occurs it will likely impact the conversion process embodied in the
current law as well as the issuance of the Company's existing applications
for concessions nearby the Brisas concessions. As a possible alternative, the
Company has recommended to MIBAM that instead of converting the CVG work
contracts into concessions some form of land use permits or easements would
be more appropriate as our objective is to use these properties that are
contiguous and adjacent to the Brisas concessions primarily for
infrastructure needs and not for mineral exploitation.

In addition to pending land use issues related to project infrastructure
needs, the Company has number of permits relating to the Brisas Project
pending before MIBAM, MARN and other regulatory or government agencies which
are required to be issued prior to the Company obtaining sufficient financing
and beginning construction on, and operating, the Brisas property. Most
importantly, the Company must obtain the Administrative Authorization to
Affect Natural Resources for Construction of Infrastructure and Exploitation
of Alluvial and Vein Deposits of Gold and Copper from MARN, which is issued
in part based on MIBAM's approval of the project operating plan as well as
the Company's Venezuelan Environmental and Social Impact Assessment (V-ESIA)
which was submitted in August 2005.

Tenure
-----------------------------------------------------------------------------
The Brisas alluvial concession was acquired through the acquisition of
BRISAS. The Brisas hardrock concession was granted to BRISAS in March 1998.
Both concessions were granted by MEM (now MIBAM) pursuant to the 1945 mining
law.

The Brisas alluvial concession is an exploitation concession with a term of
20 years, two renewal periods of 10 years each at the discretion of MIBAM,
and a 3% tax on gold sales. In prior years the Brisas alluvial mineralization
was substantially mined out. The remaining mineralization is low-grade and
uneconomic on a stand-alone basis. When this mineralization is combined with
the Brisas hardrock mineralization it represents approximately 3% of the
total Brisas Project mineralization and becomes economic due to economies of
scale. The Brisas alluvial concession provides MIBAM or its designee the
right (referred to as a "special advantage" to the Republic of Venezuela) to
acquire 20% of the company organized by the alluvial concession holder to
perform extraction activities within the concession. Venezuelan counsel has
advised us that to the best of their knowledge MIBAM has never enforced such
provisions contained in similar concessions. For this reason, it is unclear
how the value of the twenty percent (20%) of the alluvial concession would be
determined, in the event MIBAM chose to exercise such right pursuant to the
concession.

The Brisas hardrock concession is an exploitation concession with a term of
20 years and two renewal periods of 10 years each, at the discretion of
MIBAM. The hardrock concession provides for up to a 3% tax on gold sales and
up to a 7% mine mouth tax on copper production. See "Venezuelan Mining
Environment and Other Matters."

Regional Infrastructure
-----------------------------------------------------------------------------
The Brisas Project site is located in the State of Bolivar, in southeastern
Venezuela. The nearest major city is Puerto Ordaz, with approximately
1,400,000 inhabitants. Puerto Ordaz is the center of major industrial
developments in the area, including iron and steel mills, aluminum smelters,
iron and bauxite mining and forestry. Major hydroelectric generating plants
on the Caroni River, providing more than 20,000 MW of electricity, support
these industries. Puerto Ordaz has major port facilities and is accessible to
ocean-going vessels from the Atlantic Ocean, via the Orinoco river. There are
also port facilities 428 km northwest of Puerto Ordaz on the Caribbean coast
near Barcelona, which would likely be the port of entry for most
construction, mining and milling equipment.

Puerto Ordaz is a modern urban center with good road and air connections to
the rest of Venezuela. There are regularly scheduled flights to Caracas and
other major cities several times daily. The highway system within Venezuela
is generally good, with paved roads in good condition providing access to
within 5 km of the Brisas Project. A four-lane highway runs from Puerto
Ordaz, northwest to both Barcelona and Guanta, and for 55 km south to Upata
where it becomes a two-lane highway to Km 88 and on into Brazil. A 400 kV
power line runs through the community of Las Claritas, nearby the Brisas
Project, with a transformer station located 3 km from the property.

Geology
-----------------------------------------------------------------------------
The Brisas Project is within the Proterozoic granite-greenstone terrain of
the Guyana shield. The shield covers eastern Colombia, southeastern
Venezuela, Guyana, Suriname, French Guiana and northeastern Brazil. The
terrain is a thick section of andesite to dacite volcanics intruded by
numerous granite stocks and batholiths. Several periods of deformation,
metamorphism, and mineralization can be documented within this terrain.

The rock units on the Brisas property are divided into weathered and
unweathered. Weathered rock or saprolite is further defined by the degree of
oxidation into oxide saprolite and sulfide saprolite. Both contain clays and
quartz with the oxide saprolite having iron oxides such as hematite and
goethite while in the sulfide saprolite the iron is present as pyrite. The
unweathered rocks consist of andesite or dacite tuffs that are further
subdivided based on the presence or absence of mineral crystals and lithic or
lapilli fragments. Unweathered intrusive rocks include a tonalite stock and
basalt dikes and sills. The tuffs strike northerly and dip 30 to 35 degrees
to the west. No faulting can be recognized within the deposit.

The mineralization is stratabound and strataform within a 200-meter thick
series of tuffs marked by rapid horizontal and vertical facies changes. The
gold/copper mineralization is over 1,900 meters long and 500 to 900 meters
wide. Mineralization continues for an unknown distance down-dip to the west,
north and south, as well as, below the current deposit. Three styles of
mineralization are seen: 1) massive sulfide-quartz-tourmaline breccia with
pyrite, chalcopyrite and gold in an outcrop referred to as the Blue Whale, 2)
stratabound, disseminated pyrite-gold/copper mineralization and 3)
quartz-calcite high angle veins marked by erratic but high gold values. The
disseminated mineralization is characterized by a
calcite-quartz-epidote-sulfide alteration and constitutes the bulk of the
economic mineralization. There appears to be no relationship between the
disseminated mineralization and the high angle veins. The mineralization to
the north is generally pyrite-chalcopyrite-gold with the copper content
decreasing to the south until in the southern portion of the deposit the
copper is a minor constituent of the mineralization. Mineralization is open
down dip to the west and to the north.

Bankable Feasibility Study
-----------------------------------------------------------------------------
The Company and a number of independent consultants completed a Bankable
Feasibility Study in respect to the construction and operation of the Brisas
Project in January 2005. Based on the results of the study, the Company plans
to produce gold dorE on-site and ship gold/copper concentrate to an off-site
smelter. Note that the Company announced an increase in the proven and
probable reserves at the Brisas Project in May 2005, which is further
discussed later in this document. The 2005 Bankable Feasibility Study
described below has not yet been updated with this new data.

Based on the results set forth in the study, the operating plan assumes a
large open pit mine containing proven and probable reserves of approximately
9.2 million ounces of gold and 1.2 billion pounds of copper in 414 million
tonnes of ore grading 0.69 grams of gold per tonne and 0.13% copper, at a
revenue cutoff grade of $2.76 per tonne. The final pit was based on a shape
produced by an industry standard pit optimization software using a gold price
of $350 per ounce and a copper price of $0.90 per pound. Utilizing
conventional truck and shovel mining methods with the processing of ore at
full production of 70,000 tonnes per day, the study anticipates that the
Brisas Project at full production levels will yield an average annual
production of 486,000 ounces of gold and 63 million pounds of copper over an
estimated mine life of approximately 16 years.

The Bankable Feasibility Study assumed an economic model base case utilizing
$400 per ounce gold and $1.00 per pound copper. At such prices, cash
operating costs (net of copper credits) are estimated at $154 per ounce of
gold and total costs per ounce, including operating costs and initial and
sustaining capital, would be $263 per ounce of gold. Initial capital costs to
construct and place the Brisas Project into production are currently estimated
to be approximately $552 million excluding value added taxes and import duties
which could total as much as $50 million. Tax exonerations or tax payment
holidays are available for various taxes including value added taxes ("VAT")
and import duty tax on the initial capital costs. Management is in the
process of preparing applications for all available exonerations and expects
to obtain such exonerations prior to the construction of the project. As a
result, the cost of such taxes and import duties are not included in the
initial costs of the project. However, there can be no assurances that such
exonerations will be obtained, the result of which would be to increase
capital and operating costs.

We are dependent on the Venezuelan regulatory authorities issuing the Company
certain required operational and land use permits relating to the Brisas
property before we may begin construction on, and operate, the Brisas
property. Obtaining these required permits is also necessary in order for the
Company to adequately identify and obtain suitable financing for the Brisas
Project. Construction of the Brisas Project is expected to take 24-30 months,
with commissioning and achievement of commercial production shortly
thereafter. Operating supplies are expected to be purchased primarily in
Venezuela and from other South American countries. Power is available from a
transmission line that passes within a few kilometers of the project site.
The power company has constructed a substation at the Km 88 location for
connection to the project. Abundant water is available in the area, with the
Brisas Project's fresh water requirements being met by water pumped from the
pit dewatering system, and by rainfall recovered in the tailings pond.
On-site accommodations will be provided for employees, who will be drawn both
from the local area, and from the industrialized area around Puerto Ordaz.
Over 2,000 personnel will be needed for the construction of the project and
employment will peak at over 900 operating personnel. The mining and
processing methods are all based on conventional technology and, at present,
no new or unproven technology is expected to be employed.

The following are the key assumptions contained in the 2005 Bankable
Feasibility Study:

Proven and probable reserves using $350 per ounce of gold and $0.90 per
pound of copper:
-----------------------------------------------------------------------------
Proven Reserves                     193.2 million tonnes;
                                    0.71 g/t gold and 0.12% copper
Probable Reserves                   221.3 million tonnes;
                                    0.68 g/t gold and 0.13% copper
Strip Ratio (waste: ore)            1.81:1
Mine Life                           16 years
Mill throughput (full production)   70,000 tonnes per day "Hardrock" ore
                                    6,000 tonnes per day "Sulfide" saprolite
                                    6,000 tonnes per day "Oxide" saprolite

Plant Metal recoveries              gold      83.1%
                                    copper    87.0%

Net Payable Metals                  gold      82.4%
                                    copper    83.0%

Life of Mine Production (payable metals)
                                    gold   7.59 million ounces
                                    copper  979 million pounds
Average Annual Gold Production      486,000 ounces
Average Annual Copper Production    63 million pounds
Average Annual Copper
  Concentrate Production            124,000 metric tonnes

Economic Model Results using $400 per ounce of gold and $1.00 per
pound of copper:
-----------------------------------------------------------------------------

Total Cash Operating Cost
(on site and off site)              $5.26 per tonne ore
Initial Capital Cost                $552.4 million
Working Capital                     $39.3 million
Ongoing Capital                     $132.3 million
Cash Operating Cost *               $154 per ounce of gold
Production Taxes                    $13 per ounce of gold
Total Cash costs *                  $167 per ounce of gold
Capital Cost Amortization           $96 per ounce of gold
Total Cost                          $263 per ounce of gold

IRR, NPV and Payback using:
per ounce of gold and:              $400             $350
per pound of copper                $1.00            $0.90
Internal Rate of Return
(After-Tax)                         9.1%             5.2%
Project Net Present Value
(After-Tax)             @ 0%        $711 million  $384 million
                        @ 5%        $207 million  $12 million
Project Payback                     8 years        10.8 years
* Net of copper by product credit

Mineral Resource and Reserve  Estimates Contained in Brisas Feasibility Study
-----------------------------------------------------------------------------
Pincock Allen & Holt ("PAH") calculated the mineral resource and reserve
estimates contained herein, most recently reported upon in February 2005 in
accordance with CSA National Instrument 43-101, as required by Canadian
Securities regulatory authorities. We believe that the calculation of such
mineral reserves based on Canadian regulations is substantially the same as
it is under the U.S. Securities and Exchange Commission Industry Guide 7.
However, we advise U.S. investors that definitions contained in National
Instrument 43-101 differ in certain respects from those set forth in the U.S.
Securities and Exchange Commission Industry Guide 7.

Brisas Feasibility Study Mineral Resource Estimate
-----------------------------------------------------------------------------
Based on work completed by PAH for the Brisas Bankable Feasibility Study,
using an off-site smelter process for treating copper concentrates, the
Brisas Project is estimated to contain a measured and indicated mineral
resource of 10.97 million ounces of gold and approximately 1.4 billion pounds
of copper (based on 0.4 gram per tonne gold equivalent cut-off). A glossary of
terms used herein is contained in the appendix.

Cautionary Note to U.S. Investors concerning estimates of Measured and
Indicated Resources. This section uses the terms "measured" and "indicated
resource." We advise U.S. investors that while the terms "measured" and
"indicated resource" are recognized and required by Canadian regulations, the
U.S. Securities and Exchange Commission does not recognize them. U.S.
investors are cautioned not to assume that the mineralization not already
categorized as mineral reserves, will ever be converted into reserves.

The February 2005 estimated measured and indicated mineral resource utilizing
an off-site smelter process is summarized in the following table and includes
the mineral reserve estimate shown in the following section:



(kt=1,000 tonnes)
                   Measured                        Indicated                Measured and Indicated
---------------------------------------------------------------------------------------------------

                                                                    
Au Eq
Cut-off               Au        Cu                    Au        Cu                    Au       Cu
Grade       kt       (gpt)      (%)        kt        (gpt)      (%)        kt        (gpt)     (%)
----------------------------------------------------------------------------------------------------
0.40     217,883     0.700     0.118     284,941     0.662     0.132     502,824     0.678     0.126
====================================================================================================




(In Millions)
                   Measured                        Indicated                Measured and Indicated
----------------------------------------------------------------------------------------------------
                                                                              
Au Eq
Cut-off                Au       Cu                     Au       Cu                     Au       Cu
Grade                  oz.      lb.                    oz.      lb.                    oz.      lb.
----------------------------------------------------------------------------------------------------
0.40          -      4.905      566            -     6.066      827           -      10.971    1,393
====================================================================================================



The inferred mineral resource, based on an off-site smelter process (0.4 gram
per tonne gold equivalent cut-off), is estimated at 126.5 million tonnes
containing 0.65 grams gold per tonne and 0.13 percent copper. The mineral
resource and gold equivalent (AuEq) cut-off is based on $350 per gold ounce
and $0.90 per pound copper. The qualified persons involved in the property
evaluation and resource and reserve estimates were Raul Borrastero C.P.G.,
Susan Poos, P.E., Richard Addison, P.E., and Rick Lambert, P.E. of PAH, and
Brad Yonaka of Gold Reserve.

Cautionary Note to U.S. Investors concerning estimates of Inferred Resources.
This section uses the term "inferred" resources. We advise U.S. investors that
while the term "inferred resource" is recognized and required by Canadian
regulations, the U.S. Securities and Exchange Commission do not recognize
such term. An "inferred resource" has a great amount of uncertainty as to its
existence and its economic and legal feasibility. Under Canadian disclosure
rules, estimates of inferred mineral resources may not form the basis of
feasibility or prefeasibility studies, except in rare cases. U.S. investors
are cautioned not to assume that part or all of an inferred resource exists,
is economically or legally mineable or that all or any part of an inferred
mineral resource will ever be upgraded to a higher category.

Brisas Feasibility Study Mineral Reserve Estimate
-----------------------------------------------------------------------------
Based on work completed by PAH for the Brisas Bankable Feasibility Study,
using an off-site smelter process for treating copper concentrates, the
Brisas Project is estimated to contain a proven and probable mineral reserve
of approximately 9.2 million ounces of gold and 1.2 billion pounds of copper.

The February 2005 estimated proven and probable mineral reserve utilizing
traditional flotation and off-site smelter processes is summarized in the
following table:




                                                                   
             Reserve      Au        Cu        Au         Cu        Waste        Total
             tonnes     Grade     Grade     ounces     pounds      tonnes       tonnes     Strip
Class      (thousands)  (gpt)      (%)   (thousands) (millions)  (thousands)  (thousands)  Ratio
------------------------------------------------------------------------------------------------
Proven       193,248     0.71     0.123     4,399        525
Probable     221,315     0.68     0.133     4,808        654
------------------------------------------------------------------------------------------------
Total        414,563     0.69     0.129     9,207      1,179       748,333     1,162,895    1.81
================================================================================================



The reserves disclosed above, which are designated as commercially viable,
are a part of the mineral resources estimate shown in the previous section.
Note that the mineral resources estimate does not represent material that
exists in addition to the mineral reserve.

The mineral reserve (within a pit design) has been estimated in accordance
with CSA National Instrument 43-101, which we believe is substantially the
same as SEC Industry Guide 7. The mineral reserve was estimated using average
recovery rates for gold and copper of 83% and 87% respectively, metal prices
of U.S. $350 per ounce gold and U.S. $0.90 per pound copper with an internal
revenue cut-off of $2.76 per tonne. The qualified persons involved in the
property evaluation and resource and reserve estimates were Raul Borrastero
C.P.G., Susan Poos, P.E., Richard Addison, P.E., and Rick Lambert, P.E. of
PAH, and Brad Yonaka of Gold Reserve.

May 2005 Updated Mineral Resource and Reserve Estimate
-----------------------------------------------------------------------------
In May 2005 PAH calculated the updated mineral resource and reserve estimates
summarized in the table below in accordance with CSA National Instrument
43-101. The 2005 Bankable Feasibility Study described earlier in this
document has not yet been updated with this new data.

We believe that the calculation of the updated mineral reserves is
substantially the same as those under the U.S. Securities and Exchange
Commission Industry Guide 7, however, we advise U.S. investors that
definitions contained in CSA National Instrument 43-101 differ in certain
respects from those set forth in the U.S. Securities and Exchange Commission
Industry Guide 7. The qualified persons involved in the property evaluation
and resource and reserve estimate were Raul Borrastero, C.P.G. and Susan Poos
P.E. of PAH and Brad Yonaka, Exploration Manager for Gold Reserve.

Mineral Resource Estimate-May 2005
-----------------------------------------------------------------------------
The Brisas Project is estimated to contain a measured and indicated mineral
resource of 12.4 million ounces of gold and approximately 1.6 billion pounds
of copper (based on 0.4 gram per tonne gold equivalent cut-off). A glossary
of terms used herein is contained in the appendix.

Cautionary Note to U.S. Investors concerning estimates of Measured and
Indicated Resources. This section uses the terms "measured" and "indicated
resource." We advise U.S. investors that while the terms "measured" and
"indicated resource" are recognized and required by Canadian regulations, the
U.S. Securities and Exchange Commission does not recognize them. U.S.
investors are cautioned not to assume that the mineralization not already
categorized as mineral reserves, will ever be converted into reserves.

The May 2005 estimated measured and indicated mineral resource utilizing
an off-site smelter process is summarized in the following table:



(kt=1,000 tonnes)
                   Measured                        Indicated                Measured and Indicated
---------------------------------------------------------------------------------------------------

                                                                    
Au Eq
Cut-off               Au        Cu                    Au        Cu                    Au       Cu
Grade       kt       (gpt)      (%)        kt        (gpt)      (%)        kt        (gpt)     (%)
----------------------------------------------------------------------------------------------------
0.40     250,184     0.689     0.119     332,314     0.640     0.132     582,498     0.661     0.126
====================================================================================================




(In Millions)
                   Measured                        Indicated                Measured and Indicated
----------------------------------------------------------------------------------------------------
                                                                              
Au Eq
Cut-off                Au       Cu                     Au       Cu                     Au       Cu
Grade                  oz.      lb.                    oz.      lb.                    oz.      lb.
----------------------------------------------------------------------------------------------------
0.40          -      5.541      656            -     6.837      966           -      12.378    1,622
====================================================================================================


The inferred mineral resource, based on an off-site smelter process (0.4 gram
per tonne gold equivalent cut-off), is estimated at 129.0 million tonnes
containing 0.594 grams gold per tonne and 0.122 percent copper, or 2.46
million ounces of gold and 346 million pounds of copper. The mineral resource
estimate has been calculated in accordance with CSA National Instrument
43-101. The mineral resource and gold equivalent (AuEq) cut-off is based on
$350 per gold ounce and $0.90 per pound copper.

Cautionary Note to U.S. Investors concerning estimates of Inferred Resources.
This section uses the term "inferred" resources. We advise U.S. investors that
while the term "inferred resource" is recognized and required by Canadian
regulations, the U.S. Securities and Exchange Commission do not recognize
such term. An "inferred resource" has a great amount of uncertainty as to its
existence and its economic and legal feasibility. Under Canadian disclosure
rules, estimates of inferred mineral resources may not form the basis of
feasibility or prefeasibility studies, except in rare cases. U.S. investors
are cautioned not to assume that part or all of an inferred resource exists,
is economically or legally mineable or that all or any part of an inferred
mineral resource will ever be upgraded to a higher category.

Mineral Reserve Estimate-May 2005
-----------------------------------------------------------------------------
The Brisas Project is estimated to contain a proven and probable mineral
reserve of approximately 10.1 million ounces of gold and 1.29 billion pounds
of copper as summarized in the following table:




                                                                   
             Reserve      Au        Cu        Au         Cu        Waste        Total
             tonnes     Grade     Grade     ounces     pounds      tonnes       tonnes    Strip
Class      (millions)  (gpt)      (%)   (thousands) (millions)  (millions)  (millions)    Ratio
------------------------------------------------------------------------------------------------
Proven        206.9     0.726     0.125     4,829        570
Probable      239.3     0.683     0.136     5,255        720
------------------------------------------------------------------------------------------------
Total         446.2     0.703     0.131    10,084      1,290       963.8      1,410.0    2.16
================================================================================================



Note that the mineral resource estimate does not represent material that
exists in addition to the mineral reserve. The mineral reserve estimates
disclosed above, which are designated as commercially viable, are included in
and a part of the mineral resource estimate shown in the previous section.

The mineral reserve (within a pit design) has been estimated in accordance
with CSA National Instrument 43-101, which we believe is substantially the
same as SEC Industry Guide 7. The mineral reserve was estimated using average
recovery rates for gold and copper of approximately 83% and 87% respectively,
metal prices of U.S. $350 per ounce gold, U.S. $0.90 per pound copper and an
internal revenue cut-off of $3.00 per tonne.

Brisas Project Work To Date
-----------------------------------------------------------------------------
Approximately $100 million has been expended (includes costs capitalized and
costs expensed in the period incurred) on the Brisas Project since inception.
These costs include property and mineral rights, acquisition costs, equipment
expenditures, litigation settlement costs and exploration costs. Considerable
work has taken place to establish the mineral resource and proven and probable
reserves. Previous activities on the property include:

  Extensive geology, geophysics and geochemistry 830 exploration drill holes
  Approximately 196,000 meters of drilling
  Independent audits of exploration drilling, sampling, assaying procedures and
  ore reserves methodology Environmental baseline work/socioeconomic studies
  Hydrology studies
  Geotechnical and geochemical studies
  Mine planning
  Advanced stage grinding and metallurgical testwork Tailings dam designs
  Milling process flow sheet designs
  Preliminary feasibility study completed in 1998 and updated in 2000
  Submittal and approval of initial operating plan based on the preliminary
  feasibility study for the Brisas Project by MIBAM
  Extraction of a 700 tonne bulk sample from an underground shaft for large
  scale metallurgical testing

In addition to the completion of the Brisas Bankable Feasibility Study in
early 2005, the following events occurred in 2005:

Continued Commitment to the Community. The Company has continued its
participation in various social, cultural, health and environmental programs
in the immediate and surrounding areas near Brisas. These efforts have
included the construction of a medical facility within the framework of
"MisiUn Barrio Adentro", a governmental program to provide medical assistance
to the needy, and refurbishment and expansion of a local school. Also, the
Company has completed construction of new recreational facilities such as
parks, refurbishment of multiple-use sport courts and year-round cultural and
sport programs, all of which have received a very favorable response from the
community. The Company continues its open dialogue with the local and
surrounding communities. The Company also continues to further its proposal
to MIBAM to implement a support program within the framework of Mission Piar,
one of President Chavez's social initiatives, which includes local small
miners and encompasses technical assistance and training to explore and
minimize the impact of small miners to the environment as well as their
integration into the formal economy.

Negotiations with Copper Concentrate Smelters. The Company is in the process
of developing a sales and marketing strategy for its gold/copper concentrate.
As part of that effort, management has met with representatives of smelters in
Japan, Germany, Spain and Sweden with the assistance of an independent
consultant. Subsequent to these meetings, the Company entered letters of
intent or agreement with several smelters covering approximately 75% of its
projected annual production of gold/copper concentrates. Management expects
to complete indicative marketing agreements with one or more smelters prior
to or concurrent with the completion of project financing.

Submittal of NI 43-101 Technical Report. The mineable reserve estimate
contained in the Bankable Feasibility Study was completed and submitted to
Canadian securities regulators pursuant to CSA National Instrument 43-101 in
February 2005. Subsequently, the Company announced in May 2005 an increase in
the proven and probable reserves at the Brisas Project.

Proven and Probable Reserves Updated. The Company announced an increase in
the proven and probable reserves at the Brisas Project in May 2005. Gold
increased to 10.1 million ounces from 9.2 million ounces and copper increased
to 1.29 billion pounds from 1.18 billion pounds, as shown in the tables above.
The 2005 Bankable Feasibility Study described elsewhere in this document has
not yet been updated with this new data. The new reserves will be
incorporated into the final Brisas Project plan as part of the ongoing
detailed engineering.

EPCM Contractor Progress. The Company and its Venezuelan affiliate selected
SNC-Lavalin Engineers & Constructors, Inc. (SLE&C) of Toronto and its
international affiliate to undertake Engineering and Procurement (EP) and
Construction Management (CM) services for the Brisas gold/copper project. SLE&C
initiated a limited scope of work on the Brisas Project in July 2005 and
continues to work under a Letter of intent and Limited Authorization to proceed.
The parties have completed negotiations on the definitive EP and CM contracts.
Management expects the parties will execute the EP and CM contracts and notices
to proceed will be issued pursuant to the contracts upon receiving the necessary
permits to proceed with the construction of the Brisas Project from the
Venezuelan government.

SLE&C commenced the definition phase of the EP and CM scope of work in 2005. The
key objective of the definition phase is to generate process flow sheets,
preliminary piping and instrumentation diagrams, design criteria, standard
specifications, major equipment specifications, site and facility layouts and
material take-offs. In addition, initial bids on major equipment items have
been secured, tender packages have been prepared for early works activities
and activities related to surveying, access roads and geotechnical drilling
have commenced.

Development of Port Facilities. The Company signed a letter of intent with a
Venezuelan port facility company for the future storage and trans-shipments
of gold/copper concentrate. Detailed engineering and design efforts related
to the port facility have already commenced

Completion of Environmental Studies. Management completed and filed in August
2005 a Venezuelan Environmental and Social Impact Assessment (V-ESIA) for
MARN, with the assistance of independent consultants. The V-EISA satisfies
Venezuelan requirements to obtain an "Administrative Authorization to Affect
Natural Resources for Construction of Infrastructure and Exploitation of
Alluvial and Vein Deposits of Gold and Copper," which is granted by MARN. In
addition, an International Environmental and Social Impact Assessment
(I-ESIA) meeting World Bank Standards, the Equator Principles and any
requirements desired by financing institutions is expected to be completed in
the next several months.

Public Consultation Meetings. The Company held a public consultation meeting
in July 2005 with the local communities surrounding the Brisas Project in the
KM 88 mining district of Venezuela. The meeting, held in conjunction with the
Company's completion of the V-ESIA and, support of the I-ESIA, built on the
Company's years of community dialogue and development initiatives and was
attended nearly 200 people representing the local communities and indigenous
people. We believe the meeting was well received by the community leaders and
comments provided will be considered and incorporated into the project as
appropriate.

Project Financing. The Company and Endeavour Financial continue working to
secure project financing for the Brisas Project. Endeavour and Management
have met with a number of debt and equity sources throughout the year to
describe the Brisas Project, explain the major assumptions underlying the
Brisas Project development plan and obtain a preliminary understanding of the
needs and requirements of these potential funding sources. In addition, an
independent mining consultant is conducting an independent review of the
feasibility study in support of project financing.

New Personnel. In August and October 2005 the Company added the positions of
Vice President-Chief Legal Officer and Vice President of Venezuelan
Operations to the management team, respectively. Earlier in January 2005, the
Company added five key managerial personnel to its operations and technical
staff. These staff additions are part of management's continuing effort to
add additional personnel that will be needed to construct and operate the
Brisas Project.

2006 Brisas Work Plan
-----------------------------------------------------------------------------
SLE&C is in the process of completing the Brisas Project scope and definition
documentation. This information focuses on project scope, definition phase
engineering documents and drawing, project schedule and execution plan,
procurement and contracting plan, project construction budget and cash flows,
environmental, health, safety and human resource plans, quality
assurance/quality control programs and project control systems. SLE&C is also
revising the cost estimates contained in the January 2005 Bankable Feasibility
Study, which was previously completed by another independent engineering firm.
Detailed engineering, procurement and construction is expected to commence
following receipt of final environmental permits, formal completion of the
EP and CM contracts and the Company obtaining appropriate financing.

SLE&C's scope of work under the draft EP and CM contracts includes providing
services related to, and management of, the construction of a 70,000 metric
tonne per day hard rock ore copper concentrator and related systems, a
tailings dam, concentrate storage and load-out facilities, the initial pit
dewatering wells and support facilities including mobile equipment shop,
administration building, communications and IT services, laboratory,
maintenance facilities, warehouse and employee man camp. Pursuant to the
draft EP and CM contracts, SLE&C is to also provide all services and supplies
necessary for commissioning and start-up of the project, manage the health,
safety and environmental plans and assure its services and those of the trade
contractors comply with commitments from the I-ESIA, V-ESIA and local permit
requirements.

Concurrent with SLE&C's activities, management, with the assistance of
Endeavour Financial, is focusing on project financing. Endeavour and the
Company in the evaluation and design of the project financing have completed
significant work. Endeavour has assisted the company in identifying and
evaluating several sources of finance for the project. The company has
received indicative term sheets reflecting current funding requirements and
market conditions, and structures involving a mix of commercial finance,
off-take finance, equipment finance and multilateral agency finance and
support. The company has also received initial expressions of interest from
investment banks for the equity portion of the project finance requirements,
which would be contingent upon the project debt being arranged.

In addition, management is moving towards finalizing contracts for the supply
of electricity, gold/copper concentrate smelting and port facilities,
continues to provide MARN and other Venezuelan regulatory entities with
additional information and responds to questions as needed in order to ensure
that the final permit to construct the Brisas gold/copper project is issued as
soon as possible.

Work on-site such as geo-tech drilling, road construction, condemnation
drilling and various planning activities will continue or commence, as the
case may be, along with the addition of various management and staff
positions as the Company receives the appropriate permits and advances toward
commencement of construction. Community assistance and development programs
are expected to continue and be expanded to include programs to develop and
initiate basic skills training for construction in the Km 88 area.

Choco 5 Property
-----------------------------------------------------------------------------
The Company is presently focused on the development of its Brisas Project,
which is the Company's primary mining asset. To a lesser extent, the Company
is conducting exploration of its Choco 5 property. This property is a grass
roots gold exploration target also located in Venezuela.

Location
-----------------------------------------------------------------------------
The Choco 5 property is located in the State of Bolivar, Guayana region. The
property is located 24 kilometers west of the mining community of El Callao
(population approximately 25,000) located in the El Callao mining district
and 200 kilometers south of Puerto Ordaz, the nearest major city.
Hydroelectric power from generating plants on the Caroni River, near Puerto
Ordaz, is connected to El Callao with a 400 kV power line running through the
Choco 4 property. The El Callao mining district is an area with considerable
mining activity by other companies such as Minerven (a wholly owned
subsidiary of CVG), Gold Fields Ltd. on properties adjacent to Choco 5,
Crystallex International Corporation, Hecla Mining Company and the Shandong
Gold Group.

Tenure
-----------------------------------------------------------------------------
The underlying mining title or concession for the area known as the Choco 5
property was issued by MEM (now MIBAM) to CVG on May 11, 1993. The concession
was subsequently leased by CVG to Minerven (a wholly-owned subsidiary of CVG)
pursuant to an agreement dated December 22, 1998 (the "Choco 5 Lease"). On
June 28, 2000, Minerven subleased the Choco 5 Concession to the Company (the
"Choco 5 Sublease"). The mining title, the lease and sub-lease have all been
duly registered at the appropriate Municipal Registrar Office.

The Choco 5 concession is a vein and alluvial concession for the exploration
and subsequent exploitation of primarily gold and copper as well as other
minerals, with a term of 20 years, starting with the publication of its
exploitation certificate, subject to two possible 10 year extensions up to a
maximum term of 40 years. The Company's most significant obligations pursuant
to the Choco 5 Sublease (which incorporates the terms of the Choco 5 Lease and
Choco 5 concession) included the payment of $150,000 upon signing, variable
royalties staged over the life of the project on the value of gross
production of gold and other minerals and on the value of proven reserves
ranging from 0.35 to 2.3 percent, quarterly payments of approximately $5,000
until commercial production and the obligation to keep the property in good
standing during the term of the agreement.

Regional Infrastructure
-----------------------------------------------------------------------------
The Choco 5 property has substantially the same regional infrastructure as
the Brisas Project. For a description of the Choco 5 regional infrastructure.
See "Item 4. -Properties -Brisas Project -Regional Infrastructure."

Geology
-----------------------------------------------------------------------------
The Choco 5 property is within the Proterozoic granite-greenstone terrain of
the Guyana shield. The shield covers eastern Colombia, southeastern
Venezuela, Guyana, Suriname, French Guiana and northeastern Brazil. The
terrain is a thick section of andesitic to dacitic volcanics intruded by
numerous granite stocks and batholiths. Several periods of deformation,
metamorphism, and mineralization can be documented within this terrain.

The rock units on the Choco 5 property consist of basaltic to rhyolitic
volcanic flows and tuffs, felsic sedimentary rocks related to volcanism, and
intrusives of gabbroic composition. Apart from a number of surface outcrops,
depth to unweathered rock is unknown due to lack of exploratory drilling.
Units on the eastern side of the property display foliation in a NE-SW
orientation, while on the western side a large scale folding yields
orientations of NW-SE. A number of large faults provide offsets of unknown
magnitude.

Gold mineralization, as seen exclusively from surficial soil and rock sample
anomalies, follows foliation orientations on both eastern and western sides
of the property. In most cases the presence of gold anomalies is accompanied
by dark red alteration of weathered material, suggesting high sulfide
content. There is also a clear association between mineralization and
presence of quartz veining.

Choco 5 Project Work To Date
-----------------------------------------------------------------------------
Since acquiring the property, the Company has invested approximately $600,000
on the exploration of the Choco 5 property, which has included acquisition
costs, geological mapping, airborne geophysics, stream sediment and soil
geochemistry in selected areas, mapping of access roads and clearing of
property boundaries and geomorphological study. In July 2005, the Company
received the Permit to Affect Natural Resources from MARN for the Choco 5
property and subsequently commenced an exploration-drilling program on the
property with planned expenditures of approximately $750,000 in 2006.

2006 Choco 5 Work Plan
-----------------------------------------------------------------------------
Exploration activities planned for 2006 will include further environmental
permitting, additional geologic mapping and reconnaissance, comprehensive
grid of soil geochemical sampling, geophysical testing of established gold
anomalies in the eastern sector of the property as well as other identified
targets, trenching and selective diamond drilling of gold anomalies, and
construction of access roads to facilitate the above activities. The Company
will base its exploration effort out of its office in the community of El
Callao.

Venezuelan Mining, Environment and Other Matters
-----------------------------------------------------------------------------
Venezuelan mining operations are subject to laws that differ from those of
Canada and the United States, while at the same time are subject to various
mining and environmental rules and regulations that are similar in purpose to
those in Canada and the United States, but often more bureaucratically
complex. The following is a summary of the more significant Venezuelan mining
and environmental laws and other laws and regulations that may affect the
Company's operations on the Brisas and Choco 5 properties, but is not a
comprehensive review of all laws or a complete analysis of all potential
regulatory considerations related to the properties. The receipt of certain
material permits are required before we can conclude or financing efforts and
commence construction and operation at the Brisas Project. See "Item 3. Key
Information - Risk Factors - Our mining assets are concentrated in a foreign
country and, as a result, our operations are subject to inherent local risks."

Formation of the Ministry of Basic Industries and Mines
-----------------------------------------------------------------------------
In January 2005, Presidential Decree # 3,416 (dated January 11, 2005)
reorganized the previous Ministry of Energy and Mines and transferred certain
activities, including mining, to the newly created MIBAM. The Decree has also
assigned to the new Ministry the oversight and authority over the state-owned
CVG, holder of the iron ore, bauxite and aluminum, gold, metallurgical and
other mining and industrial state-owned assets. In conjunction with the
reorganization, Mr. Victor Alvarez (previous President of the Banco de
Comercio Exterior ("Bancoex"), was appointed Minister of MIBAM and President
of CVG.

Government Review of Contracts and Concessions for Compliance
-----------------------------------------------------------------------------
In early 2005, MIBAM announced that Venezuela would review all foreign
investments in non-oil basic industries, including gold projects. MIBAM
indicated that it was seeking transfers of new technology, technical training
and assistance, job growth, greater national content, and creation of local
downstream industries requiring a fundamental change in economic relations
with major multinational companies. In September 2005, Venezuelan President
Hugo Chavez announced that the government's intentions to revoke gold and
diamond concessions and/or contracts and also create a new state mining
company as part of an effort to increase government control over the sector.
President Chavez did not specify which concessions and/or contracts would be
revoked, but later Minister Alvarez said inactive and out of compliance mines
would be handed over to small mining cooperatives supported by the government
through a new government-mining corporation. The date for the completion of
the review and the announcement of the results of this review has been
deferred several times and it is unclear when such announcement will take
place.

We believe, based on communications with the relevant regulatory agencies,
all of our properties are in compliance with applicable regulations,
including our required and voluntary commitments to various social, cultural
and environmental programs in the immediate and surrounding areas near
Brisas. However, due to the uncertainty regarding the creation of the new
state mining company and related changes in the mining law, the Company
cannot provide any assurance that the creation of a state mining company will
not adversely affect our ability to develop and operate its Venezuelan
properties.

1999 Mining Law
-----------------------------------------------------------------------------
A new Venezuelan Mining Law was approved and subsequently published in the
Official Gazette on September 28, 1999 (the "Mining Law"). It establishes
five basic ways to structure mining activities with the primary one being
concessions for exploration and subsequent exploitation.

Scope and Term of Concessions
-----------------------------------------------------------------------------
The Mining Law sets out the basic requirements for a concession application
to MIBAM, including:

Identification of the mineral(s) to be explored for and exploited

Evidence of technical, economic and financial capability

Special advantages to be granted to the Republic of Venezuela in different
areas (e.g., technology, infrastructure, social facilities, training
obligations, etc.)

Before initiating exploitation, the concession holder must provide to the
MARN an environmental bond to guarantee the rehabilitation of the environment
at the completion of exploitation.

The concession holder will have the right to exploit the granted minerals
regardless of whether they occur in the vein (veta) or alluvial and the
concession will extend only to minerals specifically covered by the
concession. A concession holder that finds a deposit of another mineral must
inform MIBAM and make separate application for such mineral, in compliance
with the 1999 Mining Law.

The term of a concession is 20 years (from the date the certificate of
exploitation is granted) with two subsequent 10-year renewals, provided the
concession holder has received such renewal within three months before the
expiration of the term of the concession. Concession exploration periods are
three years with a possible extension for one year. The concession holder
must obtain an exploitation certificate by application to MIBAM. A
feasibility study covering the technical, financial and environmental aspects
of the project must accompany the application. The concession holder has seven
years from the date of the exploitation certificate to commence exploitation.

Concession holders are subject to several royalties or taxes. A nominal
surface tax is to be paid quarterly commencing on the fourth anniversary of
the grant of the concession. In addition, minimum royalties or exploitation
taxes are assessed as follows:

Gold, silver, platinum and associated metals, 3% of their commercial value as
determined in the city of Caracas,
Diamonds and other precious stones, 4% of their commercial value as determined
in the city of Caracas,
In other cases, including copper, 3% of their commercial value at the mine
mouth. MIBAM can reduce this tax from 3% to 1% (and subsequently increase it
back to 3%) if economic conditions warrant it.

Also, the government is entitled to exempt, either totally or partially,
concession holders from taxes on importation of tools and equipment not
produced in the country and needed to develop mining activities.

In addition to the rights and obligations described above, current Venezuelan
mining and environmental regulations require the rational exploitation of all
known mineralization and prohibit the development of permanent structures
over mineralization and development efforts that hinder or negatively impact
the rights of neighbors. These regulations provide, among other things, an
environment in which neighboring title-holders can negotiate set-back
agreements or similar agreements in order to allow the mineralization
contained within an adjoining area to be rationally exploited by all parties.
Under current Venezuelan mining laws and related regulations, the government
(or in this case MIBAM) has significant influence over the extraction of
mineralization widely believed to be contained in this single continuous ore
body comprised of Las Cristinas and Brisas.

The Company's Brisas Project mine plan, which was originally approved by
MIBAM in 2003, and its pending application for the Brisas Project
Administrative Authorization to Affect Natural Resources for Construction of
Infrastructure and Exploitation of Alluvial and Vein Deposits of Gold and
Copper both include the assumption that a set-back agreement related to the
Brisas Project northern boundary will be obtained, and, although the Company
has not yet obtained a definitive set-back agreement or something similar
with the adjacent property title-holder to the north, management has not
received any communication that such agreement (either formal or informal)
will not be obtained in the future. Less than fifteen percent of the
Company's current proven and probable reserves noted in Item 4. Information
on the Company-Properties-Brisas Project- is affected by the area subject to
the setback agreement. Further, previous approval of the Company's mine
operating plan acknowledges that, either the Company, a Venezuelan government
entity and/or its subcontractor will mine the area between the pits with the
extracted ore delivered to the appropriate property owner. Management has
already held discussions with MIBAM where it offered to mine the area and
either process the ore, deliver the equivalent value in cash or metals or
deliver the mineralized material to a stockpile of their or their
contractor's choice. Management can give no assurances that a set-back
agreement will be obtained.

1945 Mining Law Transition Provisions
-----------------------------------------------------------------------------
All concessions acquired by BRISAS under the 1945 Mining Law are governed by
the 1999 Mining Law subject to the following provisions: 1) the right to
conduct exploitation activities will be limited to the minerals and deposits
indicated in the corresponding mining titles and 2) the term of the
concession is the one indicated in the corresponding mining titles, which
commences from publication thereof in the Official Gazette.

Conversion of CVG Work Contracts into Mining Concessions
-----------------------------------------------------------------------------
The Transitory Provisions included in Title XI of the 1999 Mining Law
contemplate the conversion of CVG work contracts into mining concessions. In
September 2003 a Presidential Decree was enacted that eliminated the
authority of CVG to grant new mining contracts for the exploration,
development and exploitation of gold and diamonds in the Guayana region. The
Decree is a continuation of the policy of MIBAM to centralize the management
of mining rights in the Guayana region.

The Company has acquired several properties located near the Brisas property
pursuant to CVG work contracts for infrastructure purposes and, based on the
current mining law, applied to MIBAM in a timely manner for conversion
thereof into mining concessions. MIBAM previously indicated that it would act
on these conversion applications, however recent announcements by the
government that it planned to organize a state-owned mining company and no
longer issue any additional concessions will likely impact the conversion
process embodied in the current law. As an alternative to the conversion
process, the Company has suggested to senior MIBAM officials that instead of
converting the CVG work contracts into concessions some form of land use
permits would be more appropriate as our objective is to use these properties
for infrastructure needs not for mineral exploitation.

Environmental Laws and Regulations
-----------------------------------------------------------------------------
Venezuela's environmental laws and regulations are administered through the
MARN. The MARN proscribes certain mining recovery methods deemed harmful to
the environment and monitors concessionaires' activities to ensure
compliance. Construction and production activities require four different
permits or approvals from MIBAM and MARN: 1) Permit to Occupy the Territory
("Occupation Permit") from MARN, 2) Permit to affect for exploration from
MARN, 3) Approval of the prescribed operating plan (Feasibility study) by
MIBAM all of which the Company has already obtained and 4) Administrative
Authorization to Affect Natural Resources for Construction of Infrastructure
and Exploitation of Alluvial and Vein Deposits of Gold and Copper from the
MARN. Although not consistently applied in the past, regulations state that
MIBAM will apply for and obtain the Occupation Permit on behalf of those
persons or entities applying for concessions before granting the mining
title. Applicants submit an environmental questionnaire to MIBAM, which they
in turn submit to the MARN. The production permitting process is initiated by
filing the proposed terms of reference which, when approved, serves as the
basis for an EIS. The format for the EIS is stipulated in a 1996 law (Decree
#1257) and conforms to an international standard.

Other Taxes
-----------------------------------------------------------------------------
Venezuelan tax law provides for a maximum corporate income tax rate on mining
companies of 34%. This rate applies to net income over approximately
U.S.$30,000 depending on exchange rates. Other Venezuelan taxes that apply or
may eventually apply to the Company's subsidiaries include a 15% value added
tax on goods and services, and a 5% to 20% import duty on mining equipment.
Upon application, Venezuela offers certain exemptions or exonerations from
value added tax and import duties to mining companies. Management is in the
process of applying for such exemptions or exoneration, where available.

Political and Economic Situation
-----------------------------------------------------------------------------
See "-Item 3. Key information -Risk Factors -Our mining assets are
concentrated in a foreign country and, as a result, our operations are
subject to inherent local risks -Political and Economic Environment."

Exchange Control Regulations
-----------------------------------------------------------------------------
See "-Item 3. Key information -Risk Factors -Our mining assets are
concentrated in a foreign country and, as a result, our operations are
subject to inherent local risks -Currency and Exchange Controls."

Gold Sales
-----------------------------------------------------------------------------
The Central Bank of Venezuela (BCV) allows gold mining companies to sell up
to 85% of their production on the international market. The remaining 15% may
be required by the government to be sold domestically at the current market
price, which is paid in Venezuelan currency. Gold sold domestically to BCV is
assessed a maximum tax of 1% of the value of gold as compared to the amount
stated in the mining law. There is a limited local market for the sale of
gold in Venezuela, in the event the BCV declines to purchase our domestic
gold sales. See "-Item 3. Key Information - Risk Factors - The volatility of
the price of gold and copper could have a negative impact upon our current
and future operations."

Investment Protection Treaty with Canada
-----------------------------------------------------------------------------
Pursuant to the Investment Protection Treaty with Canada, which was ratified
by Venezuela on January 20, 1998 (the "Canada-Venezuela Treaty"),
Canadian-based investors such as the Company may be afforded greater
protection in Venezuela than certain other foreign investors and may be
exempt from complying with certain restrictions imposed by the Exchange
Control Regulations. The Treaty provides protection for investments, property
and credit rights, including ownership of real estate, concessions, moveable
assets and security interests thereof, including other items. Investors are
protected against expropriation, nationalization or similar governmental
action, unless such action stems from legal procedures based on public
benefit, affected without discrimination and with a prompt, effective and
adequate compensation. Any dispute will be settled through diplomatic efforts
or international arbitration. The provisions of the Canada-Venezuela Treaty
prevail over the provisions of other Venezuelan laws and regulations,
including those of the Exchange Control Regulations.

Labor
-----------------------------------------------------------------------------
Venezuela, typical of most countries, has extensive labor laws and
regulations including obligations to favor Venezuelan nationals for
employment whenever possible. It is anticipated that, in the initial stages
of the Company's mining projects, approximately 95% of the workforce will be
Venezuelan. In order to maintain or exceed this level, the Company will
implement an extensive training program over the life of the project.
Management plans to draw on Venezuela's large industrial base to staff many
of its positions, but the experience base for large-scale mining and milling
operations in Venezuela is limited. The Company will draw on the Puerto Ordaz
area to fill a significant portion of the required management, engineering and
administration staff with the remaining positions to be filled from the local
(Las Claritas) area.

Item 4A. Unresolved Staff Comments-Not Applicable

Item 5. Operating and Financial Review and Prospects

Overview
-----------------------------------------------------------------------------
We prepare our consolidated financial statements in U.S. Dollars in
accordance with accounting principles generally accepted in Canada. A
reconciliation of the principal measurement differences between accounting
principles generally accepted in Canada and the U.S. is presented in Note 11
of the consolidated financial statements. The information contained below is
as of March 30, 2006, unless otherwise noted, and should be read in
conjunction with the Company's consolidated financial statements, included
herein. The Company entered into one material contract (identified in
Exhibit 3.3) outside the ordinary course of business.

The Company is engaged in the business of exploration and development of
mining projects and is presently focused primarily on its most significant
asset, the Brisas Project, and to a lesser extent the exploration of its
Choco 5 property, both located in Bolivar State, Venezuela. The Company has
no commercial production at this time. As a result, the Company has not
recorded revenue or cash flow from its mining operations and has experienced
losses from operations for each of the last five years, a trend we expect to
continue until the Brisas Project is fully developed and put into production.
The Company has historically financed its operations through the sale of
common stock and other equity securities. Management expects the Brisas
Project to be similarly financed along with project debt financing.

Disclosure controls and procedures are designed to provide reasonable
assurance that material information is gathered and reported to senior
management, including the Chief Executive Officer and Chief Financial
Officer, as appropriate to permit timely decisions regarding public
disclosure. Management, including the Chief Executive Officer and Chief
Financial Officer, has evaluated the effectiveness of the design and
operation of the company's disclosure controls and procedures as of December
31, 2005. Based on this evaluation, the Chief Executive Officer and Chief
Financial Officer have concluded that the company's disclosure controls and
procedures, as defined in Multilateral Instrument 52-109 - Certification of
Disclosure in Issuers' Annual and Interim Filings, are effective to ensure
that information required to be disclosed in reports filed or submitted by
the company under Canadian securities legislation is recorded, processed,
summarized and reported within the time periods specified in those rules.
Subsequent to year-end, the board of directors adopted a formal corporate
disclosure policy. See "-Item 15. Controls and Procedures."

Operations in Venezuela
-----------------------------------------------------------------------------
At December 31, 2005 and as of the date of this report, nearly all of our
non-cash assets, including our primary mining asset, the Brisas Project, were
located in Venezuela. The concentration of the Company's operations and assets
in a foreign country exposes the Company to inherent local risks. See "- Item
3. Key Information -Risk Factors - Our mining assets are concentrated in a
foreign country and, as a result, our operations are subject to inherent
local risks."

We are dependent on the Venezuelan regulatory authorities issuing the Company
certain required operational and land use permits relating to the Brisas
property before we may begin construction on, and operate, the Brisas
property. Obtaining these required permits is also necessary in order for the
Company to adequately identify and obtain suitable financing for the Brisas
Project. A number of these pending items have been outstanding for a number
of months. The resolution of these pending issues may be further delayed or
withheld for any number of reasons outside of the Company's control or in
response to the Company's lawful actions, including policy decisions of the
Venezuelan government or its regulators or agents that have no legal basis,
unexpected changes in laws or regulations, arbitrary decisions by relevant
officials, requests for improper payments, favoritism towards other companies
or persons or any other actions that may result from the changing and
uncertain regulatory environment with respect to mining rights.

The Company's original Brisas Project operating plan was approved by MEM (now
MIBAM) in 2003 and, since that approval, the Company has submitted to MIBAM a
number of modifications in order to minimize impact to the environment and
optimize economics of the Brisas Project, including an increase in milling
capacity up to 70,000 tons per day and relocation of certain surface
facilities and infrastructure. Contained within the approved operating plan
are a number of existing or pending applications for concessions, alfarjetas,
CVG work contracts, land use permits and easements, adjacent to or near the
Brisas concessions. These additional land parcels comprise the bulk of the
land required for the mining and milling facility and related infrastructure
contemplated in the Brisas Bankable Feasibility Study.

In addition to pending land use issues related to project infrastructure
needs, the Company has a number of permits relating to the Brisas Project
pending before MIBAM, MARN and other regulatory or government agencies which
are required to be issued prior to the Company obtaining sufficient financing
and beginning construction on, and operating, the Brisas property. Most
importantly, the Company must obtain the Administrative Authorization to
Affect Natural Resources for Construction of Infrastructure and Exploitation
of Alluvial and Vein Deposits of Gold and Copper from MARN, which is issued
in part based on MIBAM's approval of the project operating plan as well as
the Company's Venezuelan Environmental and Social Impact Assessment (V-ESIA)
which was submitted in August 2005.

Resolving the pending land issues and obtaining the required permits for the
construction and operation of the Brisas Project have been and will continue
to be the primary focus of management in the foreseeable future. Management
believes that the previous restrictions imposed by the Imataca issue and the
continued lack of formal resolution of the pending legal proceeding before
the Courts has affected MIBAM and MARN's willingness to proceed with the
resolution of the matters noted above, thus allowing the Brisas Project to
proceed. See "- Item 3. Key Information -Risk Factors -Our mining assets are
concentrated in a foreign country and as a result our operations are subject
to inherent local risks." More recently, the government's announcement that
it intends to organize a state-owned mining company and no longer issue any
concessions, could cause additional delays beyond our control.

As a result of the regulatory uncertainty, management can give no assurance
that the issuance of items the Company still requires for proceeding with the
Brisas Project will not be further delayed, or any existing rights or
approvals already issued or granted to the Company for its operations in
Venezuela will not be rescinded, or otherwise challenged for reasons that are
outside of the Company's control or in response to the Company's lawful
actions. Failure to obtain any of these required permits could result in a
material adverse affect on the Company's operations and investments in
Venezuela.

In 2003, the Central Bank of Venezuela enacted exchange control regulations
as a measure to protect international reserves. The exchange rate was fixed
at approximately 1,600 Bolivars per one U.S. Dollar until February 2004 when
it was adjusted to 1,920 Bolivars per one U.S. Dollar. In March 2005, the
exchange rate was increased to approximately 2,150 Bolivars per one U.S.
Dollar, which is unchanged as of the date of this report. In February 2005,
the Venezuelan government announced new regulations concerning exports from
Venezuela, which required, effective April 1, 2005, all goods and
services to be invoiced in the currency of the country of destination or in
U.S. Dollars. To date these regulations have not adversely affected our
operations as the Company primarily transfers funds into Venezuela for its
operations. However, this will change in the future to the extent that the
Company begins production and sales from Venezuela and we are unable to
predict future the impact, if any, at this time.


Critical Accounting Policies and Estimates

Critical Accounting Estimates
-----------------------------------------------------------------------------
Critical accounting estimates represent estimates that are highly uncertain
and for which changes in those estimates could materially impact our
financial statements. The significant accounting estimates contained in the
financial statements include: carrying value of the Brisas Project; mineral
reserve and resource estimates and contingencies. Management has discussed
the development and selection of our critical accounting estimates with the
Audit Committee.

Significant Accounting Policies
-----------------------------------------------------------------------------
The Company's accounting policies are described in Note 1 of the consolidated
financial statements. The more significant accounting policies are as follows:

Marketable Securities. Equity securities are carried at the lower of cost and
net realizable value. Corporate debt securities and U.S. treasuries and agency
obligations are carried at amortized cost.

Exploration and Development Costs. Exploration costs incurred in locating
areas of potential mineralization are expensed as incurred. Exploration costs
of properties or working interests with specific areas of potential
mineralization are capitalized at cost pending the determination of a
property's economic viability. Development costs of proven mining properties
not yet producing are capitalized at cost and classified as property, plant
and equipment. Property holding costs are charged to operations during the
period if no significant exploration or development activities are being
conducted on the related properties. Upon commencement of production,
capitalized exploration and development costs will be amortized based on the
estimated proven and probable reserves benefited. Properties determined to be
impaired or that are abandoned are written-down to the estimated fair value.
Carrying values do not necessarily reflect present or future values.

Shares Issued
-----------------------------------------------------------------------------
As of March 30, 2006, the Company had the following Class A common shares,
equity units and share purchase options issued:

Class A common shares                          35,313,727
Equity Units* 		                        1,085,099
---------------------------------------------------------
Total Issued                                   36,398,826
Class A common share purchase warrants          2,680,500
Class A common share purchase options           3,072,825
---------------------------------------------------------
Fully diluted                                  42,152,151

* An equity unit consists of one Class B common share of Gold Reserve Inc.
and one Class B common share of Gold Reserve Corporation. Equity units are
convertible into Class A common shares of Gold Reserve Inc. on a one-to-one
basis and confer no special voting rights.

Results of Operations
-----------------------------------------------------------------------------
The Company has no commercial production at this time and, as a result, the
Company's results of operations are a product of operating expenses,
primarily related to the development of the Brisas Project, net of investment
income.

In early 2005, the Company completed a Bankable Feasibility Study with
respect to the construction and operation of the Brisas Project, our primary
mining asset. The feasibility study contains proven and probable reserves of
approximately 9.2 million ounces of gold and 1.2 billion pounds of copper in
414 million tonnes of ore grading 0.69 grams of gold per tonne and 0.13%
copper, at a revenue cutoff grade of $2.76 per tonne using a gold price of
$350 per ounce and a copper price of $0.90 per pound. The operating plan
contained therein contemplates a large open pit mine utilizing conventional
truck and shovel mining methods, processing 70,000 tonnes of ore per day,
yielding an average annual production of 486,000 ounces of gold and 63
million pounds of copper over an estimated mine life of approximately 16
years.

Construction of the planned facility, the start of which is dependent upon
receiving the required permits and obtaining sufficient financing, is
expected to take 24-30 months, with commissioning and achievement of
commercial production shortly thereafter. Over 2,000 personnel will be needed
for the construction of the project and operating employment will peak at
over 900 personnel.

The Company and its Venezuelan affiliate selected SNC-Lavalin Engineers &
Constructors, Inc. (SLE&C) of Toronto and its international affiliate to
undertake Engineering and Procurement (EP) and Construction Management
(CM) services for the Brisas gold/copper project. SLE&C initiated a limited
scope of work on the Brisas Project in July 2005 and continues to work under
a Letter of intent and Limited Authorization to proceed. The parties have
completed negotiations on the definitive EP and CM contracts. Management
expects the parties will execute the EP and CM contracts and notices to
proceed will be issued pursuant to the contracts upon receiving the
necessary permits to proceed with the construction of the Brisas Project
from the Venezuelan government. The cost of SLE&C's EP and CM services is
expected to total between $40 and $50 million over the construction period.

SLE&C commenced the first phase of the EPCM scope of work in 2005, with the
key objective being to generate project scope and definition information.
This information focuses on project scope, definition phase engineering
documents and drawing, project schedule and execution plans, procurement and
contracting plan, project budget and cash flows, environmental, health,
safety and human resource plans, quality assurance/quality control programs
and project control systems. SLE&C is also focusing on revising the capital
cost estimates contained in the January 2005 Bankable Feasibility Study which
was previously completed by another independent engineering firm, detailed
design and engineering, procurement and contract management and construction
management and execution. Procurement and construction activities are
expected to commence following receipt of final permits, formal signing of
the EP and CM contracts and the Company obtaining sufficient financing.

References in this report to total cash costs per ounce (a non-GAAP measure
of performance) we believe enables certain investors to better understand the
Brisas Project's potential profitability and ability to generate operating
cash flow. Non-GAAP measures do not have any standardized meaning prescribed
by U.S. GAAP, and therefore they may not be comparable to similar measures
prescribed by other companies. The data are intended to provide additional
information and should not be considered in isolation or as a substitute for
measures of performance prepared in accordance with GAAP, such as the nearest
comparable GAAP measure-total cost per ounce. Such measures are not
necessarily indicative of operating profit or cash flow from operations as
determined under GAAP.

2005 Compared To 2004. The consolidated net loss for the year ended December
31, 2005 was $9,027,282 or $0.26 per share, an increase of approximately
$3,545,000 from the prior year. Other income for 2005 amounted to $1,402,868,
which is an increase of approximately $503,000 from the previous year. Other
income increased as a result of increased gains on sales of marketable
securities and interest on invested cash. Operating expenses for the year
amounted to $10,428,679, which is an increase from the prior year of
approximately $4,046,000.

The increase in operating expenses is directly related to the addition of
technical staff, engagement of consultants and overall increases in costs
related to corporate management activities, investor relations and financing
efforts associated with the development and construction of the Brisas
Project. The non-cash impact of accounting for stock-based compensation also
contributed to the increase.

2004 Compared To 2003. The consolidated net loss for the year ended December
31, 2004 was $5,482,629 or $0.19 per share, an increase of approximately
$1,775,000 from the prior year. Other income for 2004 amounted to $899,881,
which is an increase of approximately $130,000 from the previous year. Other
income increased as a result of increased gains on sales of marketable
securities. Operating expenses for the year amounted to $6,382,510, which is
an increase from the prior year of approximately $1,910,000. This change is
due to the non-cash impact of implementing new rules related to accounting
for stock-based compensation, overall increases in expenditures as a result
of the increased corporate management activity associated with the
development of the Brisas Project and financing activities, coupled with
compensation adjustments for existing officers, directors and employees,
costs associated with new hires and increased costs associated with investor
relations.

Selected Quarterly Financial Data


-----------------------------------------------------------------------------
                                                                                                
Quarter ended        12/31/05        9/30/05      6/30/05        3/31/05       12/31/04      9/30/04      6/30/04       3/31/04
Other Income           429,656        395,410       392,064        185,738      372,064       193,340      205,652      128,825
Net loss before tax (3,343,377)    (1,755,640)   (1,803,271)    (2,123,523)  (1,970,437)   (1,420,077)    (880,107)  (1,212,008)
Per share                (0.10)         (0.05)        (0.05)         (0.06)       (0.07)        (0.05)       (0.03)       (0.04)
Fully diluted            (0.10)         (0.05)        (0.05)         (0.06)       (0.07)        (0.05)       (0.03)       (0.04)
Net loss            (3,344,848)    (1,755,640)   (1,803,271)    (2,123,523)  (1,970,437)   (1,420,077)    (880,107)  (1,212,008)
Per share                (0.10)         (0.05)        (0.05)         (0.06)       (0.07)        (0.05)       (0.03)       (0.04)
Fully diluted            (0.10)         (0.05)        (0.05)         (0.06)       (0.07)        (0.05)       (0.03)       (0.04)



The net losses during the last eight quarters are indicative of the Company's
efforts to complete a Bankable Feasibility Study, add additional management,
engage technical and professional consultants, raise equity and debt
financing and position the Company to begin the construction of the Brisas
Project. The most recent two quarters represent a further increase in
activities required to begin construction.

Liquidity and Capital Resources
-----------------------------------------------------------------------------
Investing. Since acquiring the Brisas Project in 1992, the Company has
expended approximately $100 million on the property (includes costs
capitalized and costs expensed in the period incurred). These costs include
property and mineral rights, capitalized exploration costs, equipment
expenditures, on-going property management and litigation settlement costs
that were expensed in 1994. Amounts recorded as property, plant and equipment
(capitalized exploration costs) include costs associated with the Brisas
Project, including personnel and related administrative expenditures incurred
in Venezuela, drilling, preliminary and bankable feasibility and related
costs, capitalized interest expense and support costs related to the Brisas
Project.

With the completion of the Bankable Feasibility in early 2005, our efforts
continue to be focused primarily on final project permitting and obtaining
the necessary land for infrastructure purposes, raising the required capital
to construct the Brisas Project, completing detailed engineering related to
the construction of the Brisas Project, as well as, concluding smelter and
power contracts. Initial capital expenditures required to put the Brisas
Project into production as presently proposed in the Brisas Bankable
Feasibility Study, are estimated to be approximately $552 million excluding
value added taxes and import duties which could total as much as $50 million
over a 24-30 month construction period. Tax exonerations or tax payment
holidays are currently available for various taxes including value added
taxes ("VAT") and import duty tax on the initial capital costs. Management is
in the process of applying for all available exonerations and expects to
obtain such exonerations prior to the construction of the project. As a
result, the cost of such taxes and import duties are not included in the
initial costs of the project. However, there can be no assurances that such
exonerations will be obtained the result of which would likely be to increase
capital and operating costs. As a result of the passage of time and changes in
the cost of various mine equipment and components of the milling facility,
management is currently evaluating the reliability of the costs contained in
the Bankable Feasibility study. Although management expects the capital cost to
increases, the results of this review were not available at the date of this
report and as result the magnitude of the increase is not known. Commencement
of the construction of the Brisas Project is primarily dependant upon
obtaining the required permits, obtaining the necessary land for
infrastructure purposes and obtaining sufficient financing.

Investing activities in 2005 primarily consisted of capitalized costs related
to the continued development of the Brisas Project, which totaled
approximately $5.6 million and the purchase and sale of marketable
securities, which on a net basis, resulted in sales of approximately $3.1
million. Investing activities in 2004 primarily consisted of Brisas Project
capitalized costs of approximately $6.5 million and the purchase and sale of
marketable securities, which on a net basis, resulted in sales of
approximately $3.2 million.

Financing.
-----------------------------------------------------------------------------
In October 2004, the company engaged Endeavour Financial to act as the
financial advisor to the Company. Significant work has been completed by
Endeavour and the Company in the evaluation and design of the project
financing. During 2005, Endeavour and the Company developed a financial plan
for the Brisas Project. This plan included a mix of project debt and equity
financing. Endeavour and the Company have met with several international
financial institutions throughout 2005 and 2006, regarding the funding of the
development and construction costs for the Brisas Project. Activities have
included technical and legal due diligence, site visits, and input into areas
such as the sale, marketing and smelting of the planned gold and gold-copper
concentrate, structure of the EPCM arrangements with SLE&C, preparation and
review of a data room to support the due diligence process of the banks, and
the independent due diligence by lenders' representatives, environmental
requirements to international standards and the preparation of the
International Environmental Impact Statement. Financial models and
information memoranda have also been prepared which form the basis of the
financial assessment of the project. Endeavour has assisted the company in
identifying and evaluating several sources of finance for the project. From
these sources the Company expects to appoint a senior group of lenders to
provide the project financing. The company has received indicative term
sheets reflecting current funding requirements and market conditions, and
structures involving a mix of commercial finance, off-take finance, equipment
finance and multilateral agency finance and support. The company has also
received initial expressions of interest from investment banks for the equity
portion of the project finance requirements, which would be contingent upon
the project debt being arranged.

As of March 30, 2006, the Company held approximately $22 million in cash and
investments. We are seeking to raise significant additional funding in order
to fund the construction of the Brisas Project. In the near-term, management
believes that cash and investment balances are sufficient to enable the
Company to fund its pre-construction activities through 2007 (excluding
substantial Brisas Project construction activities). These activities are
expected to consist of detailed project engineering, development and
implementation of project related contracts such as engineering, procurement
and construction management, port facilities, concentrate sales contracts,
electricity and fuel supply contracts, and a number of other agreements
related to the construction and operation of the Brisas Project, completion
of the I-ESIA, obtaining the required permits and identifying suitable
funding sources. The timing and extent of additional funding or project
financing, if any, depends on a number of important factors, including, but
not limited to the actual timetable of our 2006-2007 work plan, our
assessment of the financial markets, the political and economic conditions in
Venezuela, our share price and the price of gold and copper. Management
provides no assurances that it will be able to obtain the substantial
additional financing that will be needed to construct the Brisas Project, and
the Company currently has no definitive proposals or firm commitments to
proceed with such financing. Failure to raise the required funds will mean
the Company is unable to construct and operate the Brisas Project, which
would have a material adverse effect on the Company.

In November 2004 the Company completed an offering of 5,361,000 Units of the
Company representing aggregate gross proceeds to the Company of Cdn
$30,021,600 or approximately $25,000,000. The Units were sold at a price of
Cdn $5.60 or approximately $4.65 per Unit. Each Unit is comprised of one
Class A common share and one-half of a Class A common share purchase warrant
of Gold Reserve. Each whole Class A common share purchase warrant entitles
the holder thereof to acquire one Class A common share of Gold Reserve at a
price of Cdn $6.50 per Class A common share for a period of 24 months
following the closing date of the Offering. The net proceeds from the offering
are being used for the development of the Brisas property.

As of March 28, 2006 the Company had the following unexercised warrants
outstanding:

Date      Number of   Number of        Exercise     Estimated       Expiration
Issued    Warrants    shares issuable  Price(Cdn$)  Proceeds(Cdn$)  Date
------------------------------------------------------------------------------
11/04/04  2,680,500   2,680,500        $6.50        $17,423,250     11/05/06

Operations. Cash flow used by operations for 2005 was approximately $7.7
million, which was an increase over 2004 of approximately $3.8 million. The
increase from 2004 was primarily due to overall increases in expenditures as
a result of the increased activity associated with the development of the
Brisas Project and financing activities.

Item 6. Directors, Senior Management and Employees

The following sets forth certain information regarding the Company's Board of
Directors and the individual who served as the Chief Executive Officer of the
Company during 2005 and four other individuals who served as the most highly
compensated executive officers of the Company during 2005 (collectively, the
"Named Executive Officers"). The time periods referred to below reflect the
cumulative period of time the individual has been a Director or officer of
the Company or Gold Reserve Corporation, the predecessor issuer. Directors
serve until the next annual meeting.

Rockne J. Timm
Age: 60
Chief Executive Officer, Director Chief Executive Officer of the Company.
Director and President of MGC Ventures, Inc. and Great Basin Energies, Inc.
Resides: Spokane, Washington.
Director Since March 1984

A. Douglas Belanger
Age: 52
President, Director President of the Company.
Director and Executive Vice President of MGC Ventures, Inc. and
Great Basin Energies, Inc.
Resides: Spokane, Washington.
Director Since August 1988

James P. Geyer
Age: 53
Director Senior Vice President of the Company.
Resides: Spokane, Washington.
Director Since June 1997

James H. Coleman
Age: 55
Non-Executive Chairman, Director Senior Partner of Macleod Dixon LLP
of Calgary, Alberta and Director of various
public companies.
Resides: Calgary, Alberta.
Director Since February 1994

Patrick D. McChesney
Age 56
Director Controller of Foothils Auto Group
He is also a Director of MGC Ventures, Inc.
and Great Basin Energies, Inc.
Resides: Spokane, Washington.
Director Since August 1988

Chris D. Mikkelsen
Age: 54
Director Principal in McDirmid, Mikkelsen & Secrest, P.S.
(a certified public accounting firm).
Director of MGC Ventures, Inc. and Great Basin Energies, Inc.
Resides:  Spokane, Washington.
Director Since June 1997

Jean Charles Potvin
Age: 52
Director President and Chief Executive Officer
of Tiomin Resources Inc.
Resides: Toronto, Ontario
Director Since November 1993

Douglas E. Stewart-Vice President
Age: 54
Vice President-Project Development of the Company
Resides: Lone Tree, Colorado
Officer Since April 1997

Robert A. McGuinness
Age: 50
Vice President-Finance and Chief  Financial Officer of the Company.
Vice President-Finance and Chief  Financial Officer of MGC Ventures, Inc.
and Great Basin Energies, Inc.
Resides: Spokane, Washington.
Officer Since March 1993

There are no family relationships or arrangements or understandings pursuant
to which any person was appointed as a Director or member of senior
management.

Compensation of Directors and Officers
Executive Compensation

The following table sets forth the compensation paid by the Company to the
Named Executive Officers who served during the year ended December 31, 2005.

                                                    (1)Securities
                                                         Under
U.S. Dollars                                            Options/    (2) All
                                                          SARs       Other
Name and                                                Granted  Compensation
Principal Position        Year    Salary $     Bonus       (#)          ($)
-----------------------------------------------------------------------------
Rockne J. Timm
Chief Executive Officer   2005   $250,000    $80,000     531,867     $42,000
                          2004    217,917     95,000     649,950      39,000
                          2003    195,000                696,700      42,000

A. Douglas Belanger
President                 2005    225,000     62,500     431,303      42,000
                          2004    201,250     65,000     568,955      41,000
                          2003    175,000                573,955      39,040


James P. Geyer
Senior Vice President     2005    200,000     55,000     224,473      42,000
                          2004    185,417     57,500     289,209      41,000
                          2003    175,000                284,209      39,040


Robert A. McGuinness
Vice President-Finance and
Chief Financial Officer   2005    140.000     47,500     228,915      37,500
                          2004    128,333     50,000     271,122      35,667
                          2003    120,000                301,122      26,770


Douglas E. Stewart
Vice President -
Project Development       2005    126,000     40,000     123,000      33,200
                          2004    114,333     40,000      83,000      30,867
                          2003    101,000                 83,000      22,531


Officers as a group (7)
                          2005  1,086,500    338,414   1,715,769     218,900
                          2004    919,750    335,500   1,977,236     207,634
                          2003    831,000              2,053,986     183,654

Consists of the number of Class A common shares issuable to Named Executive
Officers pursuant to options held at the end of each reported period.
Consists of the dollar value of Class A Shares purchased under the Company's
KSOP Plan and allocated to the account of each Named Executive Officer during
2005, 2004, and 2003 respectively as follows: Mr. Timm: 14,483 shares, 18,785
shares, and 39,463 shares; Mr. McGuinness: 12,931 shares, 17,180 shares, and
25,153 shares; Mr. Belanger: 14,483 shares, 19,749 shares, and 36,681 shares;
Mr. Geyer: 14,483 shares, 19,749 shares, and 36,681 shares; and Mr. Stewart:
11,448 shares, 14,868 shares, and 21,170 shares. See- "KSOP Plan" below.

Options granted for shares of the Company during the year ended December 31,
2005

The following stock options to purchase Class A common shares were granted
during 2005 to Named Executive Officers.

                               Number
                       Date      of
Name                    of    options   Exercise   Expiration
                      grant   granted    Price       Date
-------------------------------------------------------------
Douglas E. Stewart  03/31/05  40,000    $ 3.69     03/31/10


Aggregated option exercises during the year ended and option values as of
December 31, 2005

The following table sets forth option exercises and the financial year-end
values for options outstanding to the Named Executive Officers and Directors
of the Company.

                                               Number of     Dollar
                   Number of                 unexercised    value of unexercised
                   securities                 options at    in-the-money options
                   acquired     Aggregate   fiscal year-end   at fiscal year-end
                       on       Value         exercisable/    exercisable/
Name               exercise     realized(1)    unexercisable  unexercisable (2)
--------------------------------------------------------------------------------
Rockne J. Timm        118,083       318,269        531,867/-   $ 1,075,976/-
A. Douglas Belanger   137,652       361,600        431,303/-       886,880/-
James P. Geyer         64,736       174,483        224,473/-       440,385/-
Robert A. McGuinness   42,407       113,761        228,915/-       436,287/-
Douglas E. Stewart         -             -      109,666/13,334     102,628/-
James H. Coleman       67,222       181,184        144,444/        153,471/-
Patrick D. McChesney   36,711        99,511         90,674/-       200,389/-
Chris D. Mikkelsen     20,759        71,826         91,519/-       160,257/-
Jean Charles Potvin    51,871       139,809         48,741/-       107,718/-


The "Aggregate Value Realized," if applicable, would have been calculated by
determining the difference between the market value of the securities
acquired on the date of exercise based on the U.S. Dollar equivalent of the
closing price on the TSX on the date of exercise, less the exercise price of
the options exercised.

The "Value of Unexercised In-The-Money Options at FY-End" was calculated by
determining the difference between the market value of the securities
underlying the option at the end of the financial year and the exercise price
of such options. At December 31, 2005, the closing price of the shares of
common stock on the American Stock Exchange was $2.93. Options range in price
of between $0.72 and $4.14 and generally expire between 2005 and 2010.

Director Compensation

Consistent with the Board's intent to have both Directors and management hold
shares of the Company, non-employee Directors, Messrs. Coleman, McChesney,
Mikkelsen and Potvin, were each granted 10,000 Class A Shares in February
2005 for services during the fiscal year ended December 31, 2004; each were
also granted 10,000 Class A Shares in October 2005 for services during the
fiscal year ended December 31, 2005. The value of each share was US $3.92524
and US $2.14823, respectively. Mr. Coleman received cash compensation of
$89,970 related to his position as Chairman and director of the Company,
during the fiscal year ended December 31, 2005. Directors of the Company
received no additional compensation for serving on Board committees or for
attendance at the Board or committee meetings.

Equity Incentive Plan

The Company presently has one active stock option plan, the Equity Incentive
Plan (the "Plan"). The Plan provides for the issuance of up to 10% of the
outstanding shares of the Company a rolling basis, through the grant of
"incentive stock options" and "non-statutory options" to purchase Class A
common shares, stock appreciation rights ("SARs"), and  restricted stock. As
of March 28, 2006, options for the purchase of 3,072,825 Class A common
shares remained outstanding and 567,057 Class A common shares remained
available for grant under the Plan. To date, 645,350 shares of restricted
stock have been granted from the Plan. No SARs have been granted to date.
Employees and consultants of the Company and its subsidiaries are eligible to
receive grants under the Plan. The Board or a committee of the Board is
responsible for the administration of the Plan.

Options, stock appreciation rights ("SARs") and restricted stock granted
under the Plan are generally granted at the Fair Market Value of the Class A
common shares defined as follows:  "-subject to any applicable Exchange
rules, the volume weighted average trading price or the United States Dollar
equivalent of the Stock calculated by dividing the total value by the total
volume of Stock on the Exchange where the majority of the trading volume and
value of the Stock occurs, for the five trading days immediately preceding
the relevant date; -"

A SAR entitles the holder of the related option, upon exercise of the SAR, to
surrender such option or any portion thereof to the extent unexercised, and to
receive payment of an amount determined by multiplying (i) the excess of the
Fair Market Value of the Class A common shares immediately preceding the date
of exercise of such SAR over the option price under the related option, by
(ii) the number of shares as to which such SAR has been exercised.
Notwithstanding the foregoing, the agreement evidencing the SAR may limit in
any manner the amount payable with respect to any SAR.

The maximum number of shares of Class A common shares issuable to insiders:
a) at any time, under all security based compensation arrangements, cannot
exceed 10% of the outstanding shares of Stock of the Company on the date of
grant; and b) within any one year period, under all security based
compensation arrangements, cannot exceed 10% of the outstanding common shares
on the date of grant.

Each option grant is limited to a maximum duration of 10 years from the time
it is granted, except that an incentive stock option granted to a ten percent
shareholder shall have a maximum duration of five years from the time it is
granted and the vesting period is discretionary.

All Options shall be exercisable, during the Optionee's lifetime, only by the
Optionee or by the guardian or legal representative of the Optionee or its
alternative payee pursuant to such qualified domestic relations order, it
being understood that the terms "holder" and "optionee" include the guardian
and legal representative of the Optionee named in the Option Agreement and
any person to whom an Option is transferred by will or the laws of descent
and distribution, or pursuant to a qualified domestic relations order or a
gift permitted by the Plan. Notwithstanding the above, incentive stock
options shall only be transferable by will or by the laws of descent and
distribution.

The Plan provides the following for termination of employment with regard to
the options outstanding at the date of termination: Retirement -Any then
outstanding options under the Plan may be exercised at any time prior to the
earlier of the expiration date of the outstanding options or 12 months after
the date of retirement; For Cause -Any then outstanding options become null
and void; Involuntary Termination of Employment -Any then outstanding options
that are vested at the time of termination may be exercised at any time prior
to the earlier of the expiration date of the vested outstanding options or 30
days after the date of termination; Voluntary Termination of Employment -Any
then outstanding options that are vested at the time of termination may be
exercised at any time prior to the earlier of the expiration date of the
vested outstanding options or 90 days after the date of termination.

The Board may, at any time and from time to time, modify, amend, suspend or
terminate the Plan in any respect. Amendments to the Plan shall be subject to
stockholder approval to the extent required to comply with any exemption to
the short swing-profit provisions of Section 16 (b) of the U.S. Exchange Act
of 1934, as amended pursuant to rules and regulations promulgated there
under, with the exclusion for performance-based compensation under Code
Section 162 (m), or with the rules and regulations of any securities exchange
on which the Shares are listed.

Options to Purchase Securities From the Registrant or Subsidiaries

Gold Reserve Inc.

The following table sets forth the number of Class A common shares of Gold
Reserve Inc. subject to options, which were held by the Named Executives
Officers and Directors of the Company at December 31, 2005. As a group,
officers and Directors of the Company (10 persons) held 2,091,147 options to
purchase Class A common shares of the Company.


                  No. of Class A
                   common shares       Exercise    Expiry
Name             subject to option      Price       Date
------------------------------------------------------------

Rockne J. Timm        486,867          $ 0.72  December 2006
                       45,000            3.39      July 2009

A. Douglas Belanger   401,303          $ 0.72  December 2006
                       30,000            3.39      July 2009

James P. Geyer        199,473          $ 0.72  December 2006
                       25,000            3.39      July 2009

James H. Coleman       69,444          $ 0.72  December 2006
                       75,000            4.00   January 2009

Patrick D. McChesney   90,674          $ 0.72  December 2006

Chris D. Mikkelsen     41,519          $ 0.72  December 2006
                       50,000            1.56       May 2008

Jean Charles Potvin    48,741          $ 0.72  December 2006

Robert A. McGuinness  197,415          $ 0.72  December 2006
                       11,500            4.14   October 2008
                       20,000            3.39      July 2009

Douglas E. Stewart     37,367          $ 0.72  December 2006
                       14,633            1.56       May 2008
                       11,000            4.14   October 2008
                       20,000            3.39      July 2009
                       40,000            3.69     March 2010


1 Mr. McChesney also held 90,000 options to purchase common shares of Great
Basin Energies, Inc. a subsidiaries of the Company. These options are
exercisable at $0.04 per share and expire 2008.

Previous Re-pricing of Certain Options Granted to Directors and Officers of
the Company

The following table sets forth certain re-pricing information with respect to
options held by Named Executive Officers and Directors of the Company. During
the last ten years the shareholders approved two re-pricings of certain
options held by the Named Executive Officers. In June 2000, options with
exercise prices of $3.75 were re-priced at $1.00, a 25% premium to the market
price of the Company's shares at the date of approval. In June 2001, options
with exercise prices in excess of $0.72 were re-priced at $0.72, a 50%
premium to the market price of the Company's shares at the date of approval
and fifty-percent of all vested options, or immediately exercisable options,
were unvested for the following twelve month time period. All repriced
options have five-year lives from the date of approval by shareholders. The
following table details the re-pricing information:



                                                                   Length of
                                                      Exercise     Original
                                       Securities      Price        Option
                                         Under       at Time of       Term
                          Date        Options/SARs  Re-pricing    Remaining
                        Approved        Repriced         Or        at Date of
                            by             or        Amendement   Re-pricing or
Name                   shareholders     Amended     ($/Security)   Amendment
-------------------------------------------------------------------------------

Rockne J. Timm          June 2000      209,833         $3.75       2.8 years
                        June 2001       27,200          1.13       1.7 years
                        June 2001       40,000          1.50       3.1 years
                        June 2001       50,000          2.59       2.2 years
                        June 2001      125,000          3.25       2.3 years
                        June 2001      244,667          3.75       2.2 years

A. Douglas Belanger     June 2000      172,652          3.75       2.8 years
                        June 2001       26,000          1.13       1.7 years
                        June 2001       30,000          1.50       3.1 years
                        June 2001       65,000          2.59       2.2 years
                        June 2001       50,000          3.25       2.3 years
                        June 2001      230,303          3.75       2.2 years

James P. Geyer          June 2000       84,736          3.75       2.8 years
                        June 2001       30,000          1.50       3.1 years
                        June 2001       64,209          2.59       2.2 years
                        June 2001        5,000          2.88       7.0 years
                        June 2001      100,264          3.75       2.2 years

Robert A. McGuinness    June 2000       92,207          3.75       2.8 years
                        June 2001       30,000          1.50       3.1 years
                        June 2001       68,417          2.59       2.2 years
                        June 2001      115,998          3.75       2.2 years

James H. Coleman        June 2000       67,222          3.75       2.8 years
                        June 2001       15,000          1.28       3.1 years
                        June 2001      134,444          3.75       2.2 years

Patrick D. McChesney    June 2000       33,411          3.75       2.8 years
                        June 2001       27,152          1.13       1.7 years
                        June 2001       15,000          1.28       3.1 years
                        June 2001       17,278          2.59       2.2 years
                        June 2001       49,544          3.75       2.2 years

Chris D. Mikkelsen      June 2000       30,579          3.75       2.8 years
                        June 2001       15,000          1.28       3.1 years
                        June 2001       17,278          2.59       2.2 years
                        June 2001       44,241          3.75       2.2 years

Jean Charles Potvin     June 2000       51,871          3.75       2.8 years
                        June 2001       15,000          1.28       3.1 years
                        June 2001       17,278          2.59       2.2 years
                        June 2001       89,463          3.75       2.2 years

Douglas E. Stewart      June 2001       79,367          1.50       3.1 years

KSOP Plan

The Company also maintains a retirement plan, the KSOP Plan for the benefit
of eligible employees of the Company. The KSOP Plan consists of two
components- a salary reduction component (401(k)) and stock ownership
component (ESOP) and is available to all eligible employees of the Company.
Eligible employees are those who have been employed for a period in excess of
one year and who have worked at least 1,000 hours during the year in which any
allocation is to be made. Employee contributions to the 401(k) component of
the KSOP Plan are limited in each year to the total amount of salary
reduction the employee elects to defer during the year, which is limited in
2006 to $15,000 ($20,000 limit for participants who are 50 or more years of
age, or who turn 50 during 2006).

Employer contributions, stated as a percentage of eligible compensation, are
determined each year by the Board of Directors and allocations are made in
the form of Class A Shares. The number of Class A Shares released for
allocation is determined by multiplying the total eligible compensation by
the contribution percentage approved by the Board of Directors and dividing
that number by the average price of the Class A Shares remaining in the KSOP
Plan for distribution. For KSOP Plan year 2006 the Company has adopted a
"Safe Harbor" contribution of 3% of eligible compensation. As of December 31,
2005, 28,742 Class A Shares remained in the KSOP Plan to be allocated to KSOP
Plan participants, representing approximately 0.08% of the issued and
outstanding Common Shares of the Company at that time.

Total employer and employee annual contributions to an employee participating
in both the 401(k) and ESOP components of the KSOP Plan are limited (in 2006)
to a maximum of $44,000 ($49,000 limit for participants who are 50 or more
years of age or who turn 50 during 2006). The annual dollar limit is an
aggregate limit, which applies to all contributions made under this plan or
any other cash or deferral arrangements. Distributions from the KSOP Plan are
not permitted before the participating employee reaches the age of 59, except
in the case of death, disability, and termination of employment by the
Company or financial hardship. The employee stock ownership component of the
KSOP Plan is qualified under Sections 421 and 423 of the U.S. Internal
Revenue Code of 1986, as amended.

The Company allocated contributions to eligible KSOP Plan participants for
plan years 2005, 2004, and 2003 of $280,074 (96,578 Class A Shares),
$254,779 (122,722 Class A Shares), and $216,432 (203,357 Class A Shares),
respectively. The aggregate number of Class A Shares for the three-year
period is 422,657, which represents 1.6% of the current issued and
outstanding Common Shares of the Company. See footnote 2 of "-Executive
Compensation."

Termination of Employment, Change in Responsibilities and Employment Contracts

At this time, there are no written contracts of employment between the
Company and the Named Executive Officers. The Company has entered into
agreements with each of the Named Executive Officers in order to induce them
to remain employed by the Company in the event of a change of control (as
defined in the agreements). The Board decided to implement such Change of
Control Agreements given, among other things, the Named Executive Officers'
familiarity and long-standing involvement with the Brisas Project and the
importance of each of their continued involvement in the on-going development
of the Brisas Project.

In the event of a change in control, the Company has agreed with each of such
Named Executive Officers to, among other things, continue their employment
and, if their employment is terminated within seven months following the
change in control (other than for cause, disability, retirement or death) or
if the Named Executive Officer terminates his employment for good reason (as
defined in the agreements) at any time within seven months following the
change of control, such individual will be entitled to receive (lump-sum),
among other things, two or three times his annual salary and KSOP
contributions, an amount equal to all bonuses received during the twelve
months prior to the change of control, maintenance of health and insurance
benefits for a period of 36 months and the buy-out of the cash value of any
unexercised stock options (if so elected by the employee).

Board Practices

Based upon the recommendations of a report dated December 1994 (the "Report")
by the TSX Committee on Corporate Governance in Canada, the TSX adopted a
by-law requiring corporations listed on the TSX to disclose their approach to
corporate governance. The Board believes that the Company's general approach,
as summarized below, is substantially consistent with objectives reflected in
the Report.

Mandate and Duties of the Board. The Board has ultimate responsibility for
supervising the conduct of the Company's affairs and the management of its
business. The principal objective of the Board is to protect and enhance
shareholder value over the long term. Although the Board has delegated to
management responsibility for the day-to-day operations of the Company, the
Board has ultimate responsibility for the stewardship of the Company.

The Board's duties include overseeing strategic planning, reviewing and
assessing principal risks to the Company's business and approving risk
management strategies, supervising and evaluating management, authorizing
significant expenditures, ensuring timely and effective communication with
shareholders, and overseeing the Company's internal controls and information
systems.

The Board's duties also include planning and monitoring activities of senior
management. In considering and making appointments of senior management, the
Board considers it appropriate, where relevant, to address succession and
planning issues. In appointing senior management, the Board considers as a
necessary requirement of such appointments that such personnel be qualified
to carry out the duties and responsibilities relating to the appointed
positions and thus, apart from monitoring, assessing and providing feedback
to senior management, the Board does not consider it necessary to engage in
specifically training senior management.

The Board met thirteen times during 2005 at which attendance, in person or by
telephone, averaged 98%. Various matters were considered and approved by
written resolution during the year.

Board Composition. The Report's Guidelines recommend that a majority of the
Directors of the Company be "unrelated" Directors. An "unrelated" Director is
a Director who is independent of management and is free from any interest and
any business or other relationship, which could, or could reasonably be
perceived, to materially interfere with a Director's ability to act with a
view to the best interests of the corporation, other than the interests and
relationships arising from shareholding. The Company's Board presently
consists of seven members. The Board considers that four members are
"unrelated" Directors as defined in the Report's Guidelines. The remaining
three members are currently executive officers of the Company. For the
purposes of this discussion, a "related" Director is a Director who is not an
unrelated Director. All Directors presently serve until the next annual
meeting of the Company's shareholders or until their successors are elected
and have qualified.

The Board currently believes that seven Directors and the current composition
of the Board represent an appropriate board size for the Company, having
regard to the size and activities of the Company. The current composition of
the Board provides, in the Board's view, an appropriate representation of
senior management and outside Directors.

Board Compensation. The Board reviews from time to time the compensation paid
to the Directors in order to ensure that Directors are being adequately
compensated for the duties performed and the obligations assumed by the
Directors.

Board Committees. The Board has delegated some of its authority to three
committees of the Board. These are the Executive Committee, the Compensation
Committee and the Audit Committee. The Board does not maintain a nominating
committee or an orientation and education program for new Directors as
suggested by the Report or a committee to deal with corporate governance
matters generally. Decisions regarding recruitment of new Directors,
assessment of current Directors, succession planning and other corporate
governance matters are made by the full Board. The Board is of the view that,
given the size of the Company and the fact that a majority of the Board
members are independent of management, these matters can be appropriately
dealt with by the full Board. During 2005, all of the Directors attended, in
person or by phone, 98% of the meetings of the Board and Committees on which
they served.

The Executive Committee, which is comprised of Rockne J. Timm (Chair), A.
Douglas Belanger and James H. Coleman, meets in person or by phone on a
regular basis. The Executive Committee supervises the business affairs of the
Company between Board meetings, except for those matters assigned to the
Compensation and Audit Committees. The Executive Committee is composed of one
unrelated Director (Mr. Coleman) and two related Directors (Messrs. Timm and
Belanger).

The Compensation Committee, which met twelve times during 2005, in person and
by phone, consists of Chris D. Mikkelsen (Chair) and Jean Charles Potvin, both
of who are unrelated Directors. The Compensation Committee has responsibility
with respect to approving and advising the full Board on compensation matters
involving officers of the Company as well as approving allocations to the KSOP
Plan.

The Audit Committee, which met five times during 2005, in person and by
phone, consists of Chris D. Mikkelsen (Chair), Patrick D. McChesney and JC
Potvin, all of who are unrelated Directors. The Audit Committee is directly
responsible for the appointment, compensation, retention and oversight of our
independent public accountants and monitors the independence and performance
of our auditors. The Audit Committee monitors the integrity of our financial
reporting process and systems of internal controls regarding finance,
accounting and legal compliance. It reviews and reports to the Board the
scope and results of audits by our outside auditor and reviews the audit and
other professional services rendered by the outside auditor. The Audit
Committee also reviews transactions between the Company and our directors and
officers, our policies regarding those transactions and compliance with our
business ethics and conflict of interest policies. The Board has delegated
review of the quarterly financial statements to the Audit Committee prior to
filing with regulatory agencies. The Audit Committee reports to the Board on
its activities and findings.

Independence From Management. It is the Board's view that the Board operates
and functions independently of management as required. Mr. Coleman, an
independent and un-related director serves as non-executive Chairman of the
Board. In addition, the fact that four out of the seven Board members are
unrelated and not employees of the Company further reinforces the Board's
independence from management.

Shareholder Communication. The Company communicates regularly with its
shareholders through annual and quarterly reports, as well as news releases,
regulatory filings and the Company's website. In addition, the executive
officers of the Company are responsible for addressing day-to-day shareholder
inquiries and other shareholder communication issues.

Expectations of Management. The Board has delegated to the Chief Executive
Officer responsibility for day-to-day management of the business and affairs
of the Company, subject to compliance with directives and objectives
established by the Board from time to time. The Board relies on management to
provide the Board on a timely basis with information required by the Board to
perform its duties.

Outside Advisors. The Company's Audit Committee hires, fires, compensates,
oversees and monitors the independence and performance of our independent
auditors. Each of the Board and the Audit Committee are empowered to hire
outside advisors independent of management, as it determines necessary to
carry out its duties.

Share Ownership by Directors and Management

The following table sets forth the share ownership in the Company by
Directors and Named Executive Officers as of March 30, 2006 at which time the
number of Class A common shares and Equity Units outstanding were 34,599,819
and 1,157,397, respectively.
                               Number of
                               Common Shares
                               Beneficially     Percent
Name                              Owned (1)   Ownership
--------------------------------------------------------
Rockne J. Timm(2)(3)(4)         1,390,652       3.8
A. Douglas Belanger(2)(3)       1,447,675       3.9
James P. Geyer                    459,267       1.3
Robert A. McGuinness(2)(3)        435,925       1.2
Douglas E. Stewart                247,813       0.7
James H. Coleman(2)(3)            253,250       0.7
Patrick D. McChesney(2)(3)         93,174       0.3
Chris D. Mikkelsen(2)(3)(4)       284,500       0.8
Jean Charles Potvin                83,604       0.2


(1)  Includes for each individual shares issuable pursuant to
presently exercisable options for common shares as of March 30, 2006 or
options exercisable within 60 days of March 30, 2006 as follows: Mr. Timm,
531,867; Mr. Belanger, 431,303; Mr. Geyer, 224,473; Mr. McGuinness 228,915;
Mr. Stewart 123,000; Mr. Coleman, 144,444; Mr. McChesney, 90,674; Mr.
Mikkelsen, 50,000; Mr. Potvin, 48,741.

(2)  Messrs. Timm, Belanger, McGuinness, Coleman, McChesney, and
Mikkelsen are Officers or Directors of Great Basin Energies, Inc., which owns
491,192 common shares, or 1.3% of the outstanding common shares. The foregoing
individuals beneficially own 8.6%, 5.4%, 0.4%, 2.2%, 1.6%, and 1.1%,
respectively, of the outstanding common shares of Great Basin Energies, Inc.
and may be deemed indirectly to have an interest in the Company through their
respective management positions and/or ownership interests in Great Basin
Energies, Inc. Each of the foregoing individuals disclaims any beneficial
ownership of the common shares owned by Great Basin Energies, Inc.

(3)  Messrs. Timm, Belanger, McGuinness, Coleman, McChesney, and Mr.
Mikkelsen are Officers or Directors of MGC Ventures, Inc., which owns 258,083
common shares, or 0.7% of the outstanding common shares of the Company. The
foregoing individuals beneficially own 9.5%, 9.7%, .9%, 4.1%, 3.0%, and 2.0%
respectively, of the outstanding common shares of MGC Ventures, Inc. and may
be deemed indirectly to have an interest in the Company through their
respective management positions and/or ownership interests in MGC Ventures,
Inc. Each of the foregoing individuals disclaims any beneficial ownership of
the common shares owned by MGC Ventures, Inc.

Number of Employees

As of March 28, 2006, the Company employed ten full time personnel from its
Spokane, Washington, office and approximately 55 people in Venezuela, of
which approximately 33 are located at the Brisas Project. In addition, the
Company employs a number of independent consultants and contractors that are
not included as employees. The Company maintains a corporate office in
Caracas and manages day-to-day activities of Venezuelan operations from its
Puerto Ordaz office.

Item 7. Major Shareholders and Related Party Transactions

Control of Registrant

We are not directly or indirectly owned or controlled by another corporation
or by any foreign government. To the best of our knowledge no company or
government beneficially owns, directly or indirectly, or exercises control or
direction over, shares carrying more than 5% of the voting rights attached to
the Company's issued Class A common shares as of the date of this report
except for Strongbow capital and its affiliates, which owns approximately
5.7% of the Company's issued Class A common shares. Directors and the Named
Executives Officers as a group own 4,928,255 shares (including 1,999,628
shares subject to options exercisable within 60 days), or 13.5% of the total
shares issued. See "-Directors, Senior Management and Employees- Share
ownership by Directors and Management." We have no knowledge of any
arrangements that may, at a subsequent date, result in a change in our
control.

Related Party Transactions

The Directors, officers and principal shareholders of the Company and
associates, affiliates and close family members of the foregoing have had no
material interest, direct or indirect, in any transaction in which the
Company has participated during the last three fiscal years other than as
noted below. No Director and Named Executive Officer of had any indebtedness
to the Company during the last fiscal year.

Interest of Insiders in Material Transactions

None of the Directors, officers of the Company, nor any person or corporation
owning more than 10% of any class of voting securities of the Company, nor any
associates or affiliate of any of them, had or has any material interest in
any transaction since the commencement of the Company's last financial year
or in any proposed transaction which has materially affected or would
materially affect the Company or any of its subsidiaries.

Item 8. Financial Information

Our consolidated financial statements have been prepared in accordance with
accounting principles generally accepted in Canada. For a discussion of the
principal differences between accounting principles generally accepted in
Canada and the United States, please refer to note 11 to the consolidated
financial statements, included elsewhere in this annual report. A
consolidated balance sheet is presented for fiscal years 2005 and 2004 along
with consolidated statements of operations, cash flow and changes in
shareholders' equity, which are presented for fiscal 2005, 2004 and 2003.
Reference is made to Item 3 for the Company's policy on dividends and Item 17
for detailed financial information.

Legal Proceedings

We are unaware of any legal proceedings, either threatened or pending, to
which the Company is or is likely to be a party, or of which any of its
properties or assets is or is likely to be the subject, that may have a
significant effect on the Company's financial position or profitability.

Significant Changes

No significant changes have occurred since the date of the annual financial
statements.



Item 9. The Offer and Listing

Offer and Listing details

The Class A common shares of Gold Reserve Inc. are traded on The Toronto
Stock Exchange ("TSX") and on the American Stock Exchange ("AMEX") under the
symbol "GRZ."  The Company's November 4, 2004 warrants are traded on the TSX
under the symbol "GRZ.T." Neither the Company's equity units and the related
underlying securities nor the other outstanding stock purchase warrants are
listed for trading on any exchange.

Previous to October 3, 2003, the Company's common stock was traded in the
United States on the Over-the-Counter Market ("OTC") under the symbol "GLDR"
and was traded on the TSX under the symbol "GLR.A."


Last Six Months                   TSX                         AMEX (1)
                              High    Low                   High    Low
                          Canadian Dollars                  U.S. Dollars
------------------------------------------------------------------------
March
(through 03/28/06)         $ 6.32  $ 5.40                 $ 5.40  $ 4.69
February                     6.67    5.27                   5.83    4.56
January                      7.07    3.54                   6.58    3.04
December                     3.51    2.81                   3.02    2.42
November                     2.63    2.11                   2.23    1.76
October                      2.86    2.35                   2.43    2.03

Last Nine Quarters
                                  TSX                           AMEX(1)
                                  2006                          2006
                              High    Low                   High     Low
------------------------------------------------------------------------------
First Quarter               $ 7.07  $ 3.54                $ 6.58  $ 3.04

                          2005          2004            2005         2004
                      High    Low    High   Low     High    Low   High    Low
                           Canadian Dollars                U.S. Dollars
------------------------------------------------------------------------------
Fourth Quarter       $3.51  $ 2.11  $6.70  $5.32    $3.02  $1.76  $5.66  $4.30
Third Quarter         4.38    2.40   5.87   4.07     3.60   2.02   4.67   3.15
Second Quarter        4.82    3.60   5.70   3.70     3.96   2.82   4.31   2.74
First Quarter         5.74    4.18   6.89   4.39     4.72   3.54   5.33   3.35


Last Five Years                   TSX                          AMEX(1)
                              High    Low                   High    Low
                          Canadian Dollars                  U.S. Dollars
------------------------------------------------------------------------------
2005                        $5.74    $2.11                 $4.72    $1.76
2004                         6.89     3.70                  5.66     2.74
2003                         7.58     1.77                  5.86     1.16
2002                         3.31     1.06                  2.24     0.71
2001                         1.85     0.68                  1.22     0.44

(1) Previous to October 3, 2003, quotes are from the OTC market.

On March 28, 2006, the closing price for a Class A common share of the
Company was Cdn $6.03 per share on the TSX and U.S. $5.19 per share on the
AMEX. As of March 28, 2006, there were a total of 35,313,727 Class A common
shares issued and 1,085,099 Class B common shares issued.

The number of holders of Class A and Class B common shares of record on March
28, 2006 was approximately 870. Based on recent mailings to shareholders, the
Company believes its common shares are owned beneficially by approximately
8,420 shareholders. An estimated 46% of the Company's shareholders are
Canadian residents who own approximately 68% of the Company's outstanding
shares, with the remaining outstanding shares owned primarily by U.S.
residents.

Item 10. Additional Information

Memorandum and Articles of Association

Information under this heading is included as a part of the Company's
Registration Statement on Form  S-4 (Registration No. 333-68061) filed with
the U.S. Securities and Exchange Commission on November 27, 1998 and
incorporated by reference herein. All referenced documents concerning the
Company referenced in this annual report may be examined at the Company's
executive offices located at 926 West Sprague Avenue, Suite 200, Spokane, WA
99201, USA or through the U.S. Securities and Exchange Commission's website
at http://www.sec.gov

Material contracts

During the past two years, the Company has entered into one material contract
(identified in Exhibit 3.3), other than through the ordinary course of business.

Exchange Controls and Other Limitations Affecting Security Holders

There are no Canadian laws that restrict the export or import of capital,
including foreign exchange controls, or that affect the payment of dividends
to non-resident holders, except as described below under the heading
"Taxation".

Presently, the Company does not carry on any mining business in Canada. If,
however, in the future the Company carries on a Canadian business, as defined
in the Investment Canada Act, a direct or indirect acquisition of control of
such a Canadian business by non-Canadians may be subject to either
notification or review under the Investment Canada Act. Under the Investment
Canada Act, subject to certain specified exceptions, acquisitions of control
by non-Canadians of Canadian businesses, which exceed specified financial
thresholds, are reviewable (i.e., require the prior approval of the federal
Minister of Industry and/or the federal Minister of Canadian Heritage based
on a "net benefit to Canada" test). Any acquisition of control of a Canadian
business by a non-Canadian that does not exceed the applicable review
threshold is merely subject to notification to Investment Canada, a
government agency within Industry Canada and in certain limited circumstances
to the Cultural Sector Investment Review office of the Department of Canadian
Heritage.

The term "non-Canadian" is defined in the Investment Canada Act to include:
(1) an individual who is neither a citizen nor a permanent resident of
Canada, (2) a foreign government or (3) any other entity, including a
corporation, that is not Canadian-controlled.

Under the Investment Canada Act, an acquisition of control of a Canadian
business may occur through the acquisition of the voting interests of an
entity, including a corporation, which directly or indirectly carries on the
Canadian business. Generally, the Investment Canada Act deems that the
acquisition of a majority of the voting shares of a corporation by a
non-Canadian constitutes acquisition of control of such corporation. The
acquisition of one-third or more (but less than a majority) of the voting
shares of a corporation by a non-Canadian is presumed to be an acquisition of
control of the corporation unless it can be established that the acquirer does
not in fact control the corporation through the ownership of voting shares.
The acquisition of less than one-third of the voting shares of a corporation
is deemed not to be an acquisition of control of the corporation.

In addition, an acquisition of control is also considered to occur for
purposes of the Investment Canada Act when all or substantially all of the
assets used in carrying on a Canadian business are acquired.

If an acquisition of control of a Canadian business is made in contravention
of the Investment Canada Act, a court of competent jurisdiction may make any
order it deems fit, including requiring the acquirer to divest such Canadian
business.

Except as described above, statutes in Canada and the Yukon Territory and the
charter documents of the Company do not restrict the right of non-resident or
foreign owners to hold or vote common shares of the Company.

The Company maintains a Shareholder Rights Plan, which is intended to give
adequate time for shareholders of the Company to properly assess the merits
of a take-over bid without pressure and to allow competing bids to emerge.
The Plan is designed to give the board of directors time to consider
alternatives to allow shareholders to receive full and fair value for their
common shares. One right is issued in respect of each outstanding share. The
rights become exercisable only when a person, including any party related to
it or acting jointly with it, acquires or announces its intention to acquire
20% or more of the Company's outstanding shares without complying with the
"permitted bid" provisions of the Shareholder Rights Plan. Each right would,
on exercise, entitle the holder, other than the acquiring person and related
persons, to purchase common shares of the Company at a 50% discount to the
market price at the time. In 2006, the shareholders approved an amendment to
continue the Shareholder Rights Plan until June 30, 2009.

Taxation

Canadian Federal Income Tax Considerations

The following is a general summary of the principal Canadian federal income
tax considerations under the Income Tax Act (Canada) (the eeCanadian Act'')
generally applicable to the holding and disposition of Class A and Class B
common shares (together, the "common shares") by a holder who, at all
relevant times for purposes of the Canadian Act, is not resident or deemed to
be resident in Canada, deals at arm's length with the Company, holds the
common shares as capital property and does not use or hold, and is not deemed
to use or hold the common shares in the course of carrying on, or otherwise in
connection with, a business in Canada and who, for purposes of the
Canada-United States Income Tax Convention (the eeTreaty''), is a resident of
the United States. Generally, common shares will be considered to be capital
property to a holder thereof provided that the holder does not use the common
shares in the course of carrying on a business and such holder has not
acquired them in one or more transactions considered to be an adventure or
concern in the nature of trade. This summary does not deal with special
situations, such as particular circumstances of traders or dealers in
securities, limited liability companies, tax-exempt entities, insurers, and
financial institutions. For purposes of the Canadian Act, all amounts
relevant in computing a holder's liability under the Canadian Act must be
computed in Canadian Dollars. Amounts denominated in U.S. Dollars including
adjusted cost base and proceeds of disposition must be converted into
Canadian Dollars based on the prevailing exchange rate at the relevant time.

Dividends

Dividends on common shares paid or credited to a U.S. Holder (as defined
below) by the Company are subject to Canadian withholding tax. Under the
Treaty, the rate of withholding tax on dividends paid or credited to a U.S.
Holder is generally limited to 15% of the gross amount of the dividend (or 5%
in the case of a U.S. Holder that is a corporation beneficially owning at
least 10% of the Company's voting shares). Under the Treaty, dividends paid
by the Company to certain religious, scientific, charitable, certain other
tax-exempt organizations and certain pension organizations that are resident
in, and exempt from tax in, the United States are exempt from Canadian
withholding tax.

Dispositions

A U.S. Holder will generally not be subject to tax under the Canadian Act in
respect of a capital gain realized on the disposition of a common share,
unless the common share constitutes eetaxable Canadian property'' as defined
in the Canadian Act at the time of disposition. The Class B common shares are
currently not listed on any stock exchange and are taxable Canadian property.
A Class A common share will generally not be taxable Canadian property to a
U.S. Holder at the time of disposition provided the Class A common shares are
listed on a prescribed stock exchange (which includes the Toronto Stock
Exchange and American Stock Exchange) at that time and, during the 60 month
period ending at the time of disposition of the Class A common share, the
U.S. Holder, persons with whom the U.S. Holder did not deal at arm's length,
or the U.S. Holder together with such persons, did not own 25% or more of the
Company's issued shares of any class or series of capital stock.  A Class A
common share that was received on a conversion of a Class B common share may
constitute taxable Canadian property.

Even if a common share constitutes taxable Canadian property to a U.S.
Holder, by reason of the Treaty, no tax will generally be payable under the
Canadian Act on a capital gain realized by the U.S. Holder on the disposition
of such shares provided the value of such shares at the time of disposition is
not derived principally from real property situated in Canada. The Company
believes that, at the date of this filing, the value of each class of common
shares is not derived principally from real property situated in Canada
within the meaning of the Treaty.

Provided that the Class A common shares are not taxable Canadian property to
a U.S. Holder, there are no clearance certificate requirements imposed by the
Canadian Act on that U.S. Holder in respect of a disposition of Class A common
shares. As long as the Class B common shares are taxable Canadian property, a
U.S. Holder will be required to apply to the federal Canadian tax authorities
for a clearance certificate upon a disposition of a Class B common share,
including in the case of a conversion of a Class B common share into a Class
A common share.

U.S. Federal Income Tax Consequences

The following is a summary of certain material U.S. federal income tax
consequences of ownership and disposition generally applicable to U.S.
Holders (as defined below) of the Company's common shares. The discussion is
based on the Internal Revenue Code of 1986, as amended to the date hereof
(the "Code"), final and temporary Treasury regulations, rulings and judicial
decisions now in effect, all of which are subject to change or differing
interpretations possibly with retroactive effect. In such event, the U.S.
federal income tax consequences applicable to a U.S. Holder of the Company's
common shares could differ from those described in this discussion.

This summary does not address the effect of the U.S. federal estate, gift, or
excise tax laws or the tax laws of any applicable foreign, state, local or
other jurisdiction. This summary does not address tax consequences applicable
to a U.S. Holder's particular circumstances, including U.S. Holders who may be
subject to special tax rules, including, without limitation: (1) banks or
other financial institutions, U.S. Holders subject to alternative minimum
tax, partnerships or other legal entities classified as a partnership for
U.S. federal income tax purposes and persons holding through such entities,
regulated investment companies, insurance companies, dealers in securities,
traders in securities that elect to use the mark-to-market method of
accounting, certain retirement plans, dealers in commodities or currencies,
tax exempt organizations or holders of the Company's common shares as part of
a "straddle," "hedge" or "conversion transaction" with other investments and
taxpayers whose functional currency is not the United States Dollar or (2)
shareholders owning directly, indirectly or by attribution, 10% or more of
the Company's common shares.

For purposes of this discussion regarding U.S. federal income tax
consequences, a "U.S. Holder" is any beneficial owner of the Company's common
shares that is, for U.S. federal income tax purposes, a citizen or resident
of the United States (including certain former citizens and former long-term
residents), a corporation (or other entity taxable as a corporation for U.S.
federal income tax purposes) created or organized in or under the laws of the
United States or any political subdivision thereof, an estate the income of
which is subject to U.S. federal income taxation regardless of its source, or
a trust if (a) the administration of the trust is subject to the primary
supervision of a U.S. court and the trust has one or more U.S. persons with
authority to control all substantial decisions or (b) the trust has a valid
election in effect under applicable Treasury regulations to be treated as
U.S. person. A "Non-U.S. Holder" is any shareholder other than a U.S. Holder.
The discussion below assumes that the Company's common shares are held as a
capital asset within the meaning of Section 1221 of the Code.

Distributions

For U.S. federal income tax purposes, the amount of distributions made on the
Company's common shares generally will equal the amount of cash and the fair
market value of any property distributed and also will include the amount of
any Canadian taxes withheld as described above. An amount of the distribution
will be treated as a dividend, taxable to a U.S. Holder as ordinary income, to
the extent of the Company's current or accumulated earnings and profits
allocable to such U.S. Holder. To the extent that an amount received by a
U.S. Holder exceeds the allocable share of the Company's current and
accumulated earnings and profits, such excess will be treated as a return of
capital to the extent of the U.S. Holder's tax basis in its common shares and
then, to the extent in excess of such U.S. Holder's tax basis, as capital
gain. The amount treated as a dividend will not be eligible for the dividends
received deduction generally allowed to U.S. corporate shareholders on
dividends from U.S. domestic corporations.

In the case of non-corporate U.S. Holders, the federal income tax rate
applicable to dividends received in years beginning prior to 2009 may be lower
than the rate applicable to other categories of ordinary income if certain
conditions are met. Dividends will not qualify for the reduced rate, however,
if the corporation is treated, for the tax year in which the dividends are paid
or the preceding tax year, as a "passive foreign investment company" for U.S.
federal income tax purposes. As discussed below, for the year ended December
31, 2005, the Company was considered a "passive foreign investment company."

The amount of any distribution paid in foreign currency will be included in a
U.S. Holder's gross income in an amount equal to the U.S. Dollar value of the
foreign currency calculated by reference to the spot rate in effect on the
date of receipt by the U.S. Holder, regardless of whether the foreign
currency is converted into U.S. Dollars. If the foreign currency is converted
into U.S. Dollars on the date of receipt, a U.S. Holder generally should not
be required to recognize foreign currency gain or loss in respect of the
distribution. If the foreign currency received in the distribution is not
converted into U.S. Dollars on the date of receipt, a U.S. Holder will have a
tax basis in the foreign currency equal to its U.S. Dollar value on the date
of receipt. Any gain or loss recognized upon a subsequent conversion or other
disposition of the foreign currency will be treated as U.S. source ordinary
income or loss.

A Non-U.S. Holder generally will not be subject to U.S. federal income tax or
withholding tax on distributions with respect to the Company's common shares
that are treated as a dividend for U.S. federal income tax purposes unless
such dividends are effectively connected with the conduct of a trade or
business within the U.S. by the Non-U.S. Holder (and are attributable to a
permanent establishment maintained in the U.S. by such Non-U.S. Holder if an
applicable income tax treaty so requires as a condition for such Non-U.S.
Holder to be subject to U.S. taxation on a net income basis in respect of
income from the Company's common shares), in which case the Non-U.S. Holder
generally will be subject to tax in respect of such dividends in the same
manner as a U.S. Holder. Any such effectively connected dividends received by
a corporate Non-U.S. Holder also may, under certain circumstances, be subject
to an additional "branch profits tax" at a 30% rate or such lower rate as may
be specified by an applicable income tax treaty. A Non-U.S. Holder generally
will not be subject to U.S. federal income tax or withholding tax on
distributions that are treated as capital gain for U.S. federal income tax
purposes unless such Non-U.S. Holder would be subject to U.S. federal income
tax on gain realized on the sale or other disposition of the Company's common
shares, as discussed below.

Subject to certain limitations, a U.S. Holder may elect to claim a credit
against its U.S. federal income tax liability for the Canadian tax withheld
from any dividends paid on the Company's common shares. A U.S. Holder who
does not make such an election instead may deduct the Canadian tax withheld,
but only for a year in which such U.S. Holder elects to do so with respect to
all creditable foreign taxes paid by such U.S. Holder. For U.S. foreign tax
credit purposes, for taxable years beginning before January 1, 2007,
dividends on the shares will generally constitute foreign source "passive
income" or, in the case of certain U.S. Holders, "financial services
income."  However, for taxable years beginning after December 31, 2006,
dividends paid on the common shares generally will be treated as "passive
income" (or "general income for certain U.S. Holders"). If, and for so long
as, the Company is a United States-owned foreign corporation, dividends paid
by the Company on the common shares may, subject to certain exceptions and
elections, instead be treated for United States foreign tax credit purposes
as partly foreign source "passive income" (or "financial services income for
certain U.S. Holders") for taxable years beginning before January 1, 2007 or
"passive income" (or "general income for certain U.S. Holders") for taxable
years beginning after December 31, 2006, and partly United States-source income,
in proportion to the earnings and profits of the Company in the year of such
distribution allocable to foreign and United States sources, respectively.
The Company will be treated as a United States-owned foreign corporation if
stock representing 50% or more of the voting power or value of the stock of
the Company is held, directly or indirectly, by U.S. holders. No assurance can
be given as to whether the Company is or will become a United-States-owned
foreign corporation.

The rules relating to the U.S. foreign tax credit are complex, and U.S.
Holders should consult their own tax advisors to determine whether and to
what extent they would be entitled to a foreign tax credit.

Dispositions

Subject to the discussion below pertaining to passive foreign investment
companies, a U.S. Holder's sale, exchange or other disposition of the
Company's common shares generally will result in the recognition by the U.S.
Holder of U.S. source taxable capital gain or loss in an amount equal to the
difference between the U.S. Dollar value of the amount of cash and fair
market value of any property received upon the sale, exchange or other
disposition and such U.S. Holder's adjusted tax basis in the Company's common
shares. Such capital gain or loss will be long-term if the U.S. Holder's
holding period in the common shares is more than one year at the time of the
sale, exchange or other disposition. Long-term capital gain recognized by
certain non-corporate U.S. Holders generally will be subject to tax rates
lower than the rates applicable to ordinary income. The deductibility of
capital losses is subject to limitations. U.S. Holders should consult their
tax advisors regarding the treatment of capital gains and losses.



A Non-U.S. Holder will not be subject to U.S. federal income tax or
withholding tax on gain realized on the sale or other disposition of the
Company's common shares unless (i) the gain is effectively connected with the
conduct of a trade or business by the Non-U.S. Holder in the U.S. (and is
attributable to a permanent establishment maintained in the U.S. by such
Non-U.S. Holder if an applicable income tax treaty so requires as a condition
for such Non-U.S. Holder to be subject to U.S. taxation on a net income basis
in respect of income from the Company's common shares), or (ii) such Non-U.S.
Holder is an individual who is present in the U.S. for 183 days or more in the
taxable year of the sale, and certain other conditions are met. Effectively
connected gains realized by a corporate Non-U.S. Holder may also, under
certain circumstances, be subject to an additional "branch profits tax" at a
30% rate or such lower rate as may be specified by an applicable income tax
treaty.



Controlled Foreign Corporation Status

Under Section 951(a) of the Code, each "United States shareholder" of a
"controlled foreign corporation" ("CFC") must include in its gross income for
U.S. federal income tax purposes its pro rata share of the CFC's "subpart F
income," even if the subpart F income is not actually distributed to the
"United States shareholder". In addition, gain on the sale of stock in a CFC
realized by a "United States shareholder" is treated as ordinary income,
eligible for the reduced tax rate applicable to certain dividends, to the
extent of such shareholder's proportionate share of the CFC's undistributed
earnings and profits accumulated during such shareholder's holding period for
the stock. Section 951(b) of the Code defines a United States shareholder
as any U.S. corporation, citizen, resident or other U.S. person who owns
(directly or through certain deemed ownership rules) 10% or more of the total
combined voting power of all classes of stock of a foreign corporation. In
general, a foreign corporation is treated as a CFC only if such United States
shareholders collectively own more than 50% of the total combined
voting power or total value of the foreign corporation's stock. Under these
rules the Company does not expect to be a CFC. If the Company is treated as a
CFC, the Company's status as a CFC should have no adverse effect on any
shareholder of the Company that is not a "United States shareholder."


Passive Foreign Investment Company Status

Sections 1291 through 1298 of the Code contain special rules applicable with
respect to foreign corporations that are "passive foreign investment
companies" ("PFICs"). A company will be considered a PFIC if 75% or more of
its gross income (including a pro rata share of the gross income of any
company (United States or foreign) in which the company is considered to own
25% or more of the shares by value) in a taxable year is passive income (the
"Income Test"). Alternatively, a company will be considered to be a PFIC if
at least 50% of the assets (averaged over the four quarter ends for the year)
of the company (including a pro rata share of the assets of any company of
which the company is considered to own 25% or more of the shares by value) in
a taxable year are held for the production of, or produce, passive income (the
"Asset Test").

For the year ended December 31, 2005, the Company was a PFIC because it met
the Income Test. As a consequence, each shareholder who is a U.S. Holder, in
the absence of an election by such holder to treat the Company as a
"qualified electing fund" (a "QEF" election), as discussed below, will, upon
certain distributions by the Company or upon disposition of the Company's
common shares at a gain, be liable to pay tax at the highest tax rate on
ordinary income in effect for each period to which the income is allocated
plus interest on the tax, as if the distribution or gain had been recognized
ratably over the U.S. Holder's holding period for the Company's common shares
while the Company was a PFIC. Additionally, a U.S. Holder who acquires the
Company's common shares from a decedent who failed to make a QEF election
will generally be denied the normally available step-up of the income tax
basis for such shares to fair market value at the date of death and, instead,
would have a tax basis equal to the decedent's tax basis, if lower, in the
shares.

A U.S. Holder who owns the Company's common shares during a period when the
Company is a PFIC will be subject to the foregoing PFIC rules, even if the
Company ceases to be a PFIC, unless such U.S. Holder makes a QEF election in
the first year in which the U.S. Holder owned the Company's common shares and
the Company was considered a PFIC. A U.S. Holder who makes such a QEF election
will be entitled to treat any future gain on the sale of the Company's common
shares as capital gain and will not be denied the tax basis step-up at death
described above. Additionally, a U.S. Holder who makes a QEF election will,
for each taxable year the Company is a PFIC, include in income a pro rata
share of the ordinary earnings of the Company as ordinary income and a pro
rata share of any net capital gain of the Company as long-term capital gain,
subject to a separate election to defer payment of taxes (such deferral is
subject to an interest charge.) The Company, at the request of a U.S. Holder
electing to have the Company treated as a QEF, will comply with the
applicable information reporting requirements.

A U.S. Holder who makes a QEF election for the year in which the Company
first becomes a PFIC (and complies with certain U.S. federal income tax
reporting requirements) should not have any material adverse U.S. federal
income tax consequences because the Company had no ordinary earnings or net
capital gains during the year ended December 31, 2005. In addition, the
Company believes that it will not have any ordinary earnings or net capital
gains in future years in which it may be a PFIC. However, no assurance can be
given as to this expectation. U.S. Holders are urged to consult their tax
advisors concerning the application of the U.S. federal income tax rules
governing PFICs in their particular circumstances.

As an alternative to the QEF election, a U.S. Holder of certain publicly
traded PFIC stock can elect to mark the stock to market, recognizing as
ordinary income or loss each year an amount equal to the difference as of the
close of the taxable year between the U.S. Holder's fair market value of the
PFIC stock and the adjusted basis in the PFIC stock. Losses would be allowed
only to the extent of net mark-to-market gain previously included in income
by the U.S. Holder under the election for prior taxable years. If a
mark-to-market election is in effect on the date of a U.S. Holder's death,
the otherwise available step-up in tax basis to fair market value will not be
available. Instead, the tax basis of the Company's common shares in the hands
of a U.S. Holder who acquires such shares from the decedent will be the
lesser of the decedent's tax basis or the fair market value of the shares.

As a PFIC, each U.S. Holder choosing to make a QEF election would be required
annually to file an IRS Form 8621 (Return by a shareholder of a Passive
Foreign Investment Company or Qualified Electing Fund) with such U.S.
Holder's timely filed income tax return (or directly with the IRS if the U.S.
Holder is not required to file an income tax return). A U.S. Holder choosing
to make a QEF election also must include with its income tax return a
shareholder election statement and the PFIC annual information statement that
the Company will provide. If the Company determines that it was a PFIC during
the year, within two months after the end of each such year the Company
intends to supply the PFIC annual information statement necessary to make the
QEF election for such year.

Due to the complexity of the PFIC rules, a U.S. Holder should consult his or
her own tax advisor regarding the Company's status as a PFIC for tax year
ending December 31, 2005 or a subsequent year, and the eligibility, manner
and advisability of making a QEF election or a mark-to-market election.

Backup Withholding and Information Reporting

In general, dividend payments or other taxable distributions on the Company's
common shares or proceeds from the disposition thereof paid by a U.S. paying
agent or other U.S. intermediary to a non-corporate U.S. Holder may be
subject to information reporting to the IRS and possible U.S. backup
withholding at a current rate of 28%. Backup withholding generally would not
apply to a U.S. Holder that furnishes a correct taxpayer identification
number and makes any other required certifications or if the U.S. Holder is
otherwise exempt from backup withholding. U.S. Holders that are required to
establish their exempt status generally must provide such certification on
IRS Form W-9 (Request for Taxpayer Identification Number and Certification).
Certain Non-U.S. Holders receiving payments in the U.S or through certain
U.S. financial intermediaries should establish their exemption from
information reporting or backup withholding by providing certification of
non-U.S. status on IRS Form W-8 BEN, as applicable.

Amounts withheld as backup withholding may be credited against the U.S.
Holder's federal income tax liability. Additionally, a U.S. Holder or
Non-U.S. Holder may obtain a refund of any excess amounts withheld under the
backup withholding regime by timely filing the appropriate claim for refund
with the IRS and furnishing any required information.  Copies of any
information returns filed with the IRS may be made available by the IRS, under
the provisions of a specific treaty or agreement, to the taxing authorities of
the country in which the Non-U.S. Holder resides or is organized.

Item 11. Quantitative and Qualitative Disclosures about Market Risk

The Company currently does not enter into any hedging transactions or hold
any derivative instruments. The carrying amounts for cash and cash
equivalents, marketable securities, deposits, advances and other, accrued
interest and accounts payable and accrued expenses on the balance sheet
approximate fair value because of the immediate or short-term maturity of
these instruments. Fair value estimates are made at the balance sheet date
based on relevant market information but involve uncertainties and therefore
cannot be determined with precision. In order to limit its market risk, the
Company diversifies its cash and investment holdings into U.S. treasury and
agency obligations and major financial institutions and corporations. The
fair value of investments in marketable securities is disclosed in Note 2 to
the Consolidated Financial Statements. See "-Item 3. Key Information -Risk
Factors -Future hedging activities could negatively impact future operating
results."

Item 12. Description of Securities Other Than Equity Securities - Not
applicable

PART II

Item 13. Defaults, Dividends Arrearages and Delinquencies - None

Item 14. Material Modifications to Rights of Security Holders and Use of
Proceeds - None

Item 15. Controls and Procedures

a) An evaluation was performed under the supervision and with the participation
of the Company's management, including the chief executive officer and chief
financial officer, of the effectiveness of the design and operation of the
Company's disclosure controls and procedures (as defined in Rule 13a-15 of
the U.S. Securities Exchange Act of 1934, as amended) as of the end of the
period covered by this Annual Report on Form 20-F. Based on that evaluation,
the Company's management, including the chief executive officer and chief
financial officer, concluded that the Company's disclosure controls and
procedures were effective as of the end of the period covered by this Annual
Report on 20-F to provide reasonable assurance that information required to
be disclosed by the Company in the reports that it files or submits under the
U.S. Securities Exchange Act of 1934, as amended, is recorded, processed,
summarized and reported within the time period specified in the U.S.
Securities and Exchange Commission rules and forms.

b) Not applicable for annual reports for fiscal years ending prior to July
15, 2006.

c) Not applicable for annual reports for fiscal years ending prior to July 15,
2006.

d) In connection with the evaluation described above, the Company's management,
including the chief executive officer and chief financial officer, identified
no change in the Company's internal control over financial reporting that
occurred during the Company's fiscal year ended December 31, 2005, and that
has materially affected, or is reasonably likely to materially affect, the
Company's internal control over financial reporting.

Item 16. Reserved

Item 16A. Audit Committee Financial Expert

Our Audit Committee is comprised of three members: Mr. Chris Mikkelsen, Mr.
Patrick McChesney and Mr. Jean Charles Potvin. The Board has made the
affirmative determination that all members of the Audit Committee are
"independent" pursuant to the criteria outlined by AMEX, Canadian Securities
Act NI 52-110 and Rule 10A-3 of the U.S. Securities and Exchange Act of 1934,
as amended. Mr. Mikkelsen is a Certified Public Accountant ("CPA") and
shareholder in McDirmid, Mikkelsen, Secrest PS, a large local CPA practice.
Mr. McChesney is a CPA and a past and present financial executive for a
number of companies. Mr. Potvin is President and CEO of Tiomin Resources,
Inc. a resources company based in Toronto, Canada, has an MBA-Finance and was
an investment analyst at Burns Fry Ltd for 13 years. Mr. Mikkelsen serves as
the "audit committee financial expert" (as defined in Item 16A to Form 20-F),
although the Board believes that all members of the Audit Committee have
sufficient knowledge and experience to satisfy the "financial sophistication"
requirement of the AMEX and to serve as the Committee's "audit committee
financial expert." Our Audit Committee's Charter can be found on our website
at goldreserveinc.com in the Investor Relations section under corporate
governance.

Item 16B. Code of Ethics

The company has adopted a Code of Ethics and Conduct that is applicable to
all its directors, officers and employees. The Code of Ethics contains
general guidelines for conducting the business of the company. The Code was
amended and approved by the Board of Directors effective March 24, 2006.
There have been no waivers to this Code since its inception. We intend to
disclose future amendments to, or waivers from, certain provisions of the
Code on our website within five business days following the date of such
amendment or waiver. A copy of the Code of Ethics and Conduct is posted on
the Company's website ( HYPERLINK "http://www.goldreserveinc.com"
www.goldreserveinc.com). We believe that our Code of Ethics and Conduct
constitutes a "code of ethics" as defined by the U.S. Securities and Exchange
Commission and a "code of ethics and conduct" pursuant to the criteria
outlined by AMEX.

Item 16C. Principal Accountant Fees and Services

Audit Fees

The aggregate Audit Fees billed for professional services rendered by
PricewaterhouseCoopers LLP  ("PwC") for the audit of our annual financial
statements or services that are normally provided by PwC in connection
therewith for 2005 and 2004 were 75,000 and $42,100, respectively,

Audit-Related Fees

The aggregate Audit-Related Fees for professional services rendered by PwC
for services connected with our quarterly reports and securities filing
documents for 2005 and 2004 were  $22,000 and $15,700, respectively.

Tax Fees

The aggregate Tax Fees for professional services rendered by PwC for tax
planning, compliance and return preparation services for 2005 and 2004 were
79,750 and $3,668, respectively.

All Other Fees

None.

Audit Committee Services Approval Policy

Our Audit Committee is responsible for the oversight of our independent
auditor's work and pre-approves all services provided by PwC. The Audit
Committee sets forth its pre-approval in the minutes of its meetings.
Audit-Related and Tax services provided by PwC are typically approved
individually during the Committee's periodic meetings or, on an as-needed
basis, the Audit Committee's Chair is authorized to approve such services in
advance on behalf of the Committee with such approval reported to the full
Audit Committee at its next meeting.

Item 16D. Exemptions From the Listing Standards for Audit Committees

Not Applicable

Item 16E. Purchases of Equity Securities by the Issuer and Affiliated
Purchasers

Not Applicable


PART III
Item 17. Financial Statements
Index to Consolidated Financial Statements

Management's Report
Auditors Report
Consolidated Balance Sheets
December 31, 2005 and 2004
Consolidated Statements of Operations
for the years ended December 31, 2005, 2004 and 2003
Consolidated Statements of Changes in Shareholders' Equity
for the years ended December 31, 2005, 2004 and 2003
Consolidated Statements of Cash Flows
for the years ended December 31, 2005, 2004 and 2003
Notes to Consolidated Financial Statements

Management's Report

To the Shareholders of Gold Reserve Inc.

The accompanying consolidated financial statements of the Company were
prepared by management in accordance with accounting principles generally
accepted in Canada, consistently applied and within the framework of the
summary of significant accounting policies in these consolidated financial
statements. Management is responsible for all information in the annual
report. All financial and operating data in the annual report is consistent,
where appropriate, with that contained in the consolidated financial
statements.

Management is responsible for establishing and maintaining an adequate
internal control structure and procedures for financial reporting. Management
has established and maintains a system of internal accounting control designed
to provide reasonable assurance that assets are safeguarded from loss or
unauthorized use, financial information is reliable and accurate and
transactions are properly recorded and executed in accordance with
management's authorization. This system includes established policies and
procedures, the selection and training of qualified personnel and an
organization providing for appropriate delegation of authority and
segregation of responsibilities.

The Board of Directors fulfills its responsibilities for the consolidated
financial statements primarily through the activities of its Audit Committee,
which is composed of three directors, none of whom are members of management.
This Committee monitors the independence and performance of our independent
auditors and meets with the auditors to discuss the results of their audit
and their audit report prior to submitting the consolidated financial
statements to the Board of Directors for approval. This Committee reviews and
discusses with management the consolidated financial statements, related
accounting principles and practices and (when required of management under
securities commissions or the applicable listing standards) management's
assessment of internal control over financial reporting. This Committee also
monitors the integrity of our financial reporting process and systems of
internal controls regarding finance, accounting and legal compliance.

The consolidated financial statements have been audited on behalf of the
shareholders by the Company's independent auditors, PricewaterhouseCoopers
LLP. The auditors' report outlines the scope of their examination and their
opinion on the consolidated financial statements. The auditors have full and
free access to the Audit Committee.

s/ Rockne J. Timm                s/ Robert A. McGuinness
Chief Executive Officer          Vice President-Finance and CFO
March 30, 2006                   March 30, 2006


AUDITORS Report

To the Shareholders of Gold Reserve Inc.

We have audited the consolidated balance sheets of Gold Reserve Inc. as at
December 31, 2005 and 2004 and the consolidated statements of operations,
cash flows and changes in shareholders' equity for each of the years in the
three-year period ended December 31, 2005. These financial statements are the
responsibility of the company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards in Canada and the standards of the Public Company Accounting
Oversight Board (United States). Those standards require that we plan and
perform an audit to obtain reasonable assurance whether the financial
statements are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation.

In our opinion, these consolidated financial statements present fairly, in
all material respects, the financial position of the company as at December
31, 2005 and 2004 and the results of its operations and its cash flows for
each of the years in the three year period ended December 31, 2005 in
accordance with Canadian generally accepted accounting principles.

s/PricewaterhouseCoopers LLP
Chartered Accountants
Vancouver, British Columbia, Canada
February 17, 2006



Comments by Auditors for United States Readers on Canada-United States
Reporting Differences

In the United States, reporting standards for auditors require the addition
of an explanatory paragraph (following the opinion paragraph) when there are
changes in accounting principles that have a material effect on the
comparability of the company's financial statements, such as the changes in
accounting for stock based compensation and asset retirement obligations as
described in note 1 to the financial statements. Our report to the
shareholders dated February 17, 2006 is expressed in accordance with Canadian
reporting standards, which do not require a reference to such a change in
accounting principles in the auditors' report when the change is properly
accounted for and adequately disclosed in the financial statements.

s/PricewaterhouseCoopers LLP
Chartered Accountants
Vancouver, British Columbia, Canada
February 17, 2006



GOLD RESERVE INC.
CONSOLIDATED BALANCE SHEETS
December 31, 2005 and 2004
(Expressed in U.S. Dollars)
                                               2005              2004
ASSETS                                      -----------------------------
Cash and cash equivalents                   $19,370,252       $27,178,705
Marketable securities                         2,985,234         5,528,776
Deposits, advances and other                    442,130           336,128
Accrued interest                                                   13,444
                                            -----------------------------
Total current assets                         22,797,616        33,057,053

Property, plant and
  equipment, net                             58,016,102        52,535,018
Other                                         1,141,154         1,013,460
                                            -----------------------------
Total assets                                $81,954,872       $86,605,531
                                            =============================

LIABILITIES
Accounts payable and
   accrued expenses                         $ 1,187,565       $ 1,307,635
Minority interest in
  consolidated subsidiaries                   1,129,541         1,121,838
                                            -----------------------------
Total liabilities                             2,317,106         2,429,473

Commitments

SHAREHOLDERS' EQUITY
Serial preferred stock, without par value
  Authorized:     Unlimited
  Issued:         None
Common shares
   and Equity Units:                        140,512,063       136,907,516

Class A common shares, without par value
  Authorized:    Unlimited
  Issued:        2005  35,196,287  2004 33,715,795
  Outstanding:   2005  34,902,200  2004 33,421,708
Equity Units
  Issued:        2005   1,110,020  2004  1,157,397
  Outstanding:   2005     610,745  2004    658,122

Less, common shares and
   equity units held by affiliates             (674,598)         (674,598)
Stock options                                 1,867,537         1,004,197
Accumulated deficit                         (61,983,016)      (52,955,734)
KSOP debt                                       (84,220)         (105,323)
                                            -----------------------------
Total shareholders' equity                   79,637,766        84,176,058
                                            -----------------------------
Total liabilities and
  shareholders' equity                      $81,954,872       $86,605,531
                                            =============================
The accompanying notes are an integral part of the consolidated financial
statements.
Expressed in U.S. Dollars

Approved by the Board of Directors:

s/ Chris D. Mikkelsen                   s/ Patrick D. McChesney


GOLD RESERVE INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Years Ended December 31, 2005, 2004 and 2003


                                        2005           2004            2003
                                        --------------------------------------
Other Income:
Interest income                       $ 859,945      $ 529,838       $ 594,006
Gain on sale of
  marketable securities                 542,923        370,043         176,375
                                      ----------------------------------------
                                      1,402,868        899,881         770,381
                                      ----------------------------------------
Expenses:
General and administrative            5,054,420      3,079,597       1,860,312
Technical services                    3,876,928      2,391,194       2,027,391
Corporate communications                662,350        674,786         419,394
Legal and accounting                    749,208        236,924         276,291
Foreign currency (gain) loss             78,070          4,322        (156,314)
Minority interest in net income
(loss) of consolidated subsidiaries       7,703         (4,313)         45,910
                                     -----------------------------------------
                                     10,428,679      6,382,510       4,472,984

Net loss before tax                  (9,025,811)    (5,482,629)     (3,702,603)
Income tax                                1,471                          4,733
                                     -----------------------------------------
Net loss                           $ (9,027,282)  $ (5,482,629)   $ (3,707,336)
                                     =========================================
Net loss per share
   basic and diluted                   $  (0.26)      $  (0.19)       $  (0.15)
                                     =========================================
Weighted average common
   shares outstanding                35,048,800     29,215,727      24,636,083
                                     =========================================
The accompanying notes are an integral part of the consolidated financial
statements.
Expressed in U.S. Dollars




GOLD RESERVE INC.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
For the Years Ended December 31, 2005, 2004 and 2003




                                                                                  

                                                                                             Common Shares and
                                  Common Shares and Equity Units Issued       Accumulated    Equity Units
                                  Common Shares   Equity Units     Amount        Deficit     Held by Affiliates
--------------------------------------------------------------------------------------------------------
Balance, December 31, 2002         22,996,158      1,289,980     102,498,071   (43,346,668)    (674,598)
Equity units exchanged for
  common shares                        52,100        (52,100)
Net loss                                                                        (3,707,336)
Common shares issued                4,702,000                     10,473,354
--------------------------------------------------------------------------------------------------------
Balance, December 31, 2003        27,750,258        1,237,880    112,971,425   (47,054,004)    (674,598)
Equity units exchanged for
  common shares                       80,483          (80,483)
Net loss                                                                        (5,482,629)
Stock option compensation
  from 2002 and 2003                                                              (419,101)
Common shares issued               5,885,054                      23,936,091
--------------------------------------------------------------------------------------------------------
Balance, December 31, 2004        33,715,795        1,157,397    136,907,516   (52,955,734)    (674,598)
Equity units exchanged for
common shares                         47,377          (47,377)
Net loss                                                                        (9,027,282)
Common shares issued               1,433,115                       3,604,547
--------------------------------------------------------------------------------------------------------
Balance, December 31, 2005        35,196,287        1,110,020   $140,512,063  $(61,983,016)   $(674,598)
========================================================================================================

The accompanying notes are an integral part of the consolidated financial
statements.
Expressed in U.S. Dollars

GOLD RESERVE INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 2005, 2004 and 2003

                                         2005           2004           2003
Cash Flow from Operating Activities:
Net loss                             $(9,027,282)   $(5,482,629)   $(3,707,336)
Adjustments to reconcile
net loss to net cash used
by operating activities:
 Stock option compensation               863,340        599,423
 Depreciation                             93,157         58,179         44,630
 Amortization of premium (discount)
 on corporate debt securities             (2,251)       102,481        106,583
 Foreign currency (gain) loss             78,070          4,322       (156,314)
 Minority interest in net
 income (loss) of
 consolidated subsidiaries                 7,703         (4,313)        45,910
Net gain on disposition of
 marketable securities                  (542,923)      (370,043)      (176,375)
Shares issued for
 compensation and KSOP                 1,013,306        453,698        520,032

Changes in non-cash working capital:
 (Increase) decrease in dep osits,
 advances and accrued interest           (92,558)       138,999          9,120
 Increase (decrease) in accounts
 payable and accrued expenses           (120,070)       541,775        415,599
------------------------------------------------------------------------------
Net cash used by
 operating activities                 (7,729,508)    (3,958,108)    (2,898,151)
==============================================================================

Cash Flow from Investing Activities:

Purchase of marketable
 securities                           (3,903,158)    (3,796,779)    (7,375,099)
Purchase of property,
 plant and equipment                  (5,574,241)    (6,466,880)       (26,551)
Proceeds from the sale
 and maturity of marketable
 securities                            6,991,874      6,986,043      9,940,182
Other                                   (205,764)      (384,169)       192,735
------------------------------------------------------------------------------
Net cash provided (used)
 by investing activities              (2,691,289)    (3,661,785)     2,731,267
==============================================================================

Cash Flow from Financing Activities:

Proceeds from issuance
 of common shares                      2,612,344     23,467,095      9,913,755
------------------------------------------------------------------------------
 Net cash provided by
 financing activities                  2,612,344     23,467,095      9,913,755
==============================================================================

Change in Cash and Cash Equivalents:

Net increase (decrease)
 in cash and
 cash equivalents                     (7,808,453)    15,847,202      9,746,871

Cash and cash equivalents
 - beginning of year                  27,178,705     11,331,503      1,584,632
------------------------------------------------------------------------------
Cash and cash equivalents
 - end of year                       $19,370,252    $27,178,705    $11,331,503
==============================================================================
Supplemental Cash Flow Information

Non-cash investing and financing activities:
Issuance of common
 shares as compensation                 $733,232       $198,919       $303,599
Issuance of common
 shares to KSOP Plan                    $258,971       $255,750       $256,000

The accompanying notes are an integral part of the consolidated financial
statements.
Expressed in U.S. Dollars

1.The Company and Significant Accounting Policies:

The Company. Gold Reserve Inc. (the "Company") is a mining company
incorporated in 1998 under the laws of the Yukon Territory, Canada, and is
the successor issuer to Gold Reserve Corporation. The Company's primary
mining asset, the Brisas Project, is a gold/copper deposit located in the Km
88 mining district of the State of Bolivar in southeastern Venezuela. The
Company has no revenue producing mining operations at this time. All amounts
shown herein are expressed in U.S. Dollars unless otherwise noted.

In February 1999, the shareholders of Gold Reserve Corporation approved a
plan of reorganization whereby Gold Reserve Corporation became a subsidiary
of Gold Reserve Inc., the successor issuer (the "Reorganization"). Generally,
each shareholder of Gold Reserve Corporation received one Gold Reserve Inc.
Class A common share for each common share owned of Gold Reserve Corporation.
After the Reorganization, a shareholder of Gold Reserve Inc. continued to own
an interest in the business, through subsidiary companies, that in aggregate
was essentially the same as before the Reorganization.

Certain U.S. holders of Gold Reserve Corporation elected, for tax reasons, to
receive equity units in lieu of Gold Reserve Inc. Class A common shares. An
equity unit is comprised of one Gold Reserve Inc. Class B common share and
one Gold Reserve Corporation Class B common share. The equity units are
substantially equivalent to a Class A common share and are immediately
convertible into Gold Reserve Inc. Class A common shares upon compliance with
certain procedures. Equity units are not listed for trading on any stock
exchange, but, subject to compliance with applicable federal, provincial and
state securities laws, may be transferred. Unless otherwise noted, general
references to common shares of the Company include Class A common shares and
Class B common shares as a combined group.

Presentation of Financial Statements and Consolidation. The consolidated
financial statements contained herein have been prepared in accordance with
accounting principles generally accepted in Canada, which as described in
Note 11, differ in certain respects from accounting principles generally
accepted in the United States of America.

These consolidated financial statements include the accounts of the Company,
Gold Reserve Corporation, two domestic subsidiaries, Great Basin Energies,
Inc. ("Great Basin") and MGC Ventures Inc. ("MGC Ventures"), four Venezuelan
subsidiaries, two Barbados subsidiaries and five Aruba subsidiaries which
were formed to hold the Company's interest in its foreign subsidiaries or for
future transactions. All significant intercompany accounts and transactions
have been eliminated in consolidation. The Company's policy is to consolidate
those subsidiaries where majority control exists. The Company believes it
exercises majority control of Great Basin and MGC Ventures.

Cash and Cash Equivalents. The Company considers short-term, highly liquid
investments purchased with an original maturity of three months or less to be
cash equivalents for purposes of reporting cash equivalents and cash flows. At
December 31, 2005 and 2004, the Company had approximately $702,000 and
$130,000, respectively, in Venezuela and banks outside Canada and the United
States.

Marketable Securities. Equity securities are carried at the lower of cost and
net realizable value. Corporate debt securities and U.S. treasuries and agency
obligations are carried at amortized cost.

Financial Instruments. The carrying amounts for cash and cash equivalents,
advances and accounts payable and accrued expenses on the balance sheet
approximate fair value because of the immediate or short-term maturity of
these instruments. Fair value estimates are made at the balance sheet date
based on relevant market information but involve uncertainties and therefore
cannot be determined with precision. In order to limit its exposure, the
Company diversifies its cash and investment holdings into Canadian and U.S.
treasury and agency obligations, major financial institutions and
corporations. The fair values of investments in marketable securities are
disclosed in Note 2.

Exploration and Development Costs. Exploration costs incurred in locating
areas of potential mineralization are expensed as incurred. Exploration costs
of properties or working interests with specific areas of potential
mineralization are capitalized at cost pending the determination of a
property's economic viability. Development costs of proven mining properties
not yet producing are capitalized at cost and classified as capitalized
exploration costs under property, plant and equipment. Property holding costs
are charged to operations during the period if no significant exploration or
development activities are being conducted on the related properties. Upon
commencement of production, capitalized exploration and development costs
will be amortized based on the estimated proven and probable reserves
benefited. Properties determined to be impaired or that are abandoned are
written-down to the estimated fair value. Carrying values do not necessarily
reflect present or future values.

Property, Plant and Equipment. Property, plant and equipment are recorded at
the lower of cost less accumulated depreciation. Replacements and major
improvements are capitalized. Maintenance and repairs are charged to expense
as incurred. The cost and accumulated depreciation of assets retired or sold
are removed from the accounts and any resulting gain or loss is reflected in
operations. Depreciation is provided using straight-line and accelerated
methods over the lesser of the useful life or lease term of the related
asset. During the exploration and development phase, depreciation of mining
assets is capitalized. Interest costs incurred during the construction and
development of qualifying assets are capitalized.

Impairment Test. The Company reviews long-lived assets for impairment
whenever events or changes in circumstances indicate that the carrying amount
of the assets may not be recoverable. If the sum of the expected future net
cash flows to be generated from the use or disposition of a long-lived asset
(undiscounted and without interest charges) is less than the carrying amount
of the asset, an impairment loss is recognized and the asset is written down
to fair value. Fair value is generally determined by discounting estimated
cash flows.

Foreign Currency. The U.S. Dollar is the Company's functional currency.
Foreign currency amounts are translated into U.S. Dollars using the temporal
method. Accordingly, non-monetary assets and liabilities are translated at
historical rates, monetary assets and liabilities are translated at current
rates and revenue and expense items are translated at average exchange rates
for the month in which they occur, except for depreciation which is
translated at historical rates. Translation gains and losses are included in
operating expenses.

Stock Based Compensation. Effective January 1, 2004, the Company adopted the
new requirements of the Canadian Institute of Chartered Accountants standard
3870 under which the fair value method of accounting for stock options
granted to employees and directors is followed. This new standards was
adopted retroactively without restatement of prior periods. Accordingly,
compensation expense was recorded on a retroactive basis to retained earnings
to show the effect of compensation expense associated with stock option grants
to employees and directors from January 1, 2002 to December 31, 2003, which
amounted to $419,101. Grants of stock options to non-employees and direct
awards of stock to employees and non-employees must be accounted for using
the fair value method of accounting. Consideration paid for shares on
exercise of share options in addition to the fair value attributable to stock
options granted is credited to capital stock.

Income Taxes. The Company uses the liability method of accounting for income
taxes. Future tax assets and liabilities are determined based on the
differences between the tax basis of assets and liabilities and those amounts
reported in the financial statements. The future tax assets or liabilities are
calculated using the substantively enacted tax rates expected to apply in the
periods in which the differences are expected to be settled. Future tax
assets are recognized to the extent that they are considered more likely than
not to be realized.

Measurement Uncertainty. The preparation of financial statements in
conformity with generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported amounts of assets
and liabilities, disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.

At December 31, 2005 and as of the date of this report, nearly all of our
non-cash assets, including our primary mining asset, the Brisas Project, were
located in Venezuela. Our operations in Venezuela are subject to the effects
of changes in legal, tax and regulatory regimes, national and local
political, labor and economic developments or unrest, currency and exchange
controls and import/export restrictions, government bureaucracy and
corruption and uncertain legal enforcement. We have not experienced any
significant adverse impact to date on our operations in Venezuela nor have we
curtailed our investment activities in the country. However, one or more of
the issues described herein or other factors beyond our control could
adversely affect our operations and investment in Venezuela in the future.

Management's capitalization of exploration and development costs and
assumptions regarding the future recoverability of such costs are based on,
among other things, the Company's estimate of current mineral reserves which
are based on engineering and geological estimates, estimated gold and copper
prices, estimated plant construction and operating costs and the procurement
of all necessary regulatory permits and approvals. These estimates could
change in the future and this could affect the carrying value and the
ultimate recoverability of the amounts recorded as property and mineral
rights and capitalized exploration and development costs. The Company
operates and files tax returns in a number of jurisdictions. The preparation
of such tax filings requires considerable judgment and the use of
assumptions. Accordingly, the amounts reported could vary in the future.

Net Loss Per Share. Net loss per share is computed by dividing net loss by
the combined weighted average number of Class A and B common shares
outstanding during each year, which has been reduced by the common shares
owned by Great Basin and MGC Ventures. As of December 31, 2005, 2004 and
2003, there were 3,148,844, 3,316,374 and 3,204,124 shares, respectively,
available for issuance pursuant to the exercise of previously granted share
options. In addition, at December 31, 2005 and 2004 there were 2,680,500 and
4,680,400 shares, respectively, available for issuance upon exercise of
common share purchase warrants. The effect of potential issuances of shares
under options and warrants would be anti-dilutive, and therefore basic and
diluted losses per share are the same.

Variable Interest Entities. Effective January 1, 2005, the Company adopted
the new Accounting Guideline 15 (AcG-15) "Consolidation of Variable Interest
Entities." The new standard establishes when a company should consolidate a
variable interest entity in its financial statements. AcG-15 provides the
definition of a variable interest entity and requires a variable interest
entity to be consolidated if a company is at risk of absorbing the variable
interest entity's expected losses, or is entitled to receive a majority of
the variable interest entity's residual returns, or both. The Company has
determined that it has no variable interest entities.

Asset Retirement Obligations. On January 1, 2004, the Company adopted the new
accounting standard for asset retirement obligations, Canadian Institute of
Chartered Accountants ("CICA") 3110. The standard requires that the fair
value of a liability for an asset retirement obligation be recognized in the
period in which it is incurred if a reasonable estimate of fair value can be
made. The associated asset retirement costs are capitalized as part of the
carrying amount of the long-lived asset. The adoption of this standard did
not have any impact on the Company's financial position or results of
operations of the Company.

2.      Marketable Securities:
                                     Amortized Cost/      Quoted
                                     Carrying Value      Market Value
2005
Temporary:
Corporate debt securities            $    323,581       $    324,000
Equity securities                       2,661,653          6,774,557
                                     -------------------------------
Total                                $  2,985,234       $  7,098,557
                                     ===============================

2004
Temporary:
Corporate debt securities            $    503,226       $    502,425
Equity securities                       5,025,550          8,069,528
                                     -------------------------------
Total                                $  5,528,776       $  8,571,953
                                     ===============================
Debt securities at December 31, 2005 and 2004 yield between 2% and 4%.

3.      Property, Plant and Equipment:
                                                  Accumulated
                                     Cost         Depreciation         Net
2005
United States
Furniture and office equipment      $   339,889    $ (260,120)   $    79,769
Leasehold improvements                   35,633       (35,633)             -
                                    ----------------------------------------
                                    $   375,522    $ (295,753)   $    79,769
                                    ----------------------------------------
Foreign
Property and mineral rights         $11,252,335                  $11,252,335
Capitalized exploration costs        46,381,380                   46,381,380
Buildings                               292,967    $ (265,517)        27,450
Furniture and office equipment          472,196      (421,916)        50,280
Transportation equipment                504,147      (283,300)       220,847
Machinery and equipment                 316,552      (312,511)         4,041
                                    ----------------------------------------
                                     59,219,577    (1,283,244)    57,936,333
                                    ----------------------------------------
Total                               $59,595,099   $(1,578,997)   $58,016,102
                                    ========================================
2004
United States
Furniture and office equipment      $   303,530   $  (236,887)   $    66,643
Leasehold improvements                   35,633       (35,403)           230
                                    ----------------------------------------
                                    $   339,163   $  (272,290)   $    66,873
                                    ----------------------------------------
Foreign
Property and mineral rights         $11,252,335                  $11,252,335
Capitalized exploration costs        41,034,321                   41,034,321
Buildings                               288,222   $  (253,121)        35,101
Furniture and office equipment          448,355      (408,127)        40,228
Transportation equipment                378,784      (277,942)       100,842
Machinery and equipment                 316,552      (311,234)         5,318
                                    ----------------------------------------
                                     53,718,569    (1,250,424)    52,468,145
                                    ----------------------------------------
Total                               $54,057,732   $(1,522,714)   $52,535,018
                                    ========================================
4.      KSOP Plan:

The KSOP Plan, adopted in 1990 for the benefit of employees, is comprised of
two parts, (1) a salary reduction component, or 401(k), and (2) an employee
share ownership component, or ESOP. Unallocated shares are recorded as a
reduction to shareholders' equity. Allocation of common shares to
participants' accounts is at the discretion of the Company's board of
directors, subject to certain limitations. The value of the shares allocated
is recorded in the statement of operations with a reduction of the KSOP debt
account. The Company allocated contributions to eligible participants for the
Plan years 2005, 2004 and 2003 of $280,074, $254,779 and $216,432,
respectively. As of December 31, 2005, 28,742 common shares remain
unallocated to plan participants.

5.      Share Option Plan:

The Company's Equity Incentive Plan (the "Plan") as amended in 2005, allows
for the issuance of up to 3,650,000 Class A common share purchase options, in
addition to any options issued pursuant to predecessor plans, to officers,
directors and key individuals for terms of up to ten years. The vesting
period of options ranges from immediately to up to three years. Share option
transactions for the last three years are as follows:




	                                 2005                    2004                     2003
                                           Weighted                 Weighted                 Weighted
                                           Average                  Average                  Average
                                           Exercise                 Exercise                 Exercise
                               Shares      Price        Shares      Price        Shares      Price
                                                                            
Options outstanding at
 beginning of year            3,316,374      $1.39     3,204,124      $0.95     3,368,549      $0.80
Options exercised              (573,030)      1.00      (373,954)      0.99      (400,000)      0.74
Options canceled               (115,000)      4.16       (19,296)      1.13
Options granted                 520,500       3.21       505,500       3.88       235,575       1.74
                              ----------------------------------------------------------------------
Options outstanding at
 end of year                  3,148,844      $1.36     3,316,374      $1.39     3,204,124      $0.95
                              ----------------------------------------------------------------------
Options exercisable
 at end of year               2,530,682      $1.18     2,975,374      $1.13     3,087,588      $0.94
                              ======================================================================





                                           Price                    Price                    Price
                                           Range                    Range                    Range
                                                                                 
Exercise price at end of year           $0.57-$4.14              $0.57-$4.90              $0.55-$4.14
Exercise price of exercisable options   $0.57-$4.14              $0.57-$4.14              $0.55-$4.14


The following table relates to stock options at December 31, 2005




                                                       
                                                                      Weighted Average
                         Weighted          Weighted                     Exercise Price
Price        Number      Average Remaining Average          Number      of Exercisable
Range        Outstanding Contractual Life  Exercise Price   Exercisable Options
$0.57-$0.68      85,000      0.92           $0.62             85,000      $0.62
$0.72-$0.72   1,796,769      0.44           $0.72          1,796,769      $0.72
$0.82-$1.56     248,575      1.44           $1.20            203,575      $1.28
$1.89-$1.89     524,000      4.87           $1.89            135,422      $1.89
$2.15-$3.38     177,500      4.46           $2.75              6,250      $3.19
$3.39-$3.39     155,000      3.57           $3.39            155,000      $3.39
$3.68-$4.14     162,000      3.06           $3.95            148,666      $3.97
--------------------------------------------------------------------------------------
$0.57-$4.14   3,148,844      1.78           $1.36          2,530,682      $1.18
======================================================================================


Effective January 1, 2004, the Company adopted the new requirements of the
Canadian Institute of Chartered Accountants standard 3870 under which the
fair value method of accounting for stock options granted to employees and
directors is followed. Accordingly, compensation expense was recorded on a
retroactive basis, without restatement of prior years, to retained earnings
to show the effect of compensation expense associated with stock option
grants to employees and directors from January 1, 2002 to December 31, 2003,
which amounted to $419,101.

The Company recorded additional compensation expense of $863,340 and $599,423
for stock options granted during 2005 and 2004. The fair value of the options
granted was calculated using the Black-Scholes model. In 2005, the model
assumed a weighted average risk free interest rate of 3.94%, expected life of
three years, expected volatility of 65% and a dividend yield of nil. In 2004,
the model assumed a risk free interest rate of 3.25%, expected life of five
years, expected volatility of 65% and a dividend yield of nil.

Had the fair value method of accounting been followed in prior years, the
Company would have recorded additional compensation expense of $406,108 in
2003. The fair value of the options granted in 2003 was calculated using the
Black-Scholes model and assumed a weighted average risk free interest rate of
3.7%, expected life of five years, weighted average expected volatility of 84%
and a dividend yield of nil. This adjustment would have resulted in proforma
basic and diluted net loss per share of $0.17 in 2003.

6.     Related Party Transactions:

MGC Ventures. The Chief Executive Officer, President, Vice President-Finance
and Vice President-Administration of the Company are also officers and/or
directors and shareholders of MGC Ventures. At December 31, 2005 and 2004,
the Company owned 12,062,953 common shares of MGC Ventures, which represented
47% of its outstanding shares. MGC Ventures owned 276,642 common shares of the
Company at December 31, 2005 and 2004. In addition, MGC Ventures owned 280,000
common shares of Great Basin at December 31, 2005 and 2004. During the last
three years, the Company sublet a portion of its office space to MGC Ventures
for $6,000 per year.

Great Basin. The Chief Executive Officer, President, Vice President-Finance
and Vice President-Administration of the Company are also officers and/or
directors and shareholders of Great Basin. At December 31, 2005 and 2004, the
Company owned 15,661,595 common shares of Great Basin, which represented 47%
of its outstanding shares. Great Basin owned 516,720 common shares of the
Company at December 31, 2005 and 2004. Great Basin also owned 170,800 common
shares of MGC Ventures at December 31, 2005 and 2004. During the last three
years, the Company sublet a portion of its office space to Great Basin for
$6,000 per year.

Notes Receivable from Officers. As of December 31, 2003, the Company had
$109,100 in notes receivable from officers bearing interest of between 4.6%
and 5.2% and payable on or before December 31, 2005. The notes were paid in
full in 2004.

7.      Income Tax:

No income tax benefit has been recorded for the three years ended December
31, 2005. The Company's Venezuelan subsidiaries are subject to Venezuelan
income tax but have not paid or accrued any income tax during the three years
ended December 31, 2005. Income tax accrued by the Company's domestic
subsidiaries during 2005, 2004 and 2003 amounted to $1,471, $0 and $4,733,
respectively. The Company has recorded a valuation allowance to reflect the
estimated amount of the future tax asset which may not be realized,
principally due to the uncertainty of utilization of net operating losses and
other carry forwards prior to expiration. The valuation allowance for future
tax assets may be reduced in the near term if the Company's estimate of
future taxable income changes. The components of the future income tax assets
and liabilities (excluding Venezuela) as of December 31, 2005 and 2004 were as
follows:

                                         Future Tax Asset (Liability)
                                             2005              2004
Accounts payable and accrued expenses     $130,976          $140,028
Investment income                           (4,080)           (4,570)
Property, plant and equipment            8,509,642         8,509,277
                                         ---------------------------
Total temporary differences              8,636,538         8,644,735
Net operating loss carry forward         9,400,040         7,067,835
Alternative minimum tax credit              19,871            19,871
                                         ---------------------------
Total temporary differences,
 operating losses and tax credit
 carry forwards                         18,056,449        15,732,441
Valuation allowance                    (18,056,449)      (15,732,441)
                                        ----------------------------
Net deferred tax asset                        $  -             $   -
                                        ============================

7.       Income Tax, continued:

At December 31, 2005, the Company had the following U.S. and Canadian tax
basis loss carry forwards and tax credits:

                                    U.S.       Canadian      Expires
Regular tax net operating loss:

                                 $ 272,248      $ 335,982      2006
                                 1,650,395        224,852      2007
                                 1,244,312        329,243      2008
                                   688,808        433,376      2009
                                   341,750      1,009,268      2010
                                   645,622                     2011
                                 1,424,144                     2012
                                         -      1,742,794      2014
                                         -      2,608,269      2015
                                 1,386,674                     2018
                                 1,621,230                     2019
                                   665,664                     2020
                                   896,833                     2021
                                 1,435,774                     2022
                                 1,806,275                     2023
                                 2,760,522                     2024
                                 4,123,142                     2025
                               ------------------------------------
                               $20,963,393     $6,683,784
                               ====================================
Alternative minimum tax net operating loss:

                               $   289,523                     2006
                                 1,624,454                     2007
                                 1,218,023                     2008
                                   660,271                     2009
                                   304,472                     2010
                                   618,845                     2011
                                 1,399,529                     2012
                              -------------------------------------
                               $ 6,115,117
                              =====================================
Alternative
minimum
tax credit                         $19,871
                              ============

8.      Geographic Segments:
                              North America     South America    Consolidated
-----------------------------------------------------------------------------
2005
Other income                   $ 1,402,868                       $ 1,402,868
Depreciation                        23,462      $    69,695           93,157
Net loss                         5,802,593        3,224,689        9,027,282

Identifiable assets
Property, plant and
 equipment, net                   $ 79,769      $57,936,333      $58,016,102
General corporate assets        22,164,983        1,773,787       23,938,770
----------------------------------------------------------------------------
Total identifiable assets      $22,244,752      $59,710,120      $81,954,872
============================================================================

2004
Other income                   $   899,881                       $   899,881
Depreciation                        20,723           37,456           58,179
Net loss                         3,620,963      $ 1,861,666        5,482,629

Identifiable assets
Property, plant and
 equipment, net                $    66,873      $52,468,145      $52,535,018
General corporate assets        32,962,146        1,108,367       34,070,513
----------------------------------------------------------------------------
Total identifiable assets      $33,029,019      $53,576,512      $86,605,531
============================================================================

2003
Other income                   $   770,381                       $   770,381
Depreciation                        25,645           18,985           44,630
Net loss                         2,146,525      $ 1,560,811        3,707,336

Identifiable assets
Property, plant and
 equipment, net                $    55,510      $46,070,807      $46,126,317
General corporate assets        20,095,630          808,535       20,904,165
----------------------------------------------------------------------------
Total identifiable assets      $20,151,140      $46,879,342      $67,030,482
============================================================================

Revenues and identifiable assets of each segment are those that are directly
identified with those operations.

9.     Commitments:

The Company leases office space under a non-cancelable operating lease. In
January 2004, the lease was renewed for an additional five years commencing
March 1, 2004. Rent expense under the lease during 2005, 2004 and 2003 was
$115,180, 112,352 and 110,442, respectively. Future minimum annual rent
payable under the lease is $118,813 in 2006, $119,440 for 2007 and 2008 and
$19,907 in 2009.

10.     Shareholder Rights Plan:

The Company instituted a shareholder rights plan (the "Rights Plan") in 1999.
Since the original approval by the Shareholders, the Rights Plan and the
Rights Plan Agreement have been amended and continued from time to time, the
most recent amendment being on March 14, 2003. In March 2006, the
shareholders approved certain amendments to the Plan including continuing the
Shareholder Rights Plan until June 30, 2009. The Rights Plan is intended to
give adequate time for shareholders of the Company to properly assess the
merits of a take-over bid without pressure and to allow competing bids to
emerge. The Rights Plan is designed to give the board of director's time to
consider alternatives to allow shareholders to receive full and fair value
for their common shares. One right is issued in respect of each outstanding
share. The rights become exercisable only when a person, including any party
related to it or acting jointly with it, acquires or announces its intention
to acquire 20% or more of the Company's outstanding shares without complying
with the "permitted bid" provisions of the Rights Plan. Each right would, on
exercise, entitle the holder, other than the acquiring person and related
persons, to purchase common shares of the Company at a 50% discount to the
market price at the time.

11.      Differences Between Canadian and U.S. GAAP:

The Company prepares its consolidated financial statements in accordance with
generally accepted accounting principles (GAAP) in Canada. The effect of the
principal measurement differences between U.S. and Canadian GAAP are
summarized below.

                              Canadian GAAP      Change            U.S. GAAP
2005
Total assets                   $81,954,872     $(36,921,417)A,C   $45,033,455
Total shareholders' equity      79,637,766      (36,921,417)A,C    42,716,349
Net loss                        (9,027,282)       3,149,038 B      (5,878,244)
Loss per common share(1)             (0.26)            0.09             (0.17)
Cash flow used by operations    (7,729,508)                        (7,729,508)
Cash flow (used) provided
 by investing activities        (2,691,289)                        (2,691,289)
=============================================================================
2004
Total assets                   $86,605,531     $(37,990,343)A,C   $48,615,188
Total shareholders' equity      84,176,058      (37,990,343)A,C    46,185,715
Net loss                        (5,482,629)      (4,877,262)B,C   (10,359,891)
Loss per common share(1)             (0.19)           (0.16)            (0.35)
Cash flow used by operations    (3,958,108)      (6,268,328) C    (10,226,436)
Cash flow (used) provided
 by investing activities        (3,661,785)       6,268,328C        2,606,543
=============================================================================
2003
Total assets                   $67,030,482     $(31,651,868)A,C   $35,378,614
Total shareholders' equity      65,138,471      (31,651,868)A,C    33,486,603
Net loss                        (3,707,336)      (7,704,726)B     (11,412,062)
Loss per common share(1)             (0.15)           (0.31)            (0.46)
Cash flow used by operations    (2,898,151)                        (2,898,151)
Cash flow provided
 by investing activities         2,731,267                          2,731,267
=============================================================================

1.     Basic and diluted

A      Under U.S. GAAP, marketable securities would be divided between
held-to-maturity securities and available-for-sale securities. Those
securities classified as available-for-sale would be recorded at market value
and the unrealized gain or loss would be recorded as a separate component of
shareholders' equity. The increase in total assets and total shareholders'
equity between Canadian and U.S. GAAP for the years ended December 31, 2005,
2004, and 2003 was $4,112,904, $3,043,978, and $3,114,125, respectively.

B      For U.S. GAAP purposes, the Company accounts for stock-based employee
compensation arrangements using the intrinsic value method prescribed in
Accounting Principles Board (APB) Opinion No.25, "Accounting for Stock Issued
to Employees". Under U.S. GAAP, when the exercise price of certain stock
options is amended (the "Repricing "), these options are accounted for as
variable compensation from the date of the effective Repricing. Under this
method, following the repricing date, compensation expense is recognized when
the quoted market value of the Company's common shares exceeds the amended
exercise price. Should the quoted market value subsequently decrease, a
recovery of a portion, or all of the previously recognized compensation
expense will be recognized. For U.S. GAAP purposes, the Company will adopt
SFAS 123, "Accounting for Stock Based Compensation" effective January 1,
2006. SFAS 123 requires the use of the fair value method of accounting for
stock based compensation. This standard is substantially consistent with the
revised provisions of CICA 3870, which was adopted by the Company for
Canadian GAAP effective January 1, 2004. For U.S.GAAP, the Company will apply
the modified retrospective method of adoption included in SFAS 148 and will
adjust shareholders' equity in 2006 as if the fair value based accounting
method in this statement had been used to account for all employees awards
granted, modified or settled in fiscal years beginning after December
14,1994. This standard is consistent with the revised provisions of CICA
3870, adopted for Canadian GAAP effective January 1, 2004. The change in net
loss between Canadian and U.S. GAAP for the years ended December 31, 2005,
2004, and 2003 was $3,149,038, $1,391,066 and ($7,704,726), respectively.

C      Under Canadian GAAP we capitalize mine development costs after proven
and probable reserves have been established. We also capitalize costs on
properties where we have found non-reserve material that does not meet all
the criteria required for classification as proven or probable reserves.
Under U.S. GAAP, exploration and development expenditures incurred on
properties where mineralization has not been classified as a proven and
probable reserves under SEC rules are expensed as incurred. Accordingly,
certain expenditures are capitalized for Canadian GAAP purposes but expensed
under U.S. GAAP. The increase in net loss between Canadian and U.S. GAAP for
the years ended December 31, 2005, 2004, and 2003 was $0, $6,268,328 and $0,
respectively.

12.     Common Shares

During 2005, 573,030 shares were issued upon exercise of stock options,
533,735 shares were issued upon exercise of warrants, 251,350 shares were
issued for compensation and 75,000 shares were issued to the KSOP plan

In 2004, the Company completed an offering of 5,361,000 Units at Canadian
$5.60 per Unit. Each Unit consists of one Class A common share and one half
Class A common share purchase warrant. Each whole Class A common share
purchase warrant entitles its holder to acquire one Class A common share at a
price of Canadian $6.50 for a period of 24 months following the closing date
of the Offering. The net proceeds of the offering amounted to approximately
Canadian $30 million (U.S.$ 25 million). In addition to the 5,361,000 shares
from the financing, 373,954 shares were issued upon exercise of stock
options, 75,000 shares were issued to the KSOP plan, 54,000 shares were
issued as compensation and 21,100 shares were issued upon exercise of
warrants.

In 2003, the company completed an offering 4,042,000 Units at Canadian $3.50
per Unit. Each Unit consists of one Class common share and one half Class A
common share purchase warrant. Each whole Class A common share purchase
warrant entitles its holder to acquire one Class A common share at a price of
Canadian $5.25 for a period of 18 months following the closing of the
offering. The net proceeds of the offering amounted to approximately Canadian
$13 million (U.S.$ 9.6 million). In addition to the 4,042,000 shares from the
financing, 400,000 shares were issued upon exercise of employee stock
options, 200,000 shares were issued to the KSOP plan and 60,000 shares were
issued primarily for independent director compensation.

As of December 31, 2005, the Company had the following warrants outstanding:

Date      Number of     Number of        Exercise     Estimated      Expiration
Issued    Warrants      shares issuable  Price (CAD$) Proceeds (CAD$)      Date
11/04/04  2,680,500     2,680,500        $6.50        $17,423,250      11/05/06

13.     New standards

Deferred Stripping Costs. In October 2005, the CICA Emerging Issues Committee
(EIC) issued for comment a draft abstract, EIC D56 "Accounting for Deferred
Stripping Costs in the Mining Industry". If adopted, this EIC would require
stripping costs to be accounted for as variable production costs to be
included in inventory unless the stripping activity can be shown to be a
betterment of the mineral property, in which case the stripping costs would
be capitalized. A betterment occurs when stripping activity increases future
output of the mine by providing access to additional sources of reserves.
Capitalized stripping costs would be amortized on a units-of-production basis
over the proven and probable reserves to which they relate. As at December 31,
2005 the company had no deferred stripping costs.

Non-monetary Transactions. CICA Handbook Section 3831 "Non-Monetary
Transactions" will be applicable to the company commencing with the 2006
financial year.

Derivative Instruments. In January 2005, the Canadian Institute of Chartered
Accountants (CICA) issued three new standards relating to financial
instruments. These standards are applicable for fiscal years beginning on or
after October 1, 2006. The company is currently reviewing the impact of these
new standards. These standards are as follows:

Financial Instruments - Recognition and Measurement, Section 3855. This
standard prescribes when a financial asset, financial liability, or
non-financial derivative is to be recognized on the balance sheet and whether
fair value or cost-based measures are used. It also specifies how financial
instrument gains and losses are to be presented.

Hedges, Section 3865. This standard is applicable when a company chooses to
designate a hedging relationship for accounting purposes. It builds on the
existing Accounting Guideline AcG-13 "Hedging Relationships", and Section
1650 "Foreign Currency Translation", by specifying how hedge accounting is
applied and what disclosures are necessary when it is applied.

Comprehensive Income, Section 1530. This standard introduces new rules for
the reporting and display of comprehensive income. Comprehensive income,
which is currently reported under US GAAP, is the change in shareholders'
equity (net assets) of an enterprise during a reporting period from
transactions and other events and circumstances from non-owner sources. It
includes all changes in equity during a period except those resulting from
investments by owners and distributions to owners. These items include
holding gains and losses on certain investments, gains and losses on certain
derivative instruments and foreign currency gains and losses related to
self-sustaining foreign operations (cumulative translation adjustment).

Recent U.S. Accounting Pronouncements

During June 2005, the FASB issued SFAS No. 154, Accounting for Changes and
Error Corrections. The new standard requires that entities which make a
voluntary change in accounting principle apply that change retroactively to
prior period financial statements, unless this would be impracticable. For
changes in methods of depreciation, amortization or depletion for long-lived
assets, the change must be accounted for prospectively, as a change in
estimate. SFAS No. 154 is effective for the company's 2006 financial
statements.

In June 2005, the Emerging Issues Task Force issued EITF 04-06 - Accounting
for Post-Production Stripping Costs in the Mining Industry. The EITF requires
that stripping costs incurred during the production phase of a mine are
variable production costs that should be included in the costs of the
inventory produced during the period that the stripping costs are incurred.
EITF 04-06 is effective for the company's 2006 financial statements and may
result in a GAAP difference based on the proposed Canadian EIC D56
"Accounting for Deferred Stripping Costs in the Mining Industry". If adopted,
this EIC would require stripping costs to be accounted for as variable
production costs to be included in inventory unless the stripping activity
can be shown to be a betterment of the mineral property, in which case the
stripping costs would be capitalized. As at December 31, 2005 the company had
no deferred stripping costs.

Item 18. Financial Statements - Not Applicable

Item 19. Exhibits

Exhibits. The following exhibits are filed as part of this report.
Exhibit
Number       Exhibit
3.1      Shareholder Rights Plan Agreement (as Amended) of the Company
         (including form of Rights Certificate) Date
3.2      Gold Reserve Inc. Equity Incentive Plan
3.3      Letter Agreement with SNC Lavalin Engineers &
         Constructors, Inc.
12.1     Certificate of Gold Reserve Inc. Chief Executive
         Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
12.2     Certificate of Gold Reserve Inc. Vice President-Finance pursuant to
         Section 302 of the Sarbanes-Oxley Act of 2002
13.1     Certificate of Gold Reserve Inc. Chief Executive Officer pursuant
         to Section 906 of the Sarbanes-Oxley Act of 2002
13.2     Certificate of Gold Reserve Inc.Vice President-Finance pursuant to
         Section 906 of the Sarbanes-Oxley Act of 2002
99.1     Consent of PricewaterhouseCoopers LLP
99.2     Consent of Pincock Allen & Holt
99.3     Consent of SNC-Lavalin Engineers & Constructors, Inc.

The following exhibits previously filed are incorporated by reference herein.
Exhibit
Number       Exhibit

1.0      Restated Articles of Incorporation of the Company. Filed as Exhibit
3.1 to the Proxy Statement/Joint Prospectus included as a part of the
Company's Registration Statement on Form  S-4 (Registration No. 333-68061)
filed with the Commission on November 27, 1998 and incorporated by reference
herein.

1.1      Bylaws of the Company. Filed as Exhibit 3.2 to the Proxy
Statement/Joint Prospectus included as a part of the Company's Registration
Statement on Form S-4 (Registration No. 333-68061) filed with the Commission
on November 27, 1998 and incorporated by reference herein.

2.0      Agreement and Plan of Merger, dated as of October 5, 1998, by and
among Gold Reserve Corporation (predecessor issuer), Gold Reserve Inc.
(successor issuer) and GR-Merger Corp. Filed as Annex I to the Proxy
Statement/Joint Prospectus included as a part of the Company's Registration
Statement on Form S-4 (Registration No. 333-68061) filed with the Commission
on November 27, 1998 and incorporated by reference herein.

2.1      Exchange Agreement by and among Gold Reserve Corporation, the
Company, TranSecurities International, Inc. and Holders of Unit Shares, dated
November 17, 1998. Filed as Exhibit 4.1 to the Proxy Statement/Joint
Prospectus included as a part of the Company's Registration Statement on
Form  S-4 (Registration No. 333-68061) filed with the Commission on November
27, 1998 and incorporated by reference herein.

2.2      Form of Certificate for the Company's Class A common shares. Filed
as Exhibit 4.4 to the Proxy Statement/Joint Prospectus included as a part of
the Company's Registration Statement on Form  S-4 (Registration No.
333-68061) filed with the Commission on November 27, 1998 and incorporated by
reference herein.

2.3      Form of Certificate for the Unit Share. Filed as Exhibit 4.5 to the
Proxy Statement/Joint Prospectus included as a part of the Company's
Registration Statement on Form S-4 (Registration No. 333-68061) filed with
the Commission on November 27, 1998 and incorporated by reference herein.

4.0      Form of Change in Control Agreement. Filed as Exhibit 4.0 to the
Company's Annual Report on Form 20-F (File No. 000-30102) filed with the
Commission on May 9, 2003 and incorporated by reference herein.

8.0     Subsidiaries of Registrant. Filed as Exhibit 21 to the Proxy
Statement/Joint Prospectus included as a part of the Company's Registration
Statement on Form S-4 (Registration No. 333-68061) filed with the Commission
on November 27, 1998 and incorporated by reference herein.

9.0     Executive Summary-Brisas Project Feasibility Study, dated January
2005. Filed on Form 6-K (File No. 001-31819) with the Commission on February
14, 2005 and incorporated by reference herein.

Signatures

The registrant hereby certifies that it meets all of the requirements for
filing on Form 20-F and has duly caused and authorized the undersigned to
sign this annual report on its behalf.

GOLD RESERVE INC.


By: s/ Rockne J. Timm                By: s/ Robert A. McGuinness
Rockne J. Timm,                      Robert A. McGuinness,
its Chief Executive Officer          its Vice President of Finance,
March 30, 2006                       Chief Financial Officer, and
                                     its Principal Financial
                                     and Accounting Officer
                                     March 30, 2006


Exhibit 3.1      - Shareholder Rights Plan Agreement (as Amended) of the
                   Company (including form of Rights Certificate) Date

SHAREHOLDER RIGHTS PLAN AGREEMENT

MEMORANDUM OF AGREEMENT, dated as of October 5, 1998, amended as of
March 20, 2000  and June 2, 2000, and amended and restated as of March 14, 2003,
and amended and restated as of January 29, 2006 between Gold Reserve Inc.
(the  "Corporation"), a corporation incorporated under the laws of the Yukon
Territory, and Computershare Investor Services Inc., a trust company
incorporated under the laws of Canada (the "Rights Agent");

WHEREAS in order to maximize shareholder value the Board of Directors of the
Corporation has determined that it is advisable for the Corporation to adopt a
shareholder rights plan (the "Rights  Plan");

WHEREAS in order to implement the adoption of a shareholder rights plan as
established by this Agreement, the board of directors of the Corporation has:

     (a)    authorized the issuance, effective immediately following the
Effective Time (as hereinafter defined), of one Right (as hereinafter defined)
in respect of each Common Share (as hereinafter  defined) outstanding
immediately following  the Effective Time (the "Record Time"); and

    (b)      authorized the issuance of one Right in respect of each Common
Share of the Corporation issued after the Record Time and prior to the earlier
of the Separation Time (as hereinafter defined) and the Expiration Time (as
hereinafter defined).

AND WHEREAS each Right, when issued, will entitle the holder thereof, after the
Separation Time, to purchase securities of the Corporation pursuant to the
terms and subject to the conditions set forth herein;

AND WHEREAS the Corporation desires to appoint the Rights Agent to act on
behalf of the Corporation and the holders of Rights, and the Rights Agent is
willing to so act, in connection with  the issuance, transfer, exchange and
replacement of Rights Certificates (as hereinafter defined), the exercise of
Rights and other matters referred to herein;

NOW THEREFORE, in consideration of the premises and the respective covenants
and agreements set forth herein, and subject to such covenants and agreements,
the parties hereby agree as follows:

ARTICLE 1

INTERPRETATION

1.1      Certain Definitions

For purposes of this Agreement, the following terms have the meanings
indicated:

(a)  "ACQUIRING PERSON" shall mean any Person who is the Beneficial Owner of 20
per cent or more of the outstanding Voting Shares; provided, however, that the
term "Acquiring Person" shall not include:

     (i) the Corporation or any Subsidiary of the Corporation;

    (ii) any Person who becomes the Beneficial Owner of 20 per cent or more of
the Outstanding Voting Shares as a result of one or any combination of (A) a
Voting Share Reduction, (B)  Permitted Bid Acquisitions, (C) an Exempt
Acquisition or (D) Pro Rata Acquisitions; provided, however, that if a Person
becomes the Beneficial Owner of 20 per cent or more of the outstanding  Voting
Shares by reason of one or any combination of the operation of Paragraphs (A),
(B), (C) or (D) above and such Person's Beneficial Ownership of Voting Shares
thereafter increases by more  than 1 per cent of the number of Voting Shares
outstanding (other than pursuant to one or any  combination of a Voting Share
Reduction, a Permitted Bid Acquisition, an Exempt Acquisition or a  Pro Rata
Acquisition), then as of the date such Person becomes the Beneficial Owner of
such additional Voting Shares, such Person shall become an "Acquiring Person";

    (iii) for a period of ten days after the Disqualification Date (as defined
below), any Person who becomes the Beneficial Owner of 20 per cent or more of
the outstanding Voting Shares as a result of such Person becoming disqualified
from relying on Clause 1.1(g)(B) because such Person makes or announces a
current intention to make a Take-over Bid, either alone or by acting jointly
or in concert with any other Person. For the purposes of this definition,
"Disqualification Date" means the first date of public announcement that any
Person is making or intends to make a Take-over Bid;

      (iv) an underwriter or member of a banking or selling group that
becomes the Beneficial Owner of 20 per cent or more of the Voting Shares in
connection with a distribution to the public of securities of the
Corporation; or

       (v) a Person (a "Grandfathered Person") who is the Beneficial Owner of
20 per cent or more of the outstanding Voting Shares of the Corporation
determined as of 12:01 am (Toronto  time) on the Agreement Date, provided,
however, that this exception shall not be, and shall cease to be, applicable
to a Grandfathered Person in the event that such Grandfathered Person  shall,
after 12:01 am (Toronto time) on the Agreement Date, become the Beneficial
Owner of any additional Voting Shares of the Corporation that increases its
Beneficial Ownership of Voting Shares  by more than 1 per cent of the number
of Voting Shares outstanding, other than through one or any  combination of
a Permitted Bid Acquisition, an Exempt Acquisition, a Voting Share Reduction,
or a Pro Rata Acquisition;

(b)     "AFFILIATE": when used to indicate a relationship with a specified
Person, shall mean a Person that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control
with, such specified Person;

(c)     "AGREEMENT" shall mean this shareholder rights plan agreement dated
as of October 5, 1998 between the Corporation and the Rights Agent, as amended
or supplemented from time to  time; "hereof", "herein", "hereto" and similar
expressions mean and refer to this Agreement as a whole and not to any
particular part of this Agreement;

(d)     "AGREEMENT DATE" means October 5, 1998;

(e)     "ANNUAL CASH DIVIDEND" shall mean cash dividends paid in any fiscal
year of the Corporation to the extent that such cash dividends do not exceed,
in the aggregate, the greatest of:

        (i)     200 per cent of the aggregate amount of cash dividends declared
payable by the Corporation on its Common Shares in its immediately preceding
fiscal year;

       (ii)     300 per cent of the arithmetic mean of the aggregate amounts of
the annual cash dividends declared payable by the Corporation on its Common
Shares in its three immediately preceding fiscal years; and

      (iii)     100 per cent of the aggregate consolidated net income of the
Corporation, before extraordinary items, for its immediately preceding fiscal
year;

(f)     "ASSOCIATE" means, when used to indicate a relationship with a
specified Person, a spouse of that Person, any Person of the same or opposite
sex with whom that Person is living in a conjugal relationship outside marriage,
a child of that Person or a relative of that Person if that relative has the
same residence as that Person;

(g)     A Person shall be deemed the "BENEFICIAL OWNER" of, and to have
"BENEFICIAL OWNERSHIP" of, and to "BENEFICIALLY OWN",

       (i)      any securities as to which such Person or any of such Person's
Affiliates or Associates is the owner at law or in equity;

      (ii)      any securities as to which such Person or any of such Person's
Affiliates or Associates has the right to acquire (whether such right is
exercisable immediately or within a period of 60 days thereafter and whether
or not on condition or the happening of any contingency) pursuant to any
agreement, arrangement, pledge or understanding, whether or not in writing
(other than (x) customary agreements with and between underwriters and/or
banking group members and/or selling group members with respect to a
distribution of securities by the Corporation, and (y) pledges of securities
in the ordinary course of business), or upon the exercise of any conversion
right, exchange right, share purchase right (other than the Rights),
warrant or option;

     (iii)      any securities owned through a trustee, legal representative,
agent or other intermediary;


     (iv)       any securities which are Beneficially Owned within the
meaning of Clauses 1.1(g)(i), (ii) or (iii) by any other Person with which
such Person is acting jointly or in concert;

provided, however, that a Person shall not be deemed the "BENEFICIAL OWNER" of,
or to have "BENEFICIAL OWNERSHIP" of, or to "BENEFICIALLY OWN", any security:

               (A)     where such security has been deposited or tendered
pursuant to any Take-over Bid or where the holder of such security has agreed
pursuant to a Permitted Lock-Up Agreement to deposit or tender such security
pursuant to a Take-over Bid, in each case made  by such Person, made by any of
such Person's Affiliates or Associates or made by any other Person acting
jointly or in concert with such Person, until such deposited or tendered
security has been taken up or paid for, whichever shall first occur;

               (B)     where such Person, any of such Person's Affiliates or
Associates or any other Person referred to in Clause 1.1(g)(iv), holds such
security provided that (1) the ordinary business of any such Person (the
"Investment Manager") includes the management of investment funds for others
(which others, for greater certainty, may include or be limited to one or more
employee benefit plans or pension plans) and such security is held by the
Investment Manager in the ordinary course of such business in the performance
of such Investment Manager's duties for the account of any other Person or
Persons (a  "Client"); or (2) such Person (the "Trust Company") is licensed to
carry on the business of a  trust company under applicable laws and, as such,
acts as trustee or administrator or in  a similar capacity in relation to the
estates of deceased or incompetent Persons (each an "Estate Account") or in
relation to other accounts (each an "Other Account") and holds such security in
the ordinary course of such duties for the estate of any such deceased or
incompetent Person or for such Other Accounts, (3)such Person is a pension plan
or fund (a "Plan") or is a Person established by statute for purposes that
include, and the ordinary business or activity of such Person (the "Statutory
Body") includes, the management of investment funds for employee benefit plans,
pension plans, insurance plans of various public bodies; or (4) such Person
(the "Administrator") is the administrator or trustee of one or more Plans;
provided, in any of the above cases, that the Investment Manager, the Trust
Company, the Statutory Body, the Administrator or the Plan, as the case may be,
is not then making or has not then announced an intention to make a Take-over
Bid, (other than an Offer to Acquire Voting Shares or other securities by means
of a distribution by the Corporation or by means of ordinary market transactions
(includingprearranged trades) executed through the facilities of a stock
exchange or organized over-the-counter market) alone or by acting jointly or
in concert with any other Person;

             (C)     where such Person or any of such Person's Affiliates or
Associates is (1) a Client of the same Investment Manager as another Person
on whose account the Investment Manager  holds such security, (2) an Estate
Account or an Other Account of the same Trust  Company as another Person on
whose account the Trust Company holds or exercises  voting or dispositive
power over such security, or (3) a Plan with the same  Administrators as
another Plan on whose account the Administrator holds such  security;

             (D)     where such Person is (1) a Client of an Investment
Manager and such security  is owned at law or in equity by the Investment
Manager, (2) an Estate Account or an Other  Account of a Trust Company and
such security is owned at law or in equity by the  Trust Company or (3) a
Plan and such security is owned at law or in equity by the  Administrator of
the Plan; or

              (E)    where such person is the registered holder of
securities as a result of  carrying on the business of or acting as a nominee
of a securities depository.

(h)     "BOARD OF DIRECTORS" shall mean the board of directors of the
Corporation or  any duly constituted and empowered committee thereof;

(i)     "BUSINESS DAY" shall mean any day other than a Saturday, Sunday or a
day on  which banking institutions in Toronto, Ontario are authorized or
obligated by law to close;

(j)     "CANADIAN DOLLAR EQUIVALENT" of any amount which is expressed in
United  States Dollars means, on any date, the Canadian dollar equivalent of
such amount determined by  multiplying such amount by the U.S. - Canadian
Exchange Rate in effect on such date;

(k)     "CANADIAN - U.S. EXCHANGE RATE" means, on any date, the inverse of
the U.S. -  Canadian Exchange Rate in effect on such date;

(l)     "CLASS A SHARES" means the class A common shares in the capital of
the  Corporation;

(m)     "CLASS B SHARES" means the class B common shares in the capital of
the  Corporation;

(n)     "CLOSE OF BUSINESS" on any given date shall mean the time on such
date (or,  if such date is not a Business Day, the time on the next
succeeding Business Day) at which the transfer  office of the transfer agent
(or co-transfer agent) for the Common Shares in the City of Toronto (or,
after the Separation Time, the office of the Rights Agent in the City of
Toronto) is closed to the public;

(o)     "COMMON SHARES" shall mean the Class A Shares and the Class B Shares
in the  capital of the Corporation and, for the purposes of this Agreement,
except as specifically  otherwise provided herein, the Class A Shares and the
Class B Shares shall be treated as a single class of common  shares;

(p)     "COMPETING PERMITTED BID" means a Take-over Bid that (i) is made
after a Permitted Bid has been made and prior to the expiry of the  Permitted
Bid; (ii) satisfies all of the provisions of a Permitted Bid other than
the condition  set forth in Clause (ii) of the definition of a Permitted Bid;
and (iii) contains, and the take-up and payment for securities tendered or
deposited is  subject to, an irrevocable and unqualified provision that no
Voting Shares will be taken up or  paid for pursuant to the Take-over Bid
prior to the close of business on the date that is no earlier  than the later
of (A) 21 days after the date of the Take-over Bid constituting the
Competing  Permitted Bid; and (B) 60 days following the date on which the
earliest Permitted Bid which preceded  the Competing Permitting Bid was made;
and only if at the date that the Voting Shares are to be  taken up more than
50% of the Voting Shares held by Independent Shareholders shall have been
deposited or tendered pursuant to the Competing Permitted Bid and not
withdrawn;

(q)     "CONTROLLED": a corporation shall be deemed to be "controlled" by
another  Person if: (i) securities entitled to vote in the election of
directors carrying more than  50 per cent of the votes for the election of
directors are held, directly or indirectly, by or for the  benefit of the
other Person; and (ii) the votes carried by such securities are entitled, if
exercised, to elect a  majority of the board of directors of such
corporation; and "controls", "controlling" and "under common control with"
shall be interpreted  accordingly;

(r)     "CO-RIGHTS AGENTS" shall have the meaning ascribed thereto in
Subsection  4.1(a);

(s)     "DIVIDEND REINVESTMENT ACQUISITION" shall mean an acquisition of
Voting  Shares of any class pursuant to a Dividend Reinvestment Plan;

(t)     "DIVIDEND REINVESTMENT PLAN" means a regular dividend reinvestment or
other  plan of the Corporation made available by the Corporation to holders of
its securities where  such plan permits the holder to direct that some or all
of: (i) dividends paid in respect of shares of any class of the Corporation;
(ii) proceeds of redemption of shares of the Corporation; (iii) interest
paid on evidences of indebtedness of the Corporation; or (iv) optional cash
payments; be applied to the purchase from the Corporation of Common Shares;

(u)     "EFFECTIVE TIME" means February 4, 1999

(v)     "ELECTION TO EXERCISE" shall have the meaning ascribed thereto in
Clause  2.2(d)(ii);

(w)     "EXEMPT ACQUISITION" means a share acquisition in respect of which
the Board  of Directors has waived the application of Section 3.1 pursuant to
the provisions of Subsection  5.1(b), (c) or (d);

(x)     "EXERCISE PRICE" shall mean, as of any date, the price at which a
holder may  purchase the securities issuable upon exercise of one whole Right
which, until adjustment thereof in  accordance with the terms hereof, shall be
$70.00;

(y)     "EXPANSION FACTOR" shall have the meaning ascribed thereto in
Clause  2.3(a)(x);

(z)     "EXPIRATION TIME" shall mean 5:00 p.m. Toronto time on June 30, 2006
unless such time is extended for an additional three-year period puruant to
Section 5.16;

(aa)     "FLIP-IN EVENT" shall mean a transaction in or pursuant to which any
Person  becomes an Acquiring Person;

(bb)     "HOLDER" shall have the meaning ascribed thereto in Section 2.8;

(cc)     "INDEPENDENT SHAREHOLDERS" shall mean holders of Voting Shares,
other than:

          (i)     any Acquiring Person;
         (ii)     any Offeror, other than a Person referred to in Clause
1.1(g)(B);
        (iii)     any Affiliate or Associate of any Acquiring Person or
Offeror;
         (iv)     any Person acting jointly or in concert with any Acquiring
Person or Offeror; and
          (v)     any employee benefit plan, deferred profit sharing plan,
stock participation plan and any other similar plan or trust for the benefit
of employees of the Corporation or a Subsidiary of the Corporation, unless
the beneficiaries of the plan or trust direct the manner in  which the
Voting Shares are to be voted or direct whether the Voting Shares are to be
tendered to a Take-over Bid;

(dd)     "MARKET PRICE" per share of any securities on any date of
determination shall mean the average of the daily closing prices per share
of such securities (determined as described below) on each of the 20
consecutive Trading Days through and including the Trading Day immediately
preceding such date; provided, however, that if an event of a type analogous
to any of the events described in Section 2.3 hereof shall have caused the
closing prices used to determine the Market Price on any Trading Days not to
be fully comparable with the closing price on such date of determination or,
if the date of determination is not a Trading Day, on the immediately
preceding Trading Day, each such closing price so used shall be
appropriately adjusted in a manner analogous to the applicable adjustment
provided for in Section 2.3 hereof in order to make it fully comparable with
the closing price on such date of determination or, if the date of
determination is not a Trading Day, on the immediately preceding Trading
Day. The closing price per share of any securities on any date shall be:

        (i)    the closing board lot sale price or, in case no such sale
takes place on such  date, the average of the closing bid and asked prices
for each of such securities as reported by the  principal Canadian stock
exchange on which such securities are listed or admitted to trading;

       (ii)    if for any reason none of such prices is available on such day
or the securities are not listed or posted for trading on a Canadian stock
exchange, the last sale price or, in case no such sale takes place on such
date, the average of the closing bid and asked prices for each of such
securities as reported by the principal national United States securities
exchange or market on which such securities are listed or admitted to
trading;

      (iii)    if for any reason none of such prices is available on such day
or the  securities are not listed or admitted to trading on a Canadian stock
exchange or a national United States  securities exchange or market, the last
sale price or, in case no sale takes place on such date, the  average of the
high bid and low asked prices for each of such securities in the
over-the-counter  market, as quoted by any reporting system then in use; or

       (iv)    if for any reason none of such prices is available on such day
or the securities are not listed or admitted to trading on a Canadian stock
exchange or a national United States  securities exchange or market or quoted
by any such reporting system, the average of the closing bid and asked prices
as furnished by a professional market maker making a market in the securities;

provided, however, that if for any reason none of such prices is available on
such day, the closing price per share of such securities on such date means
the fair value per share of such securities on such date as determined by a
nationally or internationally recognized investment dealer or investment
banker with respect to the fair value per share of such securities. The
Market Price shall be expressed in Canadian dollars and, if initially
determined in respect of any day forming part of the 20 consecutive Trading
Day period in question in United States dollars, such amount shall be
translated into Canadian dollars on such date at the Canadian Dollar
Equivalent thereof.

(ee)     "1933 SECURITIES ACT" means the Securities Act of 1933 of the United
States,  as amended, and the rules and regulations thereunder as now in effect
or as the same may from time to  time be amended, re-enacted or replaced;

(ff)     "1934 EXCHANGE ACT" means the Securities Exchange Act of 1934 of the
United  States, as amended, and the rules and regulations thereunder as now in
effect or as the same may from  time to time be amended, re-enacted or
replaced;

(gg)     "NOMINEE" shall have the meaning ascribed thereto in Subsection
2.2(c);

(hh)     "OFFER TO ACQUIRE" shall include:

        (i)   an offer to purchase or a solicitation of an offer to sell; and
       (ii)   an acceptance of an offer to sell, whether or not such offer to
              sell has been solicited;
or any combination thereof, and the Person accepting an offer to sell shall
be deemed to be making an Offer to Acquire to the Person that made the offer
to sell;

(ii)     "OFFEROR" shall mean a Person who has announced an intention to make
or who is making a Take-over Bid;

(jj)     "PERMITTED BID" means a Take-over Bid made by an Offeror by way of
take-over bid circular which also complies with the following additional
provisions:

      (i)     the Take-over Bid is made to all holders of Voting Shares as
registered on  the books of the Corporation, other than the Offeror;
     (ii)     the Take-over Bid contains, and the take-up and payment for
securities tendered or deposited is subject to, an irrevocable and
unqualified provision that no Voting Shares will be taken up or paid for
pursuant to the Take-over Bid prior to the close of business on the date
which is not less than 60 days following the date of the Take-over Bid and
only if at such date more than 50 per cent of the Voting Shares held by
Independent Shareholders shall have been deposited or tendered pursuant to
the Take-over Bid and not withdrawn;
     (iii)    the Take-over Bid contains an irrevocable and unqualified
provision that unless the Take-over Bid is withdrawn, Voting Shares may be
deposited pursuant to such Take-over Bid at any time during the period of
time between the date of the Take-over Bid and the date on which Voting
Shares may be taken up and paid for and that any Voting Shares deposited
pursuant to the Take-over Bid may be withdrawn until taken up and paid for;
and
     (iv)     the Take-over Bid contains an irrevocable and unqualified
provision that if, on the date on which Voting Shares may be taken up and
paid for, more than 50% of the Voting Shares held by Independent
Shareholders shall have been deposited pursuant to the Take-over Bid and not
withdrawn, the Offeror will make a public announcement of that fact and the
Take- over Bid will remain open for deposits and tenders of Voting Shares for
not less than ten Business Days from the date of such public announcement;

(kk) "PERMITTED BID ACQUISITION" shall mean an acquisition of Voting Shares
made pursuant to a Permitted Bid or a Competing Permitted Bid;

(ll) "PERMITTED LOCK-UP AGREEMENT" shall mean an agreement between a
Person and one or more holders of Voting Shares pursuant to which such holders
(each a "Locked-Up Person") agree to deposit or tender Voting Shares to a
Take-over Bid (the "Lock-Up Bid") made or to be made by such Person or any
of such Persons Affiliates or Associates or any other Person with which
such Person is acting jointly or in concert, provided that:

     (i)    the terms of such agreement are reduced to writing and publicly
disclosed and a copy of such agreement is made available to the public
(including the Corporation) not later than the date of the Lock-Up Bid or,
if the Lock-Up Bid has been made prior to the date on which such agreement
is entered into, not later than the date of such agreement;

     (ii)   the agreement permits a Locked-Up Person to terminate its
obligation to deposit or tender Voting Shares to or not to withdraw such
Voting Shares from the Lock-Up Bid, and to terminate any obligation with
respect to the voting of such Voting Shares, in order to tender or deposit
the Voting Shares to another Take-over Bid or to support another transaction
where the price or value of the consideration per Voting Share offered under
such other Take-over Bid or transaction is:

           (A) greater than the price or value of the consideration per
Voting Share at which the Locked-Up Person has agreed to deposit or tender
Voting Shares to the Lock-Up Bid; or

           (B) equal to or greater than a minimum price or value specified in
the agreement, which specified minimum is not more than 7% higher than the
price or value of the consideration per Voting Share at which the Locked-Up
Person has agreed to deposit or tender Voting Shares to the Lock-Up Bid; and

    (iii)    no "break-up" fees, "top-up" fees, penalties, expenses or other
amounts that exceed in aggregate the greater of:

           (A) 2.5% of the price or value of the consideration payable under
the Lock-Up Bid to a Locked-Up Person; and

           (B) 50% of the amount by which the price or value of the
consideration received by a Locked-Up Person under another Take-over Bid or
transaction exceeds the price or value of the consideration that the
Locked-Up Person would have received under the Lock- Up Bid,

shall be payable by such Locked-Up Person if the Locked-Up Person fails to
deposit or tender Voting Shares to the Lock-Up Bid, withdraws Voting Shares
previously tendered thereto or supports another transaction;

(mm) "PERSON" shall include an individual, body corporate, firm,
partnership, limited partnership, limited liability company, syndicate or
other form of unincorporated association, trust, trustee, executor,
administrator, legal personal representative, group, unincorporated
organization, a government and its agencies or instrumentalities, any
entity or group whether or not having legal personality;

(nn)     "PRO RATA ACQUISITION" shall mean an acquisition by a Person of
Voting Shares pursuant to:

       (i)   a Dividend Reinvestment Acquisition;
      (ii)   a stock dividend, stock split or other event in respect of
securities of the Corporation of one or more particular classes or series
pursuant to which such Person becomes the Beneficial Owner of Voting Shares
on the same pro rata basis as all other holders of securities of the
particular class, classes or series;
     (iii)   the acquisition or the exercise by the Person of rights to
purchase Voting Shares issued by the Corporation to all holders of
securities of the Corporation of one or more particular classes or series
pursuant to a rights offering or pursuant to a prospectus, provided that
such rights are acquired directly from the Corporation and not from any other
Person; or
     (iv)    a distribution of Voting Shares, or securities convertible into
or exchangeable for Voting Shares (and the conversion or exchange of such
convertible or exchangeable securities), made pursuant to a prospectus or by
way of a private placement by the Corporation provided that the  Person does
not thereby acquire beneficial ownership of a greater percentage of such
Voting  Shares or securities convertible into or exchangeable for Voting
Shares so offered than the Person's  percentage of Voting Shares beneficially
owned immediately prior to such acquisition ;

(oo)     "RECORD TIME" has the meaning set forth in the recitals hereto;

(qq)     "RIGHT" means a right to purchase a Class A Share of the
Corporation, upon the terms and subject to the conditions set forth in this
Agreement;

(rr)     "RIGHTS CERTIFICATE" means the certificates representing the Rights
after the Separation Time, which shall be substantially in the form attached
hereto as Attachment 1;

(ss)     "RIGHTS REGISTER" shall have the meaning ascribed thereto in
Subsection  2.6(a);

(tt)     "SECURITIES ACT (ONTARIO)" shall mean the Securities Act, R.S.O.
1990, c.S.5, as amended, and the regulations thereunder, and any comparable
or successor laws or regulations thereto;

(uu)     "SEPARATION TIME" shall mean, subject to Sub-section 5.1(d), the
later of

       (i)  the close of business on the tenth Trading Day after the
earlier of:

            (A)  the Stock Acquisition Date; and
            (B)  the date of the commencement of or first public announcement
of the intent of any Person (other than the Corporation or any Subsidiary of
the Corporation) to commence a Take-over Bid (other than a Permitted Bid or
a Competing Permitted Bid), or such later time as may be determined by the
Board of Directors, provided that, if any Take-over Bid referred to in
clause (B) above expires, is not made, is canceled, terminated or otherwise
withdrawn prior to the Separation Time, such Take-over Bid shall be deemed,
for the purposes of this definition, never to have been commenced, made or
announced; and

     (ii)     the Record Time;

(vv)     "SHARE CAPITAL INCREASE APPROVAL" shall have the meaning ascribed
thereto in  Section 5.15;

(ww)     "STOCK ACQUISITION DATE" shall mean the first date of public
announcement (which, for purposes of this definition, shall include, without
limitation, a report filed pursuant to  Section 101 of the Securities Act
(Ontario) or Section 13(d) of the 1934 Exchange Act) by the Corporation or
an  Acquiring Person of facts indicating that a Person has become an
Acquiring Person;

(xx)     "SUBSIDIARY": a corporation shall be deemed to be a Subsidiary of
another corporation if:

     (i)   it is controlled by:
     (ii)  that other; or
     (iii) that other and one or more corporations each of which is
controlled by that  other; or (iv) two or more corporations each of which is
controlled by that other; or (v) it is a Subsidiary of a corporation that is
that other's Subsidiary;

(yy)     "TAKE-OVER BID" shall mean an Offer to Acquire Voting Shares or
other  securities of the Corporation, if, assuming that the Voting Shares or
other securities subject to the Offer to  Acquire are acquired at the date of
such Offer to Acquire by the Person making such Offer to Acquire, the  Voting
Shares Beneficially Owned by the Person making the Offer to Acquire would
constitute in the aggregate  20 per cent or more of the outstanding Voting
Shares at the date of the Offer to Acquire;

(zz)     "TRADING DAY", when used with respect to any securities, shall mean
a day on  which the principal Canadian stock exchange on which such
securities are listed or admitted to trading  is open for the transaction of
business or, if the securities are not listed or admitted to  trading on any
Canadian stock  exchange, a Business Day;

(aaa)      "U.S.-CANADIAN EXCHANGE RATE" means, on any date: (i) if on such
date the Bank of Canada sets an average noon spot rate of exchange for the
conversion of one United States dollar into Canadian dollars, such rate; and
(ii) in any other case, the rate for such date for the conversion of one
United  States dollar into Canadian dollars calculated in such manner as may
be determined by the Board of Directors from time to time acting in good
faith;

(bbb)  "U.S. DOLLAR EQUIVALENT" of any amount which is expressed in Canadian
dollars means, on any date, the United States dollar equivalent of such
amount determined by multiplying such amount by the Canadian-U.S. Exchange
Rate in effect on such date;

(ccc)      "VOTING SHARE REDUCTION" shall mean an acquisition or redemption
by the  Corporation of Voting Shares which, by reducing the number of Voting
Shares outstanding, increases the percentage of outstanding Voting Shares
Beneficially Owned by any person to 20 per cent or more  of the Voting
Shares  then outstanding; and

(ddd)  "VOTING SHARES" shall mean the Common Shares of the Corporation and
any other shares in the capital of the Corporation entitled to vote
generally in the election of all directors.

(eee)      "YUKON BUSINESS CORPORATIONS ACT" means the Yukon Business
Corporations Act (Yukon), as amended, and the regulations made thereunder
and any comparable or successor laws or regulations thereto.

1.2     Currency

All sums of money which are referred to in this Agreement are expressed in
lawful  money of Canada, unless otherwise specified.

1.3      Headings

The division of this Agreement into Articles, Sections, Subsections,
Clauses, Paragraphs, Subparagraphs or other portions hereof and the
insertion of headings, subheadings and a table of contents are for
convenience of reference only and shall not affect the construction or
interpretation of this Agreement.

1.4      Calculation of Number and Percentage of Beneficial Ownership of
Outstanding Voting Shares

(a)     For purposes of this Agreement, in determining the percentage of
outstanding Voting Shares of the Corporation with respect to which a Person
is or is deemed to be the Beneficial  Owner, all unissued Voting Shares of
the Corporation of which such person is deemed to be the Beneficial Owner
shall be deemed to be outstanding.

(b)     For purposes of this Agreement, the percentage of Voting Shares
Beneficially  Owned by any Person shall be and be deemed to be the product
(expressed as a percentage) determined by the  formula:

          100 x A/B

where:

           A=     the number of votes for the election of all directors
generally attaching to the Voting Shares Beneficially Owned by such Person;
and

           B=     the number of votes for the election of all directors
generally attaching to all outstanding Voting Shares.

   The percentage of outstanding Voting Shares represented by any particular
group of Voting Shares acquired or held by any Person shall be determined in
like manner mutatis mutandis.

1.5     Acting Jointly or in Concert

For purposes of this Agreement a Person is acting jointly or in concert
with another Person, if such Person has any agreement, commitment,
arrangement or understanding, whether formal or informal and whether or not
in writing, with such  other Person for the purpose of acquiring or Offering
to Acquire any Voting Shares (other than (x) customary agreements with and
between underwriters and/or banking group members and/or selling group
members with respect to a distribution of securities by the Corporation,
(y) pledges of securities in the ordinary course of business, and (z)
Permitted Lock-Up Agreements).

1.6     Generally Accepted Accounting Principles

Wherever in this Agreement reference is made to generally accepted
accounting principles, such reference shall be deemed to be generally
accepted accounting principles followed in Canada applicable on a
consolidated basis (unless  otherwise specifically provided herein to be
applicable on an unconsolidated  basis) as at the date on which a calculation
is  made or required to be made in accordance with generally accepted
accounting principles. Where the character or amount of any asset or
liability or item of revenue or expense is required to be determined, or any
consolidation or other accounting computation is required to be made for the
purpose of this Agreement or any document, such determination or
calculation shall, to the extent applicable and except as otherwise
specified herein or as otherwise agreed in writing by the parties, be made
in accordance with generally accepted accounting principles applied on a
consistent basis.

1.7     Successor Rights Agent and Restatement

Effective March 16, 2001, Computershare was appointed as the successor to
Montreal Trust Company of Canada as Rights Agent under this Agreement.  All
references to the "Rights Agent" in this  Agreement for any time prior to the
effective time of such appointment shall be taken to be references to
Montreal Trust and all such references for any time after the effective
time of such appointment shall be taken to be references to Computershare.
This Agreement has been amended and restated effective January 29, 2006.
Notwithstanding such amendment and restatement, this Agreement shall be
dated as of October 5, 1998 and shall be considered to speak as of October
5, 1998 except where otherwise specifically provided or where the context
otherwise requires.


ARTICLE 2

THE RIGHTS

2.1     Legend on Share Certificates

Certificates representing Common Shares which are issued after the Record
Time but  prior to the earlier of the Separation Time and the Expiration
Time, shall also evidence one Right for each Common Share represented
thereby until the earlier of the Separation Time or the Expiration Time and
the Corporation shall cause such certificates to have impressed thereon,
printed thereon, written thereon or otherwise affixed to them the following
legend:

Until the close of business on the earlier of the Separation Time or the
Expiration Time (as both terms are defined  in the Shareholder Rights
Agreement referred to below), this certificate also  evidences rights of the
holder described  in a Shareholder Rights Plan Agreement dated as of October
5, 1998 (the  "Shareholder Rights Agreement") between  Gold Reserve Inc. (the
"Corporation") and  Computershare Investor services Inc.,  as supplemented
and  amended, the terms of which are incorporated herein by reference and a
copy of  which is on file at the principal executive offices of the
Corporation. Under certain circumstances set out in the  Shareholder Rights
Agreement, the rights may be terminated, may expire, may become null and void
(if, in certain  cases they are "Beneficially Owned" by an "Acquiring Person"
as such terms are defined in the Shareholder Rights  Agreement, whether
currently held by or on behalf of such Person or a subsequent holder) or may
be evidenced by  separate certificates and no longer evidenced by this
certificate. The Corporation will mail or arrange for the  mailing of a copy
of the Shareholder Rights Agreement to the holder of this certificate without
charge as soon as  practicable after the receipt of a written  request
therefor.

Provided that the Record Time occurs prior to the Separation Time,
certificates  representing Common Shares that are issued and outstanding at
the Record Time shall also evidence one Right for  each Common Share
represented thereby notwithstanding the absence of the foregoing legend,
until the close of business  on the earlier of the Separation Time and the
Expiration Time.


2.2     Initial Exercise Price; Exercise of Rights; Detachment of Rights

(a)     Subject to adjustment as herein set forth, each Right will entitle
the holder thereof, from and after the Separation Time and prior to the
Expiration Time, to purchase one Class A Share  for the Exercise Price or the
U.S. Dollar Equivalent as at the Business Day immediately preceding the day
of  exercise of the Right (and the Exercise Price and number of Class A
Shares are subject to adjustment as  set forth below).

(b)     Until the Separation Time,

        (i)     the Rights shall not be exercisable and no Right may be
exercised; and
        (ii)     each Right, when issued, will be evidenced by the certificate
for the associated Common Share of the Corporation registered in the name of
the holder thereof (which certificate shall also be deemed to represent a
Rights Certificate) and will be transferable only together with, and will be
transferred by a transfer  of, such associated Common Share of the
Corporation.

(c)     From and after the Separation Time and prior to the Expiration Time:

       (i)     the Rights shall be exercisable; and

      (ii)     the registration and transfer of Rights shall be separate from
and independent of Common Shares. Promptly following the Separation Time,
the Corporation will prepare and the  Rights Agent will  mail to each holder
of record of Common Shares as of the Separation Time (other than an Acquiring
Person and, in respect of any Rights Beneficially Owned by such Acquiring
Person which are not held of record by such Acquiring Person, the holder of
record of such Rights (a "Nominee")), at such holder's address as shown by
the records of the Corporation (the Corporation hereby agreeing to furnish
copies of such records to the Rights Agent for this purpose):

              (x)     a Rights Certificate appropriately completed,
representing the number of  Rights held by such holder at the Separation Time
and having such marks of identification or  designation and such legends,
summaries or endorsements printed thereon as the  Corporation may deem
appropriate and as are not inconsistent with the provisions  of this
Agreement, or as may be required to comply with any law, rule or regulation
or  with any rule or regulation of any self-regulatory organization, stock
exchange or  quotation system on which the Rights may from time to time be
listed or traded, or to conform to  usage; and

              (y)     a disclosure statement describing the Rights, provided
that a Nominee shall  be sent the materials provided for in (x) and (y) only
in respect of all Common Shares held of record by it which are not
Beneficially Owned by an Acquiring Person.

(d)     Rights may be exercised, in whole or in part, on any Business Day
after the  Separation Time and prior to the Expiration Time by submitting to
the Rights Agent at its office in Toronto,  Ontario or any other office of
the Rights Agent (or any Co-Rights Agent) in cities designated from time to
time for that purpose by the Corporation:

      (i)      the Rights Certificate evidencing such Rights;
      (ii)     an election to exercise such Rights (an "Election to
Exercise") substantially  in the form attached to the Rights Certificate
appropriately completed and executed by the holder or his  executors or
administrators or other personal representatives or his or their legal
attorney  duly appointed by an instrument in writing in form and executed in
a manner satisfactory to the Rights  Agent; and
     (iii)     payment by certified cheque, banker's draft or money order
payable to the order of the Corporation, of a sum equal to the Exercise
Price multiplied by the number of  Rights being exercised and a sum
sufficient to cover any transfer tax or charge which may be  payable in
respect of any transfer involved in the transfer or delivery of Rights
Certificates or the  issuance or delivery of certificates for Class A Shares
in a name other than that of the holder of the  Rights being exercised.

(e)     Upon receipt of a Rights Certificate, together with a completed
Election to  Exercise executed in accordance with Clause 2.2(d)(ii), which
does not indicate that such Right is null and void  as provided by Subsection
3.1(b), and payment as set forth in Clause 2.2(d)(iii), the Rights Agent
(unless  otherwise instructed by the Corporation in the event that the
Corporation is of the opinion that the Rights  cannot be exercised in
accordance with this Agreement) will thereupon promptly:

      (i)     requisition from the transfer agent certificates representing
the number of  such Class A Shares to be purchased (the Corporation hereby
irrevocably authorizing its transfer agent to  comply with all such
requisitions);

     (ii)     when appropriate, requisition from the Corporation the amount
of cash to be  paid in lieu of issuing fractional Class A Shares;

     (iii)     after receipt of the certificates referred to in Clause
2.2(e)(i), deliver  the same to or upon the order of the registered holder of
such Rights Certificates, registered in such name or  names as may be
designated by such holder;

    (iv)     when appropriate, after receipt, deliver the cash referred to in
Clause  2.2(e)(ii) to or to the order of the registered holder of such Rights
Certificate; and

     (v)     remit to the Corporation all payments received on the exercise
of Rights.

(f)     In case the holder of any Rights shall exercise less than all the
Rights  evidenced by such holder's Rights Certificate, a new Rights
Certificate evidencing the Rights remaining unexercised  (subject to the
provisions of Subsection 5.5(a)) will be issued by the Rights Agent to such
holder or to such  holder's duly authorized assigns.

(g)     The Corporation covenants and agrees that it will:

      (i)     take all such action as may be necessary and within its power
to ensure that  all Class A Shares delivered upon exercise of Rights shall,
at the time of delivery of the  certificates for such Class A Shares (subject
to payment of the Exercise Price), be duly and validly authorized,  executed,
issued and delivered as fully paid and non-assessable;

     (ii)     take all such action as may be necessary and within its power
to comply with  the requirements of the YUKON BUSINESS CORPORATIONS ACT,
the SECURITIES ACT (ONTARIO) and the  securities laws or comparable
legislation of each of the provinces and territories of Canada, the 1993
SECURITIES ACT and the 1934 EXCHANGE ACT and any other applicable law, rule
or regulation, in connection with the issuance and delivery of the Rights
Certificates and the issuance of any Class A Shares upon exercise of Rights;

    (iii)     use reasonable efforts to cause all Class A Shares issued upon
exercise of  Rights to be listed on the stock exchanges and markets on which
such Class A Shares were traded  immediately prior to the Stock Acquisition
Date;

    (iv)      pay when due and payable, if applicable, any and all federal,
provincial, territorial and  municipal transfer taxes and charges (not
including any income or capital taxes of the holder or exercising holder or
any liability of the Corporation to withhold tax) which may be payable in
respect of the original issuance or delivery of the Rights Certificates, or
certificates for Class A Shares to be issued upon exercise of any Rights,
provided that the Corporation shall not be required to pay any transfer tax
or charge which may be payable in respect of any transfer involved in the
transfer or delivery of Rights Certificates or the issuance or delivery of
certificates for Class A Shares in a name other than that of the holder of
the Rights being transferred or exercised; and

     (v)      after the Separation Time, except as permitted by Sections 5.1
and 5.4, not take (or permit any Subsidiary to take) any action if at the
time such action is taken it is reasonably foreseeable that such action will
diminish substantially or otherwise eliminate the benefits intended to be
afforded by the Rights.

2.3     Adjustments to Exercise Price; Number of Rights

The Exercise Price, the number and kind of securities subject to purchase
upon  exercise of each Right and the number of Rights outstanding are subject
to adjustment from time to time as provided in this Section 2.3.

(a)     In the event the Corporation shall at any time after the Agreement
Date:
      (i)     declare or pay a dividend on Common Shares payable in Common
Shares (or other securities exchangeable for or convertible into or giving a
right to acquire Common Shares or  other securities of the Corporation) other
than pursuant to any Dividend Reinvestment Plan;
     (ii)     subdivide or change the then outstanding Common Shares into a
greater number of Common Shares;
    (iii)     consolidate or change the then outstanding Common Shares into a
smaller number of Common Shares; or
     (iv)         issue any Common Shares (or other securities exchangeable
for or convertible into or giving a right to acquire Common Shares or other
securities of the Corporation) in respect of, in lieu of or in exchange for
existing Common Shares except as otherwise provided in this Section 2.3, the
Exercise Price and the number of Rights outstanding, or, if the payment or
effective date therefor shall occur after the Separation Time, the securities
purchasable upon exercise of Rights shall be adjusted as of the payment or
effective date in the manner set forth below.  If the Exercise Price and
number of Rights outstanding are to be adjusted:

     (x)     the Exercise Price in effect after such adjustment will be equal
to the  Exercise Price in effect immediately prior to such adjustment divided
by the number of Common Shares (or other capital stock) (the "Expansion
Factor") that a holder of one Common Share immediately prior to such
dividend, subdivision, change, consolidation or issuance would hold
thereafter as a result thereof; and

     (y)     each Right held prior to such adjustment will become that number
of Rights equal to the Expansion Factor,

and the adjusted number of Rights will be deemed to be distributed among
the Common Shares with respect to which the original Rights were associated
(if they remain outstanding) and the shares issued in respect of such
dividend, subdivision, change, consolidation or issuance, so that each such
Common Share (or other capital stock) will have exactly one Right associated
with it.

For greater certainty, if the securities purchasable upon exercise of Rights
are  to be adjusted, the securities purchasable upon exercise of each Right
after such adjustment will be the  securities that a holder of the securities
purchasable upon exercise of one Right immediately prior to such  dividend,
subdivision, change, consolidation or issuance would hold thereafter as a
result of such dividend, subdivision, change, consolidation or issuance.

If, after the Record Time and prior to the Expiration Time, the Corporation
shall  issue any shares of capital stock other than Common Shares in a
transaction of a type described in Clause  2.3(a)(i) or (iv), shares of such
capital stock shall be treated herein as nearly equivalent to Common Shares
as may be practicable and appropriate under the circumstances and the
Corporation and the Rights Agent agree  to amend this Agreement in order to
effect such treatment. In the event the Corporation shall at  any time after
the Record Time and prior to the Separation Time issue any Common Shares
otherwise than in a  transaction referred to in this Subsection 2.3(a), each
such Common Share so issued shall automatically  have one new Right
associated with it, which Right shall be evidenced by the certificate
representing  such associated Common Share.

(b)     In the event the Corporation shall at any time after the Record Time
and  prior to the Separation Time fix a  record date for the issuance of
rights, options or warrants to all holders of  Common Shares entitling them
(for a period expiring within 45 calendar days after such record date) to
subscribe for or purchase Common  Shares (or securities convertible into or
exchangeable for or carrying a right to  purchase Common Shares) at  a price
per Common Share (or, if a security convertible into or exchangeable for  or
carrying a right to  purchase or subscribe for Common Shares, having a
conversion, exchange or exercise  price, including the  price required to be
paid to purchase such convertible or exchangeable security or  right per
share) less than  the Market Price per Common Share on such record date, the
Exercise Price to be in  effect after such record  date shall be determined
by multiplying the Exercise Price in effect immediately  prior to such record
date  by a fraction:

      (i)     the numerator of which shall be the number of Common Shares
outstanding on  such record date  plus the number of Common Shares that the
aggregate offering price of the total  number of  Common Shares so to be
offered (and/or the aggregate initial conversion, exchange  or exercise
price of the convertible or exchangeable securities or rights so to be
offered,  including the price  required to be paid to purchase such
convertible or exchangeable securities or  rights) would  purchase at such
Market Price per Common Share; and

     (ii)     the denominator of which shall be the number of Common Shares
outstanding on  such record date  plus the number of additional Common Shares
to be offered for subscription or  purchase (or into  which the convertible or
exchangeable securities or rights so to be offered are  initially
convertible,  exchangeable or exercisable).

In case such subscription price may be paid by delivery of consideration,
part or  all of which may be in a  form other than cash, the value of such
consideration shall be as determined in  good faith by the Board of
Directors, whose determination shall be described in a statement filed with
the  Rights Agent and shall be  binding on the Rights Agent and the holders
of Rights. Such adjustment shall be  made successively  whenever such a
record date is fixed, and in the event that such rights, options  or warrants
are not so  issued, or if issued, are not exercised prior to the expiration
thereof, the  Exercise Price shall be readjusted  to the Exercise Price which
would then be in effect if such record date had not  been fixed, or to the
Exercise Price which would be in effect based upon the number of Common
Shares (or  securities  convertible into, or exchangeable or exercisable for
Common Shares) actually  issued upon the exercise of  such rights, options or
warrants, as the case may be.

For purposes of this Agreement, the granting of the right to purchase
Common  Shares from treasury  pursuant to the Dividend Reinvestment Plan or
any employee benefit, stock option  or similar plans shall  be deemed not to
constitute an issue of rights, options or warrants by the  Corporation;
provided, however,  that, in all such cases, the right to purchase Common
Shares is at a price per  share of not less than 90 per  cent of the current
market price per share (determined as provided in such plans)  of the Common
Shares.

(c)     In the event the Corporation shall at any time after the Record Time
and  prior to the Separation Time fix a  record date for the making of a
distribution to all holders of Common Shares  (including any such
distribution made in connection with a merger or amalgamation) of evidences
of  indebtedness, cash (other  than an annual cash dividend or a dividend
paid in Common Shares, but including  any dividend payable in  securities
other than Common Shares), assets or rights, options or warrants  (excluding
those referred to in  Subsection 2.3(b)) to purchase Common Shares at a price
per Common Share that is  less than the Market  Price per Common Share on such
record date, the Exercise Price to be in effect  after such record date
shall  be determined by multiplying the Exercise Price in effect immediately
prior to  such record date by a  fraction:

      (i)     the numerator of which shall be the Market Price per Common
Share on such  record date, less the  fair market value (the determination of
which shall be described in a statement  filed with the  Rights Agent and
shall be binding on the Rights Agent and the holders of Rights),  on a per
share  basis, of the portion of the cash, assets, evidences of indebtedness,
rights,  options or warrants so  to be distributed; and

     (ii)     the denominator of which shall be such Market Price per Common
Share.  Such adjustments shall be made successively whenever such a record
date is fixed,  and in the event that  such a distribution is not so made,
the Exercise Price shall be adjusted to be the  Exercise Price which  would
have been in effect if such record date had not been fixed.

(d)     Notwithstanding anything herein to the contrary, no adjustment in
the  Exercise Price shall be required  unless such adjustment would require
an increase or decrease of at least one per  cent in the Exercise Price;
provided, however, that any adjustments which by reason of this Subsection
2.3(d)  are not required to be  made shall be carried forward and taken into
account in any subsequent adjustment.  All calculations under  Section 2.3
shall be made to the nearest cent or to the nearest ten-thousandth of  a
share. Notwithstanding  the first sentence of this Subsection 2.3(d), any
adjustment required by Section  2.3 shall be made no later  than the earlier
of:

      (i)     three years from the date of the transaction which gives rise
to such  adjustment; or

     (ii)     the Expiration Time.

(e)     In the event the Corporation shall at any time after the Record Time
and  prior to the Separation Time issue  any shares of capital stock (other
than Common Shares), or rights, options or  warrants to subscribe for or
purchase any such capital stock, or securities convertible into or
exchangeable  for any such capital stock, in  a transaction referred to in
Clause 2.3(a)(i) or (iv), if the Board of Directors  acting in good faith
determines  that the adjustments contemplated by Subsections 2.3(a), (b) and
(c) in connection  with such transaction  will not appropriately protect the
interests of the holders of Rights, the Board  of Directors may determine
what other adjustments to the Exercise Price, number of Rights and/or
securities  purchasable upon exercise  of Rights would be appropriate and,
notwithstanding Subsections 2.3(a), (b) and  (c), such adjustments,  rather
than the adjustments contemplated by Subsections 2.3(a), (b) and (c), shall
be made. Subject to  Subsection 5.4(b) and (c), the Corporation and the
Rights Agent shall have  authority without the approval  of the holders of
the Common Shares or the holders of Rights to amend this  Agreement as
appropriate to  provide for such adjustments.

(f)     Each Right originally issued by the Corporation subsequent to any
adjustment  made to the Exercise Price  hereunder shall evidence the right to
purchase, at the adjusted Exercise Price,  the number of Class A Shares
purchasable from time to time hereunder upon exercise of a Right immediately
prior  to such issue, all  subject to further adjustment as provided herein.

(g)     Irrespective of any adjustment or change in the Exercise Price or the
number  of Class A Shares issuable  upon the exercise of the Rights, the
Rights Certificates theretofore and  thereafter issued may continue to
express the Exercise Price per Class A Share and the number of Class A
Shares  which were expressed in  the initial Rights Certificates issued
hereunder.

(h)     In any case in which this Section 2.3 shall require that an
adjustment in the  Exercise Price be made  effective as of a record date for
a specified event, the Corporation may elect to  defer until the occurrence
of  such event the issuance to the holder of any Right exercised after such
record  date the number of Class A  Shares and other securities of the
Corporation, if any, issuable upon such  exercise over and above the  number
of Class A Shares and other securities of the Corporation, if any, issuable
upon such exercise on  the basis of the Exercise Price in effect prior to
such adjustment; provided,  however, that the Corporation  shall deliver to
such holder an appropriate instrument evidencing such holder's  right to
receive such  additional shares (fractional or otherwise) or other securities
upon the  occurrence of the event requiring such  adjustment.

(i)     Notwithstanding anything contained in this Section 2.3 to the
contrary, the  Corporation shall be entitled to  make such reductions in the
Exercise Price, in addition to those adjustments  expressly required by
this  Section 2.3, as and to the extent that in their good faith judgment the
Board of  Directors shall determine to  be advisable, in order that any:

               (i)     consolidation or subdivision of Common Shares;
              (ii)     issuance (wholly or in part for cash) of Common Shares
or securities that by their terms are convertible into or exchangeable for
Common Shares;
             (iii)     stock dividends; or

             (iv)     issuance of rights, options or warrants referred to in
this Section 2.3, hereafter made by the Corporation to holders of its Common
Shares, subject to applicable taxation laws, shall not be taxable to such
shareholders or shall subject such shareholders to a lesser amount of tax.

(j)     The Rights Agent shall be entitled to rely on any certificate
received from the Corporation stating that any of the events giving rise to
an adjustment required by this section 2.3 has occurred.

(k)     The Corporation may elect on or after the date of any adjustment of an
Exercise Price to adjust the number of Rights, in lieu of any adjustment in the
number of Class A Shares purchasable upon the exercise of a Right. Each of the
Rights outstanding after the adjustment in the number of Rights shall be
exercisable for the number of Class A Shares for which a Right was exercisable
immediately prior to such adjustment. Each Right held or record prior to such
adjustment of the number of Rights shall become the number of Rights
(calculated to the nearest one ten-thousandth) obtained by dividing the
relevant Exercise Price by the relevant Exercise Price in effect immediately
after adjustment of the relevant Exercise Price. The Corporation shall make a
public announcement of its election to adjust the number of Rights, indicating
the record date for the adjustment, and, if known at the time, the amount of
the adjustment to be made. This record date may be the date on which the
relevant Exercise Price is adjusted or any day thereafter, but, if the Rights
Certificates have been issued, shall be at least 10 days later than the date
of the public announcement. If Rights Certificates have been issued, upon each
adjustment of the number of Rights pursuant to this Subsection 2.3(k), the
Corporation shall, as promptly as practicable, cause to be distributed to such
holders of record in substitution and replacement for the Rights Certificated
held by such holders prior to the date of adjustment, and upon surrender
thereof if required by the Corporation, new Rights Certificates evidencing all
the Rights to which such holders shall be entitled after such adjustment.
Rights Certificates so to be distributed shall be issued, executed and
countersigned in the manner provided for herein and may bear, at the option
of the Corporation, the relevant adjusted Exercise Price and shall be
registered in the names of holders or record of Rights Certificates on the
record date specified in the public announcement.

(l)     Irrespective of any adjustment or change in the securities purchasable
upon exercise of the Rights, the Rights Certificates theretofore and thereafter
issued may continue to express the securities so purchasable which were
expressed in the initial Rights Certificates issued hereunder.

(m)     In any case in which this Section 2.3 shall require that an adjustment
in the Exercise Price be made effective as of the record date for a specified
event, the Corporation may elect to defer until the occurrence of such event
the issuance to holder of any Rights exercised after such record date of the
number of Class A Shares and other securities of the Corporation, if any,
issuable upon such exercise over and above the number of Class A Shares and
other securities of the Corporation shall deliver to such holder a due bill or
other appropriate instrument evidencing such holder's right to receive such
additional Class A Shares (fractional or otherwise) or other securities upon
the occurrence of the event requiring such adjustment.

(n)     Notwithstanding anything in this Section 2.3 to the contrary, the
Corporation shall be entitled to make such reductions in the Exercise Price,
in addition to those adjustments expressly required by this Section 2.3, as
and to the extent that in its good faith judgment the Board of Directors shall
determine to be advisable in order that any (i) subdivision or consolidation
of the Common Shares, (ii) issuance (wholly or in part for cash) of Common
Shares at less than the applicable Market Price, (ii) issuance (wholly for
cash) of any Common Shares or securities that by their terms are exchangeable
for or convertible into or give a right to acquire Common Shares, subject to
applicable taxation laws, shall not be taxable to such shareholders.

(o)     After the Separation Time, the Corporation will not, except as
permitted by the provisions hereof, take (or permit any Subsidiary of the
Corporation to take) any action if at the time such action is taken it is
reasonably foreseeable that such action will diminish substantially or
otherwise eliminate the benefits intended to be afforded by the Rights.

(p)     Whenever an adjustment to the Exercise Price or a change in the
securities purchasable upon the exercise of Rights is made pursuant to this
Section 2.3, the Corporation shall promptly:
	(i) 	prepare a certificate setting forth such adjustment and a brief
            statement of the facts accounting for such adjustment;
	(ii)	file with the Rights Agents and with each transfer agent for the
            Common Shares, a copy of such certificate; and
	(iii)	cause notice of the particulars of such adjustment or change to
            be given to the holders of the Rights.

	Failure to file such certificate or to cause such notice to be given
      as aforesaid, or any defect therein, shall not affect the validity of
      any such adjustment or change.

2.4     Date on Which Exercise Is Effective

Each Person in whose name any certificate for Class A Shares or other
securities,  if applicable, is issued upon the  exercise of Rights shall for
all purposes be deemed to have become the holder of  record of the Class A
Shares or other  securities, if applicable, represented thereon, and such
certificate shall be  dated the date upon which the Rights Certificate
evidencing such Rights was duly surrendered in accordance with Subsection
2.2(d)  (together with a duly completed Election  to Exercise) and payment of
the Exercise Price for such Rights (and any applicable  transfer taxes and
other governmental  charges payable by the exercising holder hereunder) was
made; provided, however,  that if the date of such surrender and  payment is
a date upon which the Class A Share transfer books of the Corporation  are
closed, such Person shall be deemed  to have become the record holder of such
shares on, and such certificate shall be  dated, the next succeeding Business
Day on  which the Class A Share transfer books of the Corporation are open.

2.5     Execution, Authentication, Delivery and Dating of Rights
Certificates

(a)     The Rights Certificates shall be executed on behalf of the
Corporation by its  Chairman of the Board,  President or any Vice-President
and by its Corporate Secretary or any Assistant  Secretary under the
corporate seal of the Corporation reproduced thereon. The signature of any
of  these officers on the Rights  Certificates may be manual or facsimile.
Rights Certificates bearing the manual or  facsimile signatures of
individuals who were at any time the proper officers of the Corporation shall
bind  the Corporation,  notwithstanding that such individuals or any of them
have ceased to hold such  offices either before or after  the
countersignature and delivery of such Rights Certificates.

(b)     Promptly after the Corporation learns of the Separation Time, the
Corporation  will notify the Rights Agent  of such Separation Time and will
deliver Rights Certificates executed by the  Corporation to the Rights  Agent
for countersignature, and the Rights Agent shall manually countersign (in a
manner satisfactory to  the Corporation) and send such Rights Certificates to
the holders of the Rights  pursuant to Subsection  2.2(c) hereof. No Rights
Certificate shall be valid for any purpose until  countersigned by the Rights
Agent  as aforesaid.

(c)     Each Rights Certificate shall be dated the date of countersignature
thereof.

2.6     Registration, Transfer and Exchange

(a)     The Corporation will cause to be kept a register (the "Rights
Register") in  which, subject to such  reasonable regulations as it may
prescribe, the Corporation will provide for the  registration and transfer
of  Rights. The Rights Agent is hereby appointed, effective from and after
the  Separation Time, registrar for  the Rights (the "Rights Registrar") for
the purpose of maintaining the Rights  Register for the Corporation  and
registering Rights and transfers of Rights as herein provided and the
Rights  Agent hereby accepts such  appointment. In the event that the Rights
Agent shall cease to be the Rights  Registrar, the Rights Agent  will have
the right to examine the Rights Register at all reasonable times.  After the
Separation Time and prior to the Expiration Time, upon surrender for
registration of transfer or  exchange of any Rights Certificate, and subject
to the provisions of Subsection  2.6(c), the Corporation will  execute, and
the Rights Agent will manually countersign and deliver, in the name  of the
holder or the  designated transferee or transferees, as required pursuant to
the holder's  instructions, one or more new  Rights Certificates evidencing
the same aggregate number of Rights as did the  Rights Certificates so
surrendered.

(b)     All Rights issued upon any registration of transfer or exchange of
Rights  Certificates shall be the valid  obligations of the Corporation, and
such Rights shall be entitled to the same  benefits under this Agreement  as
the Rights surrendered upon such registration of transfer or exchange.

(c)     Every Rights Certificate surrendered for registration of transfer or
exchange  shall be duly endorsed, or be  accompanied by a written instrument
of transfer in form satisfactory to the  Corporation or the Rights  Agent, as
the case may be, duly executed by the holder thereof or such holder's
attorney duly authorized in  writing. As a condition to the issuance of any
new Rights Certificate under this  Section 2.6, the  Corporation may require
the payment of a sum sufficient to cover any tax or other  governmental
charge that  may be imposed in relation thereto and any other expenses
(including the  reasonable fees and expenses of  the Rights Agent) connected
therewith.

(d)     The Corporation shall not be required to register the transfer or
exchange of any Rights after the Rights have been terminated pursuant to the
provisions of this Agreement.

2.7     Mutilated, Destroyed, Lost and Stolen Rights Certificates

(a)     If any mutilated Rights Certificate is surrendered to the Rights
Agent prior  to the Expiration Time, the  Corporation shall execute and the
Rights Agent shall countersign and deliver in  exchange therefor a new
Rights Certificate evidencing the same number of Rights as did the Rights
Certificate so surrendered.

(b)     If there shall be delivered to the Corporation and the Rights Agent
prior to  the Expiration Time:

      (i)     evidence to their reasonable satisfaction of the destruction,
loss or theft  of any Rights Certificate;  and

     (ii)     such security or indemnity as may be reasonably required by
them to save each  of them and any of  their agents harmless, then, in the
absence of notice to the Corporation or the  Rights Agent that  such Rights
Certificate has been acquired by a bona fide purchaser, the  Corporation
shall execute  and upon the Corporation's request the Rights Agent shall
countersign and deliver,  in lieu of any  such destroyed, lost or stolen
Rights Certificate, a new Rights Certificate  evidencing the same  number of
Rights as did the Rights Certificate so destroyed, lost or stolen.

(c)     As a condition to the issuance of any new Rights Certificate under
this  Section 2.7, the Corporation may  require the payment of a sum
sufficient to cover any tax or other governmental  charge that may be
imposed  in relation thereto and any other expenses (including the reasonable
fees and  expenses of the Rights Agent)  connected therewith.

(d)     Every new Rights Certificate issued pursuant to this Section 2.7 in
lieu of  any destroyed, lost or stolen  Rights Certificate shall evidence the
contractual obligation of the Corporation,  whether or not the  destroyed,
lost or stolen Rights Certificate shall be at any time enforceable by
anyone, and shall be entitled  to all the benefits of this Agreement equally
and proportionately with any and all  other Rights duly issued  hereunder.

2.8     Persons Deemed Owners of Rights

The Corporation, the Rights Agent and any agent of the Corporation or the
Rights  Agent may deem and treat the  Person in whose name a Rights
Certificate (or, prior to the Separation Time, the  associated Common Share
certificate) is  registered as the absolute owner thereof and of the Rights
evidenced thereby for  all purposes whatsoever. As used in this  Agreement,
unless the context otherwise requires, the term "holder" of any Right  shall
mean the registered holder of such  Right (or, from and after the Record Time
and prior to the Separation Time, the  registered holder of the associated
Common  Share).

2.9     Delivery and Cancellation of Certificates  All Rights Certificates
surrendered upon exercise or for redemption, registration  of transfer or
exchange shall, if  surrendered to any Person other than the Rights Agent, be
delivered to the Rights  Agent and, in any case, shall be promptly  canceled
by the Rights Agent. The Corporation may at any time deliver to the  Rights
Agent for cancellation any Rights  Certificates previously countersigned and
delivered hereunder which the  Corporation may have acquired in any manner
whatsoever, and all Rights Certificates so delivered shall be promptly
canceled by  the Rights Agent. No Rights Certificate  shall be countersigned
in lieu of or in exchange for any Rights Certificates  canceled as provided
in this Section 2.9, except as  expressly permitted by this Agreement. The
Rights Agent shall, subject to  applicable laws, destroy all canceled
Rights  Certificates and deliver a certificate of destruction to the
Corporation.

2.10     Agreement of Rights Holders

Every holder of Rights, by accepting the same, consents and agrees with the
Corporation and the Rights Agent and  with every other holder of Rights:

(a)     to be bound by and subject to the provisions of this Agreement, as
amended  from time to time in  accordance with the terms hereof, in respect
of all Rights held;

(b)     that, provided the Separation Time follows the Record Time, from and
after  the Record Time and prior to  the Separation Time, each Right will be
transferable only together with, and will  be transferred by a  transfer of,
the associated Common Share certificate representing such Right;

(c)     that after the Separation Time, the Rights Certificates will be
transferable  only on the Rights Register as  provided herein;

(d)     that prior to due presentment of a Rights Certificate (or, from and
after the  Record Time and prior to the  Separation Time, the associated
Common Share certificate) for registration of  transfer, the Corporation,
the  Rights Agent and any agent of the Corporation or the Rights Agent may
deem and  treat the Person in  whose name the Rights Certificate (or, prior
to the Separation Time, the  associated Common Share  certificate) is
registered as the absolute owner thereof and of the Rights  evidenced thereby
(notwithstanding  any notations of ownership or writing on such Rights
Certificate or the associated  Common Share  certificate made by anyone other
than the Corporation or the Rights Agent) for all  purposes whatsoever,  and
neither the Corporation nor the Rights Agent shall be affected by any
notice  to the contrary;

(e)     that such holder of Rights has waived his right to receive any
fractional  Rights or any fractional shares or  other securities upon
exercise of a Right (except as provided herein);

(f)     that, without the approval of any holder of Rights or Voting Shares
and upon  the sole authority of the  Board of Directors, acting in good
faith, this Agreement may be supplemented or  amended from time to  time
pursuant to and as provided herein, and

(g)     notwithstanding anything in this Agreement to the Contrary, neither
the Corporation nor the Rights Agent shall have any liability to any holder
of a Right or to any other Person as a result of its inability to perform any
of its obligations under this Agreement by reason of any preliminary or
permanent injunction or other order, decree or ruling issued by a court of
competent jurisdiction or by a government, regulatory or administrative
agency or commission, or any statute, rule, regulation or executive order
promulgated or enacted by any governmental authority, prohibiting or
otherwise restraining performance of such obligation.


2.11     Rights Certificate Holder Not Deemed a Shareholder

No holder, as such, of any Rights or Rights Certificate shall be entitled to
vote,  receive dividends or be deemed for  any purpose whatsoever the holder
of any Class A Share or any other share or  security of the Corporation which
may at any  time be issuable on the exercise of the Rights represented
thereby, nor shall  anything contained herein or in any Rights  Certificate
be construed or deemed or confer upon the holder of any Right or  Rights
Certificate, as such, any right, title,  benefit or privilege of a holder of
Class A Shares or any other shares or  securities of the Corporation or any
right to vote at  any meeting of shareholders of the Corporation whether for
the election of  directors or otherwise or upon any matter  submitted to
holders of Class A Shares or any other shares of the Corporation at  any
meeting thereof, or to give or withhold  consent to any action of the
Corporation, or to receive notice of any meeting or  other action affecting
any holder of Class A  Shares or any other shares of the Corporation except
as expressly provided herein,  or to receive dividends, distributions or
subscription rights, or otherwise, until the Right or Rights evidenced by
Rights  Certificates shall have been duly exercised  in accordance with the
terms and provisions hereof.

ARTICLE 3

ADJUSTMENTS TO THE RIGHTS

3.1     Flip-in Event

(a)     Subject to Subsection 3.1(b) and Section 5.1, in the event that prior
to the  Expiration Time a Flip-in  Event shall occur, each Right shall
constitute, effective at the close of business  on the later of the
Effective  Time or the tenth Trading Day after the Stock Acquisition Date,
the right to  purchase from the  Corporation, upon exercise thereof in
accordance with the terms hereof, that  number of Class A Shares  having an
aggregate Market Price on the date of consummation or occurrence of such
Flip-in Event equal to  twice the Exercise Price for an amount in cash equal
to the Exercise Price (such  right to be appropriately  adjusted in a manner
analogous to the applicable adjustment provided for in  Section 2.3 in the
event that  after such consummation or occurrence, an event of a type
analogous to any of the  events described in  Section 2.3 shall have
occurred).

(b)     Notwithstanding anything in this Agreement to the contrary, upon
the  occurrence of any Flip-in Event, any  Rights that are or were
Beneficially Owned on or after the earlier of the  Separation Time or the
Stock  Acquisition Date by:

      (i)     an Acquiring Person (or any Affiliate or Associate of an
Acquiring Person or  any Person acting  jointly or in concert with an
Acquiring Person or any Affiliate or Associate of an  Acquiring  Person); or

     (ii)     a transferee or other successor in title, directly or
indirectly, (a  "Transferee") of Rights or Common  Shares held by an
Acquiring Person (or any Affiliate or Associate of an Acquiring  Person or
any  Person acting jointly or in concert with an Acquiring Person or any
Affiliate or  Associate of an  Acquiring Person), where such Transferee
becomes a transferee concurrently with or  subsequent to  the Acquiring
Person becoming such in a transfer that the Board of Directors has
determined is  part of a plan, arrangement or scheme of an Acquiring Person
(or any Affiliate or  Associate of an  Acquiring Person or any Person acting
jointly or in concert with an Acquiring  Person or any  Affiliate or
Associate of an Acquiring Person), that has the purpose or effect of
avoiding Clause  3.1(b)(i),

shall become null and void without any further action, and any holder of
such  Rights (including any  Transferee) shall thereafter have no right to
exercise such Rights under any  provision of this Agreement and  further
shall thereafter not have any other rights whatsoever with respect to such
Rights, whether under any  provision of this Agreement or otherwise.

(c)     From and after the Separation Time, the Corporation shall do all such
acts  and things as shall be necessary  and within its power to ensure
compliance with the provisions of this Section 3.1,  including without
limitation, all such acts and things as may be required to satisfy the
requirements of the Yukon Business  Corporations Act, the Securities Act
(Ontario) and the securities laws or  comparable legislation of each of  the
provinces of Canada and of the United States and each of the applicable
states  thereof in respect of the  issue of Class A Shares upon the exercise
of Rights in accordance with this  Agreement.

(d)     Any Rights Certificate that represents Rights Beneficially Owned by a
Person  described in either Clause  3.1(b)(i) or (ii) or transferred to any
nominee of any such Person, and any Rights  Certificate issued upon
transfer, exchange, replacement or adjustment of any other Rights
Certificate  referred to in this sentence,  shall contain the following
legend:

         The Rights represented by this Rights Certificate were issued to a
Person who was  an Acquiring  Person or an Affiliate or an Associate of an
Acquiring Person (as such terms are  defined in the  Shareholder Rights
Agreement) or a Person who was acting jointly or in concert  with an
Acquiring Person or an Affiliate or Associate of an Acquiring Person. This
Rights  Certificate and  the Rights represented hereby are void or shall
become void in the circumstances  specified in  Subsection 3.1(b) of the
Shareholder Rights Agreement.

         provided, however, that the Rights Agent shall not be under any
responsibility to  ascertain the  existence of facts that would require the
imposition of such legend but shall  impose such legend  only if instructed
to do so by the Corporation in writing or if a holder fails to  certify upon
transfer  or exchange in the space provided on the Rights Certificate that
such holder is  not a Person  described in such legend and provided further
that the fact that such legend does  not appear on a  certificate is not
determinative of whether any Rights represented thereby are  void under
this  Section.

ARTICLE 4

THE RIGHTS AGENT

4.1     General

(a)     The Corporation hereby appoints the Rights Agent to act as agent for
the  Corporation and the holders of  the Rights in accordance with the terms
and conditions hereof, and the Rights  Agent hereby accepts such
appointment. The Corporation may from time to time appoint such Co-Rights
Agents  ("Co-Rights  Agents") as it may deem necessary or desirable. In the
event the Corporation  appoints one or more Co- Rights Agents, the respective
duties of the Rights Agent and Co-Rights Agents  shall be as the Corporation
may determine. The Corporation agrees to pay all reasonable fees and expenses
of  the Rights Agent in  respect of the performance of its duties under this
Agreement. The Corporation  also agrees to indemnify the  Rights Agent for,
and to hold it harmless against, any loss, liability or expense,  incurred
without  negligence, bad faith or willful misconduct on the part of the Rights
Agent, for  anything done or omitted  by the Rights Agent in connection with
the acceptance and administration of this  Agreement, including the  costs
and expenses of defending against any claim of liability, which right to
indemnification will survive  the termination of this Agreement.

(b)     The Rights Agent shall be protected and shall incur no liability for
or in  respect of any action taken,  suffered or omitted by it in connection
with its administration of this Agreement  in reliance upon any  certificate
for Common Shares, Rights Certificate, certificate for other  securities of
the Corporation,  instrument of assignment or transfer, power of attorney,
endorsement, affidavit,  letter, notice, direction,  consent, certificate,
statement, or other paper or document believed by it to be  genuine and to be
signed,  executed and, where necessary, verified or acknowledged, by the
proper Person or  Persons.

(c)     The Rights Agent shall not be responsible for any inaccuracies in
the  shareholder information provided by  the Corporation to the Rights Agent
pursuant to subsection 2.2(c).

4.2     Merger, Amalgamation or Consolidation or Change of Name of Rights
Agent

(a)     Any corporation into which the Rights Agent may be merged or
amalgamated or  with which it may be  consolidated, or any corporation
resulting from any merger, amalgamation,  statutory arrangement or
consolidation to which the Rights Agent is a party, or any corporation
succeeding  to the shareholder or  stockholder services business of the
Rights Agent, will be the successor to the  Rights Agent under this
Agreement without the execution or filing of any paper or any further act on
the  part of any of the parties  hereto, provided that such corporation would
be eligible for appointment as a  successor Rights Agent under  the provisions
of Section 4.4 hereof. In case at the time such successor Rights  Agent
succeeds to the  agency created by this Agreement any of the Rights
Certificates have been  countersigned but not delivered,  any successor
Rights Agent may adopt the countersignature of the predecessor  Rights Agent
and deliver  such Rights Certificates so countersigned; and in case at that
time any of the  Rights have not been  countersigned, any successor Rights
Agent may countersign such Rights Certificates  in the name of the
predecessor Rights Agent or in the name of the successor Rights Agent; and in
all  such cases such Rights  Certificates will have the full force provided in
the Rights Certificates and in  this Agreement.

(b)     In case at any time the name of the Rights Agent is changed and at
such time  any of the Rights Certificates  shall have been countersigned but
not delivered, the Rights Agent may adopt the  countersignature under its
prior name and deliver Rights Certificates so countersigned; and in case at
that  time any of the Rights  Certificates shall not have been countersigned,
the Rights Agent may countersign  such Rights Certificates  either in its
prior name or in its changed name; and in all such cases such Rights
Certificates shall have the  full force provided in the Rights Certificates
and in this Agreement.

4.3     Duties of Rights Agent

The Rights Agent undertakes the duties and obligations imposed by this
Agreement  upon the following terms and  conditions, all of which the
Corporation and the holders of certificates for  Common Shares and the
holders of Rights  Certificates, by their acceptance thereof, shall be
bound:

(a)     the Rights Agent may consult with legal counsel (who may be legal
counsel for  the Corporation), at the  Corporation's expense, and the opinion
of such counsel will be full and complete  authorization and  protection to
the Rights Agent as to any action taken or omitted by it in good  faith and
in accordance with  such opinion;

(b)     whenever in the performance of its duties under this Agreement, the
Rights  Agent deems it necessary or  desirable that any fact or matter be
proved or established by the Corporation  prior to taking or suffering any
action hereunder, such fact or matter (unless other evidence in respect
thereof be  herein specifically  prescribed) may be deemed to be conclusively
proved and established by a  certificate signed by a Person  believed by the
Rights Agent to be the Chairman of the Board, President, any Vice- President,
Treasurer,  Corporate Secretary or any Assistant Secretary of the Corporation
and delivered to  the Rights Agent; and  such certificate will be full
authorization to the Rights Agent for any action  taken or suffered in good
faith  by it under the provisions of this Agreement in reliance upon such
certificate;

(c)     the Rights Agent will be liable hereunder for its own negligence, bad
faith  or willful misconduct;

(d)     the Rights Agent will not be liable for or by reason of any of the
statements  of fact or recitals contained in  this Agreement or in the
certificates for Common Shares, or the Rights  Certificates (except its
countersignature thereof) or be required to verify the same, but all such
statements and recitals are and will  be deemed to have been made by the
Corporation only;

(e)     the Rights Agent will not be under any responsibility in respect of
the  validity of this Agreement or the  execution and delivery hereof (except
the due authorization, execution and  delivery hereof by the Rights  Agent) or
in respect of the validity or execution of any certificate for a Common  Share
or Rights Certificate  (except its countersignature thereof); nor will it be
responsible for any breach  by the Corporation of any  covenant or condition
contained in this Agreement or in any Rights Certificate;  nor will it be
responsible  for any change in the exercisability of the Rights (including
the Rights becoming  void pursuant to  Subsection 3.1(b) hereof) or any
adjustment required under the provisions of  Section 2.3 hereof or
responsible for the manner, method or amount of any such adjustment or the
ascertaining of the existence  of facts that would require any such
adjustment (except with respect to the  exercise of Rights after receipt  of
the certificate contemplated by Section 2.3 describing any such
adjustment);  nor will it by any act  hereunder be deemed to make any
representation or warranty as to the authorization  of any Class A Shares  to
be issued pursuant to this Agreement or any Rights or as to whether any Class
A  Shares will, when  issued, be duly and validly authorized, executed,
issued and delivered and fully  paid and non-assessable;

(f)     the Corporation agrees that it will perform, execute, acknowledge and
deliver  or cause to be performed,  executed, acknowledged and delivered all
such further and other acts, instruments  and assurances as may  reasonably
be required by the Rights Agent for the carrying out or performing by  the
Rights Agent of the  provisions of this Agreement;

(g)     the Rights Agent is hereby authorized and directed to accept
instructions in  writing with respect to the  performance of its duties
hereunder from any individual believed by the Rights  Agent to be the
Chairman  of the Board, President, any Vice-President, Treasurer, Corporate
Secretary or any  Assistant Secretary of  the Corporation, and to apply to
such individuals for advice or instructions in  connection with its duties,
and it shall not be liable for any action taken or suffered by it in good
faith in  accordance with instructions  of any such individual;

(h)     the Rights Agent and any shareholder or stockholder, director,
officer or  employee of the Rights Agent  may buy, sell or deal in Common
Shares, Rights or other securities of the  Corporation or become  pecuniarily
interested in any transaction in which the Corporation may be  interested, or
contract with or  lend money to the Corporation or otherwise act as fully and
freely as though it  were not Rights Agent  under this Agreement. Nothing
herein shall preclude the Rights Agent from acting  in any other capacity
for  the Corporation or for any other legal entity; and

(i)     the Rights Agent may execute and exercise any of the rights or powers
hereby  vested in it or perform any  duty hereunder either itself or by or
through its attorneys or agents, and the  Rights Agent will not be
answerable or accountable for any act, default, neglect or misconduct of any
such  attorneys or agents or for  any loss to the Corporation resulting from
any such act, default, neglect or  misconduct, provided  reasonable care was
exercised in the selection and continued employment thereof.

4.4     Change of Rights Agent

The Rights Agent may resign and be discharged from its duties under this
Agreement  upon 90 days' notice (or such  lesser notice as is acceptable to
the Corporation) in writing mailed to the  Corporation and to each transfer
agent of Common  Shares by registered or certified mail. The Corporation may
remove the Rights  Agent upon 30 days' notice in writing,  mailed to the
Rights Agent and to each transfer agent of the Common Shares by  registered
or certified mail. If the Rights  Agent should resign or be removed or
otherwise become incapable of acting, the  Corporation will appoint a
successor to the  Rights Agent. If the Corporation fails to make such
appointment within a period of  30 days after such removal or after it has
been notified in writing of such resignation or incapacity by the resigning
or  incapacitated Rights Agent, then by prior  written notice to the
Corporation the resigning Rights Agent or the holder of any  Rights (which
holder shall, with such  notice, submit such holder's Rights Certificate, if
any, for inspection by the  Corporation), may apply to any court of
competent jurisdiction for the appointment of a new Rights Agent. Any
successor  Rights Agent, whether appointed by the  Corporation or by such a
court, shall be a corporation incorporated under the laws  of Canada or a
province thereof authorized  to carry on the business of a trust company in
the Province of Ontario. After  appointment, the successor Rights Agent
will  be vested with the same powers, rights, duties and responsibilities as
if it had  been originally named as Rights Agent  without further act or
deed; but the predecessor Rights Agent shall, subject to  its right to first
require payment of all  outstanding fees and other amounts owed to it
hereunder, deliver and transfer to  the successor Rights Agent any property
at  the time held by it hereunder, and execute and deliver any further
assurance,  conveyance, act or deed necessary for the  purpose. Not later
than the effective date of any such appointment, the  Corporation will file
notice thereof in writing with the  predecessor Rights Agent and each
transfer agent of the Common Shares, and mail a  notice thereof in writing to
the holders  of the Rights in accordance with Section 5.9. Failure to give any
notice provided  for in this Section 4.4, however, or any  defect therein,
shall not affect the legality or validly of the resignation or  removal of
the Rights Agent or the appointment of  any successor Rights Agent, as the
case may be.

ARTICLE 5

MISCELLANEOUS

5.1     Redemption and Waiver

(a)     The Board of Directors may, with the prior consent of the holders of
Voting  Shares or of the holders of  Rights given in accordance with Section
5.1(i) or (j), as the case may be, at any  time prior to the  occurrence of a
Flip-in Event as to which the application of Section 3.1 has not  been waived
pursuant to  the provisions of this Section 5.1, elect to redeem all but not
less than all of  the then outstanding Rights  at a redemption price of
$0.00001 per Right appropriately adjusted in a manner  analogous to the
applicable  adjustment provided for in Section 2.3 in the event that an event
of the type  analogous to any of the events  described in Section 2.3 shall
have occurred (such redemption price being herein  referred to as the
"Redemption Price"). The Board of Directors may, prior to the date of the
shareholders' meeting referred to  in Section 5.15, elect to terminate this
Agreement. If the Board of Directors  elects to terminate this  Agreement
pursuant to this Section 5.1(a), this Agreement will thereupon terminate  and
be void and of no  further force or effect.

(b)     The Board of Directors may, with the prior consent of the holders of
Voting  Shares given in accordance  with Section 5.1(i), determine, at any
time prior to the occurrence of a Flip-in  Event as to which the  application
of Section 3.1 has not been waived pursuant to this Section 5.1, if  such
Flip-in Event would  occur by reason of an acquisition of Voting Shares
otherwise than pursuant to a  Take-over Bid made by  means of a take-over bid
circular to all holders of record of Voting Shares and  otherwise than in
the  circumstances set forth in Section 5.1(d), to waive the application of
Section 3.1  to such Flip-in Event. In  the event that the Board of Directors
proposes such a waiver, the Board of  Directors shall extend the  Separation
Time to a date subsequent to and not more than ten Business Days  following
the meeting of  shareholders called to approve such waiver.

(c)     The Board of Directors may, until the occurrence of a Flip-in Event
upon  prior written notice delivered to  the Rights Agent, determine to waive
the application of Section 3.1 to such  particular Flip-in Event  provided
that the Flip-in Event would occur by reason of a Take-over Bid made by  way
of take-over bid  circular sent to all holders of Voting Shares (which for
greater certainty shall  not include the circumstances  described in
Subsection 5.1(d)); provided that if the Board of Directors waives  the
application of Section  3.1 to a particular Flip-in Event pursuant to this
Subsection 5.1(c), the Board of  Directors shall be deemed  to have waived
the application of Section 3.1 to any other Flip-in Event occurring  by
reason of any Take- over Bid which is made by means of a take-over bid
circular to all holders of  Voting Shares (i) prior to the  granting of such
waiver, (ii) thereafter and prior to the expiry of any Take-over  Bid (as the
same may be  extended from time to time) outstanding at the time of the
granting of such waiver  or (iii) thereafter and  prior to the expiry of any
Take-over Bid in respect of which a waiver is, or is  deemed to have been,
granted  under this Subsection 5.1(c).

(d)     Notwithstanding the provisions of Subsections 5.1(b) and (c) hereof,
the  Board of Directors may waive the  application of Section 3.1 in respect
of the occurrence of any Flip-in Event,  provided that both of the  following
conditions are satisfied:

      (i)     the Board of Directors has determined within ten Trading Days
following a  Stock Acquisition  Date that a Person became an Acquiring Person
by inadvertence and without any  intention to  become, or knowledge that it
would become, an Acquiring Person under this  Agreement, and

     (ii)     such Person has reduced its Beneficial Ownership of Voting
Shares such that  at the time of  granting the waiver pursuant to this
Subsection 5.1(d), such Person is no longer  an Acquiring  Person and in the
event that such a waiver is granted by the Board of Directors,  such Stock
Acquisition Date and Flip- in Event shall be deemed not to have occurred and
the  Separation  Time shall be deemed not to have occurred as a result of
such Person having  inadvertently become  an Acquiring Person.

(e)     The Board of Directors, shall, without further formality, be deemed
to have  elected to redeem the Rights at  the Redemption Price on the date
that a Person which has made a Permitted Bid, a  Competing Permitted  Bid, a
Take-Over Bid in respect of which the Board of Directors has waived, or is
deemed to have waived,  pursuant to Section 5.1(c) the application of Section
3.1, takes up and pays for  Voting Shares pursuant to  the terms and
conditions of such Permitted Bid, Competing Permitted Bid or Take- over bid,
as the case  may be.

(f)     Where a Take-over Bid that is not a Permitted Bid Acquisition is
withdrawn or  otherwise terminated after  the Separation Time has occurred
and prior to the occurrence of a Flip-in Event,  the Board of Directors may
elect to redeem all the outstanding Rights at the Redemption Price. Upon
the  Rights being redeemed  pursuant to this Subsection 5.1(f), all the
provisions of this Agreement shall  continue to apply as if the  Separation
Time had not occurred and Rights Certificates representing the number  of
Rights held by each  holder of record of Common Shares as of the Separation
Time had not been mailed to  each such holder and  for all purposes of this
Agreement the Separation Time shall be deemed not to have  occurred.

(g)     If the Board of Directors elects or is deemed to have elected to
redeem the  Rights, and, in circumstances in  which Subsection 5.1(a) is
applicable, such redemption is approved by the holders  of Voting Shares or
the  holders of Rights in accordance with Subsection 5.1(i) or (j), as the
case may be,  the right to exercise the  Rights, will thereupon, without
further action and without notice, terminate and  the only right thereafter
of  the holders of Rights shall be to receive the Redemption Price.

(h)     Within 10 Business Days after the Board of Directors elects or is
deemed to  elect, to redeem the Rights or  if Subsection 5.1(a) is applicable
within 10 Business Days after the holders of  Common Shares of the  holders of
Rights have approved a redemption of Rights in accordance with Section  5.1(i)
or (j), as the case  may be, the Corporation shall give notice of redemption
to the holders of the then  outstanding Rights by  mailing such notice to
each such holder at his last address as it appears upon the  registry books
of the  Rights Agent or, prior to the Separation Time, on the registry books
of the  transfer agent for the Voting  Shares. Any notice which is mailed in
the manner herein provided shall be deemed  given, whether or not  the holder
receives the notice. Each such notice of redemption will state the  method by
which the payment  of the Redemption Price will be made. The Corporation may
not redeem, acquire or  purchase for value any  Rights at any time in any
manner other than specifically set forth in this Section  5.1 or in
connection with  the purchase of Common Shares prior to the Separation Time.

(i)     If a redemption of Rights pursuant to Section 5.1(a) or a waiver of a
Flip-in  Event pursuant to Section  5.1(b) is proposed at any time prior to
the Separation Time, such redemption or  waiver shall be submitted  for
approval to the holders of Voting Shares. Such approval shall be deemed to
have been given if the  redemption or waiver is approved by the affirmative
vote of a majority of the  votes cast by Independent  Shareholders
represented in person or by proxy at a meeting of such holders duly  held in
accordance with  applicable laws and the Corporation's by-laws.

(j)     If a redemption of Rights pursuant to Section 5.1(a) is proposed at
any time  after the Separation Time,  such redemption shall be submitted for
approval to the holders of Rights. Such  approval shall be deemed  to have
been given if the redemption is approved by holders of Rights by a  majority
of the votes cast by  the holders of Rights represented in person or by proxy
at and entitled to vote at  a meeting of such holders.  For the purposes
hereof, each outstanding Right (other than Rights which are  Beneficially
Owned by any  Person referred to in clauses (i) to (v) inclusive of the
definition of  Independent Shareholders) shall be  entitled to one vote, and
the procedures for the calling, holding and conduct of  the meeting shall be
those,  as nearly as may be, which are provided in the Corporation's by-laws
and the Yukon  Business  Corporations Act with respect to meetings of
shareholders of the Corporation.

5.2     Expiration

No Person shall have any rights whatsoever pursuant to this Agreement or in
respect of any Right after the  Expiration Time, except the Rights Agent as
specified in Subsection 4.1 of this  Agreement.

5.3     Issuance of New Rights Certificates

Notwithstanding any of the provisions of this Agreement or the Rights to
the  contrary, the Corporation may, at its  option, issue new Rights
Certificates evidencing Rights in such form as may be  approved by the Board
of Directors to reflect  any adjustment or change in the number or kind or
class of securities purchasable  upon exercise of Rights made in accordance
with the provisions of this Agreement.

5.4     Supplements and Amendments

(a)     The Corporation may make amendments to this Agreement to correct any
clerical  or typographical error or  which are required to maintain the
validity of this Agreement as a result of any  change in any applicable
legislation or regulations thereunder. The Corporation may, prior to the date
of  the shareholders' meeting  referred to in Section 5.15, supplement, amend,
vary, rescind or delete any of the  provisions of this  Agreement and the
Rights (whether or not such action would materially adversely  affect the
interests of the  holders of the Rights generally) without the approval of
any holders of Rights or  Voting Shares in order to  make any changes which
the Board of Directors acting in good faith may deem  necessary or
desirable.  Notwithstanding anything in this Section 5.4 to the contrary, no
such supplement  or amendment shall be  made to the provisions of Article 4
or to the rights, duties, obligations or  indemnities of the Rights Agent,
except with the written concurrence of the Rights Agent to such supplement
or  amendment.

(b)     Subject to Subsection 5.4(a), the Corporation may, with the prior
consent of  the holders of Voting Shares  obtained as set forth below, at any
time before the Separation Time, supplement,  amend, vary, rescind or  delete
any of the provisions of this Agreement and the Rights (whether or not such
action would materially  adversely affect the interests of the holders of
Rights generally). Such consent  shall be deemed to have been  given if the
action requiring such approval is authorized by the affirmative vote  of a
majority of the votes  cast by Independent Shareholders present or
represented at and entitled to be  voted at a meeting of the  holders of
Voting Shares duly called and held in compliance with applicable laws  and
the articles and by- laws of the Corporation.

(c)      Subject to subsection 5.4(a), the Corporation may, with the prior
consent of  the holders of Rights, at any  time on or after the Separation
Time, supplement, amend, vary, rescind or delete  any of the provisions of
this Agreement and the Rights (whether or not such action would materially
adversely affect the interests of  the holders of Rights generally), provided
that no such amendment, variation or  deletion shall be made to  the
provisions of Article 4 or to the rights, duties, obligations or
indemnities  of the Rights Agent, except  with the written concurrence of the
Rights Agent thereto.

(d)     Any approval of the holders of Rights shall be deemed to have been
given if  the action requiring such  approval is authorized by the
affirmative votes of the holders of Rights present  or represented at and
entitled to be voted at a meeting of the holders of Rights and representing
a  majority of the votes cast in  respect thereof. For the purposes hereof,
each outstanding Right (other than  Rights which are void pursuant  to the
provisions hereof) shall be entitled to one vote, and the procedures for  the
calling, holding and  conduct of the meeting shall be those, as nearly as may
be, which are provided in  the Corporation's by- laws and the Yukon Business
Corporations Act with respect to meetings of  shareholders of the
Corporation.

(e)     Any amendments made by the Corporation to this Agreement pursuant
to  Subsection 5.4(a) which are  required to maintain the validity of this
Agreement as a result of any change in  any applicable legislation  or
regulation thereunder shall:

      (i)     if made before the Separation Time, be submitted to the
shareholders of the  Corporation at the  next meeting of shareholders and the
shareholders may, by the majority referred to  in Subsection  5.4(b), confirm
or reject such amendment;

     (ii)     if made after the Separation Time, be submitted to the holders
of Rights at a  meeting to be called  for on a date not later than
immediately following the next meeting of  shareholders of the  Corporation
and the holders of Rights may, by resolution passed by the majority  referred
to in  Subsection 5.4(d), confirm or reject such amendment.

Any such amendment shall be effective from the date of the resolution of the
Board  of Directors adopting  such amendment, until it is confirmed or
rejected or until it ceases to be  effective (as described in the next
sentence) and, where such amendment is confirmed, it continues in effect in
the  form so confirmed. If such  amendment is rejected by the shareholders or
the holders of Rights or is not  submitted to the shareholders  or holders of
Rights as required, then such amendment shall cease to be effective  from and
after the  termination of the meeting (or any adjournment of such meeting) at
which it was  rejected or to which it  should have been but was not submitted
or from and after the date of the meeting  of holders of Rights that  should
have been but was not held, and no subsequent resolution of the Board of
Directors to amend this  Agreement to substantially the same effect shall be
effective until confirmed by  the shareholders or holders  of Rights as the
case may be.

5.5     Fractional Rights and Fractional Shares

(a)     The Corporation shall not be required to issue fractions of Rights or
to  distribute Rights Certificates which  evidence fractional Rights. After
the Separation Time, in lieu of issuing  fractional Rights, the Corporation
shall pay to the holders of record of the Rights Certificates (provided the
Rights  represented by such  Rights Certificates are not void pursuant to the
provisions of Subsection 3.1(b),  at the time such fractional  Rights would
otherwise be issuable), an amount in cash equal to the fraction of  the
Market Price of one  whole Right that the fraction of a Right that would
otherwise be issuable is of  one whole Right.

(b)     The Corporation shall not be required to issue fractions of Class A
Shares  upon exercise of Rights or to  distribute certificates which evidence
fractional Class A Shares. In lieu of  issuing fractional Class A  Shares, the
Corporation shall pay to the registered holders of Rights  Certificates, at
the time such Rights  are exercised as herein provided, an amount in cash
equal to the fraction of the  Market Price of one Class A  Share that the
fraction of a Class A Share that would otherwise be issuable upon  the
exercise of such Right  is of one whole Class A Share at the date of such
exercise.

5.6     Rights of Action

Subject to the terms of this Agreement, all rights of action in respect of
this  Agreement, other than rights of action  vested solely in the Rights
Agent, are vested in the respective holders of the  Rights. Any holder of
Rights, without the  consent of the Rights Agent or of the holder of any
other Rights, may, on such  holder's own behalf and for such holder's  own
benefit and the benefit of other holders of Rights, as the case may be,
enforce, and may institute and maintain any suit,  action or proceeding
against the Corporation to enforce such holder's right to  exercise such
holder's Rights, or Rights to  which he is entitled, in the manner provided
in such holder's Rights Certificate  and in this Agreement. Without limiting
the  foregoing or any remedies available to the holders of Rights, as the
case may be,  it is specifically acknowledged that the  holders of Rights
would not have an adequate remedy at law for any breach of this  Agreement
and will be entitled to specific  performance of the obligations under, and
injunctive relief against actual or  threatened violations of the obligations
of any  Person subject to, this Agreement.

5.7     Regulatory Approvals

Any obligation of the Corporation or action or event contemplated by this
Agreement shall be subject to the receipt  of any requisite approval or
consent from any governmental or regulatory  authority, including without
limiting the generality  of the foregoing, any necessary approvals of The
Toronto Stock Exchange and the American Stock Exchange or any other
applicable stock exchange or market.

5.8     Notice of Proposed Actions

In case the Corporation shall propose after the Separation Time and prior to
the  Expiration Time:

(a)     to effect or permit (in cases where the Corporation's permission is
required)  any Flip-in Event; or

(b)     to effect the liquidation, dissolution or winding up of the
Corporation or  the sale of all or substantially all  of the Corporation's
assets, then, in each such case, the Corporation shall give  to each holder
of a Right, in  accordance with Section 5.9 hereof, a notice of such proposed
action, which shall  specify the date on which  such Flip-in Event,
liquidation, dissolution, winding up or sale is to take place,  and such
notice shall be  so given at least 10 Business Days prior to the date of
taking of such proposed  action by the Corporation.


5.9     Notices

(a)     Notices or demands authorized or required by this Agreement to be
given or  made by the Rights Agent or  by the holder of any Rights to or on
the Corporation shall be sufficiently given  or made if delivered, sent  by
registered or certified mail, postage prepaid (until another address is
filed  in writing with the Rights  Agent), or sent by facsimile or other form
of recorded electronic communication,  charges prepaid and  confirmed in
writing, as follows:

Gold Reserve Inc.
926 W. Sprague Avenue, Suite 200
Spokane, Washington 99201
Attention: President
Telecopy No.: (509) 623-1634


(b)     Notices or demands authorized or required by this Agreement to be
given or  made by the Corporation or by  the holder of any Rights to or on
the Rights Agent shall be sufficiently given or  made if delivered, sent by
registered or certified mail, postage prepaid (until another address is filed
in  writing with the Corporation),  or sent by facsimile or other form of
recorded electronic communication, charges  prepaid and confirmed in
writing, as follows:

Computershare Investor Services Inc.
100 University Avenue
8th Floor
Toronto, Ontario M5J 2Y1

Attention: Manager, Client Services
Telecopy No.: (416) 981-9800

(c)     Notices or demands authorized or required by this Agreement to be
given or  made by the Corporation or  the Rights Agent to or on the holder of
any Rights shall be sufficiently given or  made if delivered or sent  by first
class mail, postage prepaid, addressed to such holder at the address of  such
holder as it appears  upon the register of the Rights Agent or, prior to the
Separation Time, on the  register of the Corporation  for its Common Shares.
Any notice which is mailed or sent in the manner herein  provided shall be
deemed  given, whether or not the holder receives the notice.

(d)     Any notice given or made in accordance with this Section 5.9 shall be
deemed  to have been given and to  have been received on the day of delivery,
if so delivered, on the third Business  Day (excluding each day  during which
there exists any general interruption of postal service due to  strike,
lockout or other cause)  following the mailing thereof, if so mailed, and on
the day of telegraphing,  telecopying or sending of the  same by other means
of recorded electronic communication (provided such sending is  during the
normal  business hours of the addressee on a Business Day and if not, on the
first  Business Day thereafter). Each of  the Corporation and the Rights
Agent may from time to time change its address for  notice by notice to the
other given in the manner aforesaid.

5.10     Costs of Enforcement

The Corporation agrees that if the Corporation fails to fulfil any of its
obligations pursuant to this Agreement, then  the Corporation will reimburse
the holder of any Rights for the costs and expenses  (including legal fees)
incurred by such  holder to enforce his rights pursuant to any Rights or this
Agreement.

5.11     Successors

All the covenants and provisions of this Agreement by or for the benefit of
the  Corporation or the Rights Agent  shall bind and enure to the benefit of
their respective successors and assigns  hereunder.

5.12     Benefits of this Agreement

Nothing in this Agreement shall be construed to give to any Person other than
the  Corporation, the Rights Agent  and the holders of the Rights any legal or
equitable right, remedy or claim under  this Agreement; further, this
Agreement  shall be for the sole and exclusive benefit of the Corporation,
the Rights Agent  and the holders of the Rights.

5.13     Governing Law

This Agreement and each Right issued hereunder shall be deemed to be a
contract  made under the laws of the  Province of Ontario and for all
purposes shall be governed by and construed in  accordance with the laws of
such Province  applicable to contracts to be made and performed entirely
within such Province.

5.14     Severability

If any term or provision hereof or the application thereof to any
circumstance  shall, in any jurisdiction and to any  extent, be invalid or
unenforceable, such term or provision shall be ineffective  only as to such
jurisdiction and to the extent  of such invalidity or unenforceability in
such jurisdiction without invalidating  or rendering unenforceable or
ineffective the  remaining terms and provisions hereof in such jurisdiction
or the application of  such term or provision in any other  jurisdiction or
to circumstances other than those as to which it is specifically  held
invalid or unenforceable.

5.15     Date Agreement Becomes Effective

This Agreement is effective and in full force and effect in accordance with
its terms from and after the Effective Time.

5.16     Reconfirmation

This Agreement must be reconfirmed  by a resolution passed by a
majority  of greater than 50 per cent of the votes cast by holders of Voting
Shares held by  Independent Shareholders who vote in  respect of such
reconfirmation at a meeting of holders of Voting Shares to be held not
later than the date on which the 2006 annual meeting of holders of Voting
Shares terminates. If the Agreement is not so  reconfirmed, the Agreement and
all outstanding Rights shall terminate and be void  and of no further force
and effect on and  from the close of business on that date which is the
earlier of the date of  termination of the meeting called to consider the
reconfirmation of this Agreement and the date of termination of the 2006 annual
meeting of holders of Voting Shares; provided, that termination shall not occur
if a Flip-in Event has occurred (other  than a Flip-in Event which has been
waived  pursuant to Subsection 5.1(c) or (d) hereof), prior to the date upon
which this Agreement would otherwise terminate pursuant to this Section 5.16.
In the event that Agreement is so reconfirmed, the Expiration Time shall be
extended for an additional three-year period. This Agreement shall be
reconfirmed by the independent Shareholders every three years thereafter in
accordance with the foregoing provisions, mutatis, mutandis

5.17     Determinations and Actions by the Board of Directors

The Board of Directors shall have the exclusive power and authority to
administer  this Agreement and to exercise all  rights and powers
specifically granted to the Board of Directors or the  Corporation, or as may
be necessary or advisable in  the administration of this Agreement. All such
actions, calculations and  determinations (including all omissions with
respect  to the foregoing) which are done or made by the Board of Directors,
in good faith,  shall not subject the Board of Directors or  any director of
the Corporation to any liability to the holders of the Rights.

5.18     Declaration as to Non-Canadian Holders

If in the opinion of the Board of Directors (who may rely upon the advice
of  counsel) any action or event  contemplated by this Agreement would
require compliance by the Corporation with  the securities laws or
comparable  legislation of a jurisdiction outside Canada, the Board of
Directors acting in  good faith shall take such actions as it may  deem
appropriate to ensure such compliance. In no event shall the Corporation or
the Rights Agent be required to issue or  deliver Rights or securities
issuable on exercise of Rights to persons who are  citizens, residents or
nationals of any  jurisdiction other than Canada or the United States, in
which such issue or  delivery would be unlawful without registration  of the
relevant Persons or securities for such purposes.

5.19     Time of the Essence

Time shall be of the essence in this Agreement.

5.20     Execution in Counterparts

This Agreement may be executed in any number of counterparts and each of
such  counterparts shall for all purposes  be deemed to be an original, and
all such counterparts shall together constitute  one and the same instrument.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly  executed as of the date first  above written.


GOLD RESERVE INC.



By: /s/ Robert A. McGuinness



COMPUTERSHARE INVESTOR SERVICES INC.


By: /s/ Christine Lawton
By: /s/ Irene Zelman





ATTACHMENT 1

GOLD RESERVE INC.
SHAREHOLDER RIGHTS PLAN AGREEMENT

[Form of Rights Certificate]

Certificate No.
______________________________________________________________

Rights ____________________________________________________________

THE RIGHTS ARE SUBJECT TO TERMINATION ON THE TERMS SET FORTH IN
THE SHAREHOLDER  RIGHTS PLAN AGREEMENT. UNDER CERTAIN CIRCUMSTANCES
(SPECIFIED IN SUBSECTION 3.1(b) OF THE SHAREHOLDER RIGHTS PLAN
AGREEMENT), RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR
CERTAIN RELATED PARTIES, OR TRANSFEREES OF AN ACQUIRING PERSON OR
CERTAIN RELATED PARTIES, MAY BECOME VOID.

Rights Certificate


This certifies that_____________________________________________________
_______or  registered assigns, is  the registered holder of the number of
Rights set forth above, each of which  entitles the registered holder
thereof, subject to  the terms, provisions and conditions of the Shareholder
Rights Plan Agreement,  dated as of October 5, 1998, as the same  may be
amended or supplemented from time to time (the "Shareholder Rights
Agreement"), between Gold Reserve Inc., a  corporation duly incorporated
under the laws of the Yukon Territory (the  "Corporation") and Computershare
Investor Services, a trust company incorporated under the laws of
Canada (the "Rights  Agent") (which term shall include any  successor Rights
Agent under the Shareholder Rights Agreement), to purchase from  the
Corporation at any time after the  Separation Time (as such term is defined
in the Shareholder Rights Agreement) and  prior to the Expiration Time (as
such  term is defined in the Shareholder Rights Agreement), one fully paid
Class A Share  of the Corporation (a "Class A Share")  at the Exercise Price
referred to below, upon presentation and surrender of this  Rights
Certificate with the Form of Election  to Exercise (in the form provided
hereinafter) duly executed and submitted to the  Rights Agent at its
principal office in the  City of Toronto [insert other cities, if
applicable]. The Exercise Price shall  initially be $70.00 (Cdn.) or the U.S.
Dollar  Equivalent per Right and shall be subject to adjustment in certain
events as  provided in the Shareholder Rights Agreement.

This Rights Certificate is subject to all of the terms and provisions of the
Shareholder Rights Agreement, which  terms and provisions are incorporated
herein by reference and made a part hereof  and to which Shareholder Rights
Agreement reference is hereby made for a full description of the rights,
limitations of  rights, obligations, duties and immunities  thereunder of the
Rights Agent, the Corporation and the holders of the Rights  Certificates.
Copies of the Shareholder Rights  Agreement are on file at the registered
office of the Corporation.

This Rights Certificate, with or without other Rights Certificates, upon
surrender  at any of the offices of the Rights  Agent designated for such
purpose, may be exchanged for another Rights Certificate or Rights
Certificates of like tenor and  date evidencing an aggregate number of Rights
equal to the aggregate number of  Rights evidenced by the Rights Certificate
or Rights Certificates surrendered. If this Rights Certificate shall be
exercised  in part, the registered holder shall be entitled  to receive, upon
surrender hereof, another Rights Certificate or Rights Certificates for the
number of whole Rights not exercised.

Subject to the provisions of the Shareholder Rights Agreement, the Rights
evidenced by this Rights Certificate may  be, and under certain circumstances
are required to be, redeemed by the  Corporation at a redemption price of
$0.00001 per  Right.

No fractional Class A Shares will be issued upon the exercise of any Right
or  Rights evidenced hereby, but in lieu  thereof a cash payment will be
made, as provided in the Shareholder Rights  Agreement. No holder of this
Rights Certificate,  as such, shall be entitled to vote or receive dividends
or be deemed for any  purpose the holder of Class A Shares or of any  other
securities which may at any time be issuable upon the exercise hereof, nor
shall anything contained in the Shareholder  Rights Agreement or herein be
construed to confer upon the holder hereof, as such,  any of the rights of a
shareholder of the  Corporation or any right to vote for the election of
directors or upon any matter  submitted to shareholders at any meeting
thereof, or to give or withhold consent to any corporate action, or to
receive  notice of meetings or other actions affecting  shareholders (except
as provided in the Shareholder Rights Agreement), or to  receive dividends or
subscription rights, or  otherwise, until the Rights evidenced by this Rights
Certificate shall have been  exercised as provided in the Shareholder  Rights
Agreement.

This Rights Certificate shall not be valid or obligatory for any purpose
until it  shall have been countersigned by the  Rights Agent.

WITNESS the facsimile signature of the proper officers of the Corporation and
its  corporate seal.

Date: ________________________



GOLD RESERVE INC.


By: ___________________________               By: ___________________________

[President]                                            [Corporate Secretary]

Countersigned:

COMPUTERSHARE INVESTOR SERVICES INC.

By:  ___________________________
Authorized Signature


By:  ___________________________
Authorized Signature




=======================================

FORM OF ASSIGNMENT

(To be executed by the registered holder if such holder desires to transfer
the  Rights Certificate.)

FOR VALUE RECEIVED hereby sells, assigns and transfers unto
---------------------

(Please print name and address of transferee.)

the Rights represented by this Rights Certificate, together with all right,
title  and interest therein, and does hereby  irrevocably constitute and
appoint _______________________, as attorney, to  transfer the within Rights
on the  books of the Corporation, with full power of substitution.  Dated:

Signature

Signature Guaranteed:

(Signature must correspond to name as written upon the face of this Rights
Certificate in every particular,  without alteration or enlargement or any
change whatsoever.)  Signature must be guaranteed by a member firm of a
recognized stock exchange in  Canada, a registered national  securities
exchange in the United States, a member of the Investment Dealers
Association of Canada or National  Association of Securities Dealers, Inc. or
a commercial bank or trust company  having an office or correspondent in
Canada or the United States or a member of the Securities Transfer Agent
Medallion  Program (STAMP).


-----------------------------------------------------------------------------

CERTIFICATE

(To be completed if true.)


The undersigned party transferring Rights hereunder, hereby represents, for
the  benefit of all holders of Rights and  Class A Shares, that the Rights
evidenced by this Rights Certificate are not, and,  to the knowledge of the
undersigned, have never been, Beneficially Owned by an Acquiring Person or
an  Affiliate or Associate thereof or a  Person acting jointly or in concert
with any of the foregoing. Capitalized terms  shall have the meaning
ascribed  thereto in the Shareholder Rights Agreement.

Signature


-----------------------------------------------------------------------------
  (To be attached to each Rights Certificate.)


=======================================


FORM OF ELECTION TO EXERCISE

(To be executed by the registered holder if such holder desires to exercise
the  Rights Certificate.)

TO:


The undersigned hereby irrevocably elects to exercise _____________ whole
Rights  represented by the attached  Rights Certificate to purchase the Class
A Shares or other securities, if  applicable, issuable upon the exercise of
such Rights and requests that certificates for such securities be issued in
the  name of:



(Name)
(Address)
(City and Province)
Social Insurance Number or other taxpayer identification number.  If such
number of Rights shall not be all the Rights evidenced by this Rights
Certificate, a new Rights Certificate  for the balance of such Rights shall
be registered in the name of and delivered  to:


(Name)
(Address)
(City and Province)
Social Insurance Number or other taxpayer identification number.  Dated:


Signature

Signature Guaranteed:      (Signature must correspond to name as written upon
the  face of this Rights Certificate in  every particular, without alteration
or enlargement or any change whatsoever.)  Signature must be guaranteed by a
member firm of a recognized stock exchange in  Canada, a registered
national  securities exchange in the United States, a member of the
Investment Dealers  Association of Canada or National  Association of
Securities Dealers, Inc. or a commercial bank or trust company  having an
office or correspondent in  Canada or the United States or a member of the
Securities Transfer Agent Medallion  Program (STAMP).

Signature


-----------------------------------------------------------------------------
  (To be attached to each Rights Certificate.)



=======================================

CERTIFICATE

(To be completed if true.)

The undersigned party exercising Rights hereunder, hereby represents, for
the  benefit of all holders of Rights and  Class A Shares, that the Rights
evidenced by this Rights Certificate are not, and,  to the knowledge of the
undersigned, have never been, Beneficially Owned by an Acquiring Person or
an  Affiliate or Associate thereof or a  Person acting jointly or in concert
with any of the foregoing. Capitalized terms  shall have the meaning
ascribed  thereto in the Shareholder Rights Agreement.

Signature


-----------------------------------------------------------------------------


(To be attached to each Rights Certificate.)

=======================================

NOTICE

In the event the certification set forth above in the Forms of Assignment
and  Election is not completed, the  Corporation will deem the Beneficial
Owner of the Rights evidenced by this Rights  Certificate to be an
Acquiring  Person or an Affiliate or Associate thereof. No Rights
Certificates shall be issued in exchange for a Rights Certificate owned or
deemed to have been owned by an Acquiring Person or an Affiliate or
Associate thereof, or by a Person acting jointly or in concert with an
Acquiring Person or an Affiliate or Associate thereof.


Exhibit 3.2      - Gold Reserve Inc. Equity Incentive Plan
Gold Reserve Inc. Equity Incentive Plan

SECTION 1.  ESTABLISHMENT, PURPOSE, AND EFFECTIVE DATE OF PLAN
--------------------------------------------------------------------------
Establishment. Gold Reserve Inc., a Yukon corporation (the "Company"), the
parent company of Gold Reserve Corporation, a Montana corporation, has
previously adopted and assumed  the "1997 EQUITY INCENTIVE PLAN" originally
established by Gold Reserve Corporation, as amended in this Fifth Amendment
and Restatement (the "Plan"), for the employees, directors and consultants of
the Company and its Subsidiaries. The Plan permits the grant of Stock Options,
Stock Appreciation Rights and Restricted Stock.

Purpose. The Purpose of the Plan is to advance the interests of the Company
and its Subsidiaries and promote continuity of management by encouraging and
providing employees, directors and consultants with the opportunity to
acquire an equity interest in the Company and to participate in the increase
in shareholder value as reflected in the growth in the price of the shares of
the Company's Stock and by enabling the Company and its Subsidiaries to
attract and retain the services of employees, directors, and consultants upon
whose judgment, interest, skills, and special effort the successful conduct of
its operations is largely dependent.

Effective Date. The Plan, as amended hereby, shall become effective on the
date it is adopted by the Board of the Company, subject to the approval by
the affirmative vote of at least a majority of the votes cast by shareholders
of the Company eligible to vote under applicable Exchange rules at a duly held
meeting of shareholders or, if permitted by Exchange rules, by written
consent  given by holders of Class A and Class B Common Shares of the Company
eligible to give their consent under Exchange rules who together hold at least
a majority of the votes attaching to shares eligible to be voted. The original
plan was effective January 30, 1997. This Plan was approved by the Board
effective as of January 29, 2006, subject to shareholder and Exchange
approvals.

SECTION 2.  DEFINITIONS, CONSTRUCTION
-------------------------------------------------------------------------
Definitions. Whenever used herein, the following terms shall have their
respective meanings set forth below:

"Act" means the Securities Act (Ontario), as amended.

"Award" means, individually or collectively, a grant under the Plan of an
Option, Restricted Stock or Stock Appreciation Right.

"Board" means the Board of Directors of the Company.

"Business Combination" shall have the meaning provided in Section 12.

"Change in Capitalization" means any increase or reduction in the number of
shares of Stock, or any change (including, but not limited to, a change in
value) in the shares of Stock or exchange of shares of Stock for a different
number or kind of shares or other securities of the Company or any other
corporation or other entity, by reason of a reclassification,
recapitalization, merger, consolidation, reorganization, spin-off, split-up,
issuance of warrants, rights or debentures, change in the exercise price or
conversion price under any warrants, rights or debenture as a result of any
event, stock dividend, stock split or reverse stock split, extraordinary
dividend, property dividend, combination or exchange of shares or otherwise.

"Change in Control" shall have the meaning provided in Section 12.

"Code" means the U.S. Internal Revenue Code of 1986, as amended.

"Committee" means a committee of the Board designated by the Board to
administer the Plan in accordance with the requirements of each Exchange, as
applicable. If no Committee is designated or is administering the Plan, all
references to the Committee herein shall refer to the Board. While the
Committee shall administer the Plan generally as provided in Section 12, the
Board shall determine matters concerning Awards to directors and references
herein to the Committee shall refer to the Board for matters relating to
Awards to directors.

"Company" means Gold Reserve Inc., a Yukon corporation, and any successors
thereto.

"Disability" means the inability to engage in any substantial activity by
reason of any medically determinable, physical or mental impairment that can
be expected to result in death or that has lasted or can be expected to last
for a continuous period of not less than 12 months.

"Employment" means the working relationship between the employee (creating a
legally valid employer-employee relationship), directors or the consultants
and the Company or Subsidiary, as applicable.

"Exchange" means the Toronto Stock Exchange and the American Stock Exchange,
as applicable.

"Exchange Act" means the U.S. Securities and Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.

"Fair Market Value" means, subject to any applicable Exchange rules, the
volume weighted average trading price or the United States Dollar equivalent
of the Stock calculated by dividing the total value by the total volume of
Stock on the Principal Market, for the five trading days immediately
preceding the relevant date; and if there is no trading during such period,
the Fair Market Value means the closing trading price or the United States
Dollar equivalent of the closing trading price on the most recent date
previous to such grant date as reported on the Principal Market for the
Stock. If no Fair Market Value has been established in accordance with the
foregoing, Fair Market Value shall be the value established by the Committee
in good faith and, in the case of an incentive stock option, in accordance
with Section 422 of the Code.

"Incumbent Board" shall have the meaning provided in Section 12.

"Option" means the right to purchase Stock at a stated price for a specified
period of time. For purposes of the Plan an Option may be either (i) an
"incentive stock option" within the meaning of Section 422 of the Code or
(ii) a "nonstatutory stock option."

"Option Agreement" means the agreement evidencing the grant of an Option as
described in Section 6.

"Option Price" means the price at which Stock may be purchased pursuant to an
Option.

"Optionee" means a person to whom an Option has been granted under the Plan.

"Outstanding Voting Securities" has the meaning provided in Section 12.

"Participant" means an employee, director or a consultant who has been
granted and, at the time of reference, holds an Option, Restricted Stock or
Stock Appreciation Right.

"Period of Restriction" means the period during which shares of Restricted
Stock are subject to restrictions pursuant to Section 9 of the Plan.

"Principal Market for the Stock" means the exchange, automated quotation
system or trading market on which the majority of the Stock was traded over
the last twelve-month period prior to the date of determination. This
includes the Toronto Stock Exchange, the American Stock Exchange or such
other securities exchange on which the Stock is listed from time to time.

"Restricted Stock" means shares of Stock granted pursuant to Section 9 of the
Plan.

"Stock" means the Class A Common Shares of the Company, no par value per
share.

"Stock Appreciation Right" means the right to receive the increase in the
value of Stock subject to an Option in lieu of purchasing such Stock.

"Subsidiary" means any present or future subsidiary of the Company, as
defined in Section 424(f) of the Code.

For all numbers, except when otherwise indicated by the context, the singular
shall include the plural, and the plural shall include the singular.

SECTION 3. PARTICIPATION
---------------------------------------------------------------------------
Participation. Participants in the Plan shall be selected by the Committee
from among those officers, directors, employees, and consultants of the
Company and its Subsidiaries who, in the opinion of the Committee, are in a
position to contribute materially to the Company's continued growth and
development and to its long-term financial success.

The number of shares of Stock issuable to insiders: a) at any time, under all
security based compensation arrangements, cannot exceed 10% of the outstanding
shares of Stock of the Company on the date of grant; and b) within any one
year period, under all security based compensation arrangements, cannot
exceed 10% of the outstanding common shares on the date of grant.

SECTION 4. STOCK SUBJECT TO PLAN
----------------------------------------------------------------------------
Number. The total number of shares of Stock subject to issuance under the
Plan, whether in the form of Restricted Stock, Options, or Stock Appreciation
Rights, or any combination thereof, shall be 10% of the Corporation's
outstanding shares of Stock, from time to time. No more than 3,637,883 shares
of Stock may be issued as incentive stock options (as defined in the Code)
without further approval by the Shareholders.

The Committee shall have the full authority to determine the number of shares
of Stock available for Awards. In its discretion the Committee may include
(without limitation), as available for distribution: (a) Stock subject to any
Award that has been previously forfeited; (b) Stock under an Award that
otherwise terminates, expires, or lapses without the issuance of Stock being
made to a Participant; (c) Stock subject to any Award that settles in cash,
or (d) Stock that is received or retained by the Company in connection with
the exercise of an Award, including the satisfaction of any tax liability or
tax withholding obligation. This paragraph shall apply equally for purposes
of determining the number of shares of Stock available for incentive stock
options, except that shares of Stock subject to incentive stock options that
settle in cash shall not be available for distribution as incentive stock
options.

Adjustment in Capitalization.

In the event of a Change in Capitalization, the Committee shall conclusively
determine, in its sole discretion, the appropriate adjustments, if any, to
(i) the maximum number and class of shares of Stock or other securities with
respect to which Options or Restricted Stock may be granted under the Plan;
(ii) the number and class of shares of Stock or other securities which are
subject to outstanding Options or Restricted Stock granted under the Plan,
and the purchase price therefore, if applicable, and (iii) the maximum number
of shares of Stock or other securities with respect to which Options or Stock
Appreciation Rights may be granted during the term of the Plan.

Any such adjustment in the shares of Stock or other securities subject to
outstanding incentive stock options (including any adjustments in the
purchase price) shall be made in such a manner as not to constitute a
modification as defined by Section 424(h)(3) of the Code and only to the
extent otherwise permitted by Sections 422 and 424 of the Code.

If, by reason of a Change in Capitalization, a grantee of Restricted Stock
shall be entitled to, or an Optionee shall be entitled to exercise an Option
with respect to new, additional or different shares of Stock or securities,
such new, additional or different shares shall thereupon be subject to all of
the conditions, restrictions and performance criteria which were applicable to
the Restricted Stock or  Stock subject to the Option, as the case may be,
prior to such Change in Capitalization.

SECTION 5. DURATION OF PLAN
--------------------------------------------------------------------------
Duration of Plan. The Plan shall remain in effect, subject to the Board's
right to earlier terminate the Plan pursuant to Section 12 hereof, until all
Stock subject to the Plan shall have been purchased or acquired pursuant to
the provisions hereof. Notwithstanding the foregoing, no Option, Stock
Appreciation Right or Restricted Stock may be granted under the Plan on or
after the tenth anniversary of the Effective Date.

SECTION 6. OPTION GRANTS
--------------------------------------------------------------------------
Grant of Options. Subject to Sections 4 and 5, Options may be granted to
Participants at any time and from time to time as determined by the
Committee. The Committee shall have complete discretion consistent with the
terms of the Plan in determining whether to grant Options, the number of
Options to be granted, and whether an Option is to be an incentive stock
option within the meaning of Section 422 of the Code or a nonstatutory stock
option. Only an employee of the Company, or its Subsidiaries (as such terms
are defined in Section 424 of the Code) on the date of grant shall be
eligible to be granted an incentive stock option. Nothing in this Section 6
of the Plan shall be deemed to prevent the grant of nonstatutory stock
options in excess of the maximum established by Section 422 of the Code.

Option Agreement. Each Option shall be evidenced by an Option Agreement that
shall specify the type of Option granted, the Option Price, the duration of
the Option, the number of shares of Stock to which the Option pertains and
such other provisions as the Committee shall determine.  Each Option shall be
designated in the Option Agreement as either an incentive stock option or a
nonstatutory stock option. However, notwithstanding such designations, to the
extent that the aggregate Fair Market Value of Shares subject to a
Participant's incentive stock options granted by the Company, any parent or
Subsidiary, which becomes exercisable for the first time during any calendar
year (under all plans of the Company or any parent or Subsidiary) exceeds
$100,000, such excess Options shall be treated as nonstatutory stock options.
For purposes of this Section, incentive stock options shall be taken into
account in the order in which they were granted, and the Fair Market Value of
the Stock shall be determined as of the time of grant.

Option Price. The Option Price for each Option shall be determined by, or in
the manner specified by, the Committee provided that no Option shall have an
Option Price that is less than the Fair Market Value of the Stock on the date
the Option is granted (110% of Fair Market Value in the case of an incentive
stock option granted to any person who owns Stock possessing more than 10% of
the total combined voting power of all classes of Stock of the Company, known
as a "Ten Percent Stockholder").

Duration of Options. Each Option shall have a maximum duration of ten years
from the time it is granted, except that an incentive stock option granted to
a Ten Percent Stockholder shall have a maximum duration of five years from the
time it is granted.

Exercise of Options. Each Option granted under the Plan shall be exercisable
at such times and be subject to such restrictions and conditions as the
Committee shall in each instance approve. Such restrictions and conditions
need not be the same for each Participant.

SECTION 7. TERMS AND CONDITIONS APPLICABLE TO ALL OPTIONS
------------------------------------------------------------------------------
Payment. The Committee shall determine the acceptable form of consideration
for exercising an Option, including the method of payment. In the case of an
incentive stock option, the Committee shall determine the acceptable form of
consideration at the time of grant. Subject to applicable laws, such
consideration may consist entirely of: (i) cash; (ii) check; (iii) other
Stock which (A) in the case of Stock acquired upon exercise of an Option,
have been owned by the Optionee for more than six months on the date of
surrender, and (B) have a Fair Market Value on the date of surrender equal to
the aggregate exercise price of the Stock as to which said Option shall be
exercised; (iv) delivery of a properly executed exercise notice together with
such other documentation as the Committee and the broker, if applicable, shall
require to effect an exercise of the Option and delivery to the Company of the
sale proceeds required to pay the exercise price; (v) a reduction in the
amount of any Company liability to the Optionee, including any liability
attributable to the Optionee's participation in any Company-sponsored
deferred compensation program or arrangement; (vi) any combination of the
foregoing methods of payment; or (vii) such other consideration and method of
payment for the issuance of Stock to the extent permitted by applicable law;
provided, however, that in no case will loans be permitted as consideration
for exercising an Option hereunder to executive officers and directors of the
Company unless otherwise permitted by law. Any such loan advances will be
evidenced in writing, will provide for the payment of interest on terms then
prevailing and will be secured by pledges of the Stock issuable upon the
exercise of the Options and if such Stock is to be resold, the proceeds of
such sale. It is presently anticipated that no such loan advance will remain
outstanding for more than a period of thirty days.

Restrictions on Stock Transferability. The Committee may impose such
restrictions on any shares of Stock acquired pursuant to the exercise of an
Option under the Plan as it may deem advisable, including, without
limitation, restrictions under applicable provincial securities law, under
applicable U.S. federal and state securities law, under requirements of any
Exchange and under any U.S. blue sky or state securities laws applicable to
such shares.

Termination Due to Retirement. If the employment of the Optionee is
terminated due to the Retirement (as hereinafter defined) of the Optionee, or
if the directorship of the Optionee expires, any then outstanding options
under the Plan may be exercised at any time prior to the earlier of the
expiration date of the Options or twelve (12) months after the date of
retirement. For purposes of the Plan, Retirement shall mean any termination
of employment with the Company or a Subsidiary occurring after the completion
of 10 years of service with the Company and the attainment of age 60 by the
Optionee.

Termination Due to Death or Disability. The rights of an Optionee under any
then outstanding Option granted to the Optionee pursuant to the Plan if the
employment or directorship of the Optionee is terminated by reason of death
or Disability shall survive for up to the earlier of the expiration date of
the Options or one year after such death or Disability.

Termination of Employment for Cause. Anything contained herein or an Award
agreement to the contrary notwithstanding, if the termination of an
Optionee's employment with the Company or a Subsidiary is as a result of or
caused by the Optionee's theft or embezzlement from the Company or a
Subsidiary, the violation of a material term or condition of his or her
employment, the disclosure by the Optionee of confidential information of the
Company or a Subsidiary, conviction of the Optionee of a crime of moral
turpitude, the Optionee's stealing trade secrets or intellectual property
owned by the Company or a Subsidiary, any act by the Optionee in competition
with the Company or a Subsidiary, or any other act, activity or conduct of
the Optionee which in the opinion of the Committee is adverse to the best
interests of the Company or a Subsidiary, then any Options and any and all
rights granted to such Optionee thereunder, to the extent not yet effectively
exercised, shall become null and void effective as of the date of the
occurrence the event which results in the Optionee ceasing to be an employee
or director of the Company or a Subsidiary, and any purported exercise of an
Option by or on behalf of said Optionee shall following such date shall be of
no effect.

Involuntary Termination of Employment. Options granted under the Plan after
the Effective Date may be exercised at any time prior to the earlier of the
expiration date of the Options or within thirty (30) days after the
involuntary termination of employment (as hereinafter defined) of the
Optionee with the Company, or applicable Subsidiary, but the Options may not
be exercised for more than the number of shares, if any, as to which the
Options were exercisable by the Optionee immediately prior to such
termination of employment, as determined by reference to the terms and
conditions specified at the time such Options were granted. For purposes of
the Plan, "involuntary termination of employment" shall mean any termination
of an Optionee's employment with the Company or applicable Subsidiary, by
reason of the discharge, firing or other involuntary termination of an
Optionee's employment by action of the Company or applicable Subsidiary other
than an involuntary termination for cause as described in the paragraph above,
or if the employee otherwise continued in the employment of another Subsidiary
of the Company.

Voluntary Termination of Employment. Options granted under the Plan after the
Effective Date may be exercised at any time prior to the earlier of the
expiration date of the Options or within ninety (90) days after the voluntary
termination of employment (as hereinafter defined) of the Optionee with the
Company, or applicable Subsidiary, but the options may not be exercised for
more than the number of shares, if any, as to which the options were
exercisable by the Optionee immediately prior to such termination of
employment, as determined by reference to the terms and conditions specified
at the time such options were granted. For purposes of the Plan "voluntary
termination of employment" shall mean any voluntary termination of employment
by reason of the Optionee's quitting or otherwise voluntarily leaving the
Company's, or Subsidiary's, employ other than a (a) voluntary termination of
employment by reason of Retirement, (b) voluntary termination of employment
for cause or (c) termination of employment as described above.

Transferability and Exercisability of Options.

No Option shall be transferable by the Optionee other than (i) by will or by
the laws of descent and distribution; (ii) a qualified domestic relations
order (as defined in the Code or Title 1 of the Employee Retirement Income
Security Act of 1974, as amended, or the rules thereunder); or (iii) gift to
such Optionee's child(ren) or grandchild(ren), whether directly or indirectly
or by means of a trust, partnership or otherwise. All Options shall be
exercisable, during the Optionee's lifetime, only by the Optionee or by the
guardian or legal representative of the Optionee or its alternative payee
pursuant to such qualified domestic relations order, it being understood that
the terms "holder" and "optionee" include the guardian and legal
representative of the Optionee named in the Option Agreement and any person
to whom an Option is transferred by will or the laws of descent and
distribution, or pursuant to a qualified domestic relations order or a gift
permitted by the Plan. Notwithstanding the above, incentive stock options
shall only be transferable by will or by the laws of descent and distribution.

SECTION 8. STOCK APPRECIATION RIGHTS
---------------------------------------------------------------------------
Stock Appreciation Rights. The Committee may, in its discretion, in
connection with the grant of an Option, grant to the Optionee Stock
Appreciation Rights, the terms and conditions of which shall be set forth in
a written Award agreement. A Stock Appreciation Right shall cover the same
shares of Stock covered by the Option (or such lesser number of shares of
Stock as the Committee may determine) and shall, except as provided in this
Section 8, be subject to the same terms and conditions as the related Option.
Stock Appreciation Rights shall be subject to the following terms and
provisions:

A Stock Appreciation Right may be granted either at the time of grant, or at
any time thereafter during the term of the Option if related to a
nonstatutory stock option; or only at the time of grant if related to an
incentive stock option.

A Stock Appreciation Right will entitle the holder of the related Option upon
exercise of the Stock Appreciation Right, to surrender such Option or any
portion thereof to the extent unexercised, and to receive payment of an
amount determined by multiplying (i) the excess of the Fair Market Value of
the Stock over the Option Price under the related Option, by (ii) the number
of shares as to which such Stock Appreciation Right has been exercised.
Notwithstanding the foregoing, the agreement evidencing the Stock
Appreciation Right may limit in any manner the amount payable with respect to
any Stock Appreciation Right.

A Stock Appreciation Right will be exercisable at such time or times and only
to the extent that a related Option is exercisable, and will not be
transferable except to the extent that such related Option may be
transferable. A Stock Appreciation Right granted in connection with an
incentive stock option shall be exercisable only if the Fair Market Value of
the Stock on the date of exercise exceeds the Option Price in the related
Option.

Upon the exercise of a Stock Appreciation Right, the related Option shall be
cancelled to the extent of the number of shares of Stock as to which the
Stock Appreciation Right is exercised, and upon the exercise of an Option
granted in connection with a Stock Appreciation Right, the Stock Appreciation
Right shall be canceled to the extent of the number of shares of Stock as to
which the Option is exercised or surrendered.

A Stock Appreciation Right may be exercised by an Optionee only by a written
notice delivered in person or by mail to the Secretary of the Company at the
Company's principal executive office, specifying the number of shares of
Stock with respect to which the Stock Appreciation Right is being exercised.
The Optionee shall deliver the agreement evidencing the Stock Appreciation
Right being exercised and the agreement evidencing any related Option to the
Secretary of the Company who shall endorse thereon a notation of such
exercise and return such agreement to the Optionee.

Payment of the amount determined under Subsection (b) may be made by the
Company in the discretion of the Committee solely in whole shares of Stock in
a number determined at their Fair Market Value on the date preceding the date
of exercise of the Stock Appreciation Right or solely in cash, or in a
combination of cash and Stock. If payment is made in Stock and the amount
payable results in a fractional share, payment for the fractional share will
be made in cash.

No Stock Appreciation Right may be exercised within three months after it is
granted.

Subject to the terms of the Plan, the Committee may modify outstanding Awards
of Stock Appreciation Rights or accept the surrender of outstanding Awards of
Stock Appreciation Rights (to the extent not exercised) and grant new awards
in substitution for them. Notwithstanding the foregoing, no modification of
an Award of Stock Appreciation Rights shall adversely alter or impair any
rights or obligations under the agreement granting such Stock Appreciation
Rights without the Optionee's consent.

SECTION 9. RESTRICTED STOCK
---------------------------------------------------------------------------
Grant of Restricted Stock. Subject to Sections 4 and 5, the Committee at any
time and from time to time, may grant Restricted Stock under the Plan to such
Participants and in such amounts as it determines in its sole discretion. Each
grant of Restricted Stock shall be made pursuant to a written Award agreement
which shall contain such restrictions, terms and conditions as the Committee
may determine in its discretion. Restrictions upon Restricted Stock shall be
for such period or periods (herein called "Period(s) of Restriction") and on
such terms and conditions as the Committee may, in its discretion, determine.

Transferability. Except as provided in this Section 9, the shares of
Restricted Stock granted hereunder may not be sold, transferred, pledged,
assigned or otherwise alienated or hypothecated for such period of time as
shall be determined by the Committee and shall be specified in the Restricted
Stock grant, or upon earlier satisfaction of other conditions set forth in the
Restricted Stock grant.

Other Restrictions. The Committee may impose such other restrictions on any
shares of Restricted Stock granted to any Participant pursuant to the Plan as
it may deem advisable including, without limitation, restrictions under
applicable provincial, U.S. federal or state securities laws, and shall
legend the certificates representing Restricted Stock to give appropriate
notice of such restrictions.

Certificate Legend. In addition to any legends placed on certificates
pursuant to Section 9 hereof, each certificate representing shares of
Restricted Stock granted pursuant to the Plan shall bear the following legend:

"The sale or other transfer of the shares of Stock represented by this
certificate, whether voluntary, involuntary or by operation of law, is
subject to certain restrictions on transfer set forth in Gold Reserve Inc.'s
Equity Incentive Plan and Restricted Stock agreement dated ___________
[TO BE COMPLETED WITH THE DATE OF GRANT]. A copy of the Plan and such
Restricted Stock agreement may be obtained from the Secretary of
Gold Reserve Inc."

Removal of Restrictions. Except as otherwise provided in this Section 9,
shares of Restricted Stock covered by each Restricted Stock grant made under
the Plan shall become freely transferable, subject to compliance with
applicable securities laws, by the Participant after the last day of the
Period of Restriction. Once the shares are released from the restrictions,
the Participant shall be entitled to have the legend required by Section 9
removed from his or her Stock certificate.

Voting Rights. During the Period of Restriction, Participants holding shares
of Restricted Stock granted hereunder may exercise full voting rights with
respect to such shares.

Dividends and Other Distributions. During the Period of Restriction,
Participants holding shares of Restricted Stock granted hereunder shall be
entitled to receive all dividends and other distributions paid with respect
to such shares while they are so held. If any such dividends or distributions
are paid in shares of Stock, such shares shall be subject to the same
restrictions as the shares of Restricted Stock with respect to which they
were paid.

SECTION 10. BENEFICIARY DESIGNATION
---------------------------------------------------------------------------
Beneficiary Designation. Subject to Sections 7 and 9, each Participant may,
from time to time, name any beneficiary or beneficiaries (who may be named
contingently or successively) to whom any benefit under the Plan is to be
paid in case of the Participant's death before he or she receives any or all
of such benefit. Each designation will revoke all prior designations by the
same Participant, shall be in a form prescribed by the Committee and will be
effective only when filed by the Participant in writing with the Committee
during the life time of the Participant. In the absence of any such
designation, benefits remaining unpaid at the Participant's death shall be
paid to the estate of the Participant.

SECTION 11. RIGHTS OF PARTICIPANTS
----------------------------------------------------------------------------
Employment. Nothing in the Plan shall interfere with or limit in any way the
right of the Company or any Subsidiary to terminate any Participant's
employment, directorship or service at any time nor confer upon any
Participant any right to continue in the employ or service or as a director
of the Company or any Subsidiary. No person shall have a right to be selected
as a Participant or, having been so selected, to be selected again as an
Optionee or recipient of Restricted Stock. The preceding sentence shall not
be construed or applied so as to deny a person any participation in the Plan
solely because he or she was a Participant in connection with a prior grant
of benefits under the Plan.

SECTION 12. ADMINISTRATION; POWERS AND DUTIES OF THE COMMITTEE AND THE BOARD
----------------------------------------------------------------------------
Administration.

The Committee shall be responsible for the administration of the Plan as it
applies to Participants other than directors, and the Board shall be
responsible for the administration of the Plan as it applies to directors,
subject to Section 2. The Committee, by majority action thereof, is
authorized to interpret and construe the Plan, to prescribe, amend, and
rescind rules and regulations relating to the Plan (including related
agreements), to provide for conditions and assurances deemed necessary or
advisable to protect the interests of the Company and its Subsidiaries, and
to make all other determinations necessary or advisable for the
administration, interpretation and construction of the Plan (including
related agreements), but only to the extent not contrary to the express
provision of the Plan. Determinations, interpretations, or other actions made
or taken by the Committee pursuant to the provisions of the Plan shall be
final and binding and conclusive for all purposes and upon all persons
whomsoever. No member of the Committee shall be personally liable for any
action, determination or interpretation made or taken in good faith with
respect to the Plan, and all members of the Committee shall be fully
indemnified by the Company with respect to any such action, determination or
interpretation.

To the extent that the Board determines it to be desirable to qualify Awards
granted hereunder as "performance-based compensation" within the meaning of
Section 162(m) of the Code, the Plan shall be administered by the Committee
of two or more "outside directors" within the meaning of Section 162(m) of
the Code.

Subject to the provisions of the Plan, and in the case of the Committee,
subject to the specific duties delegated by the Board to such Committee, the
Committee shall have the authority, in its discretion: (i) to determine the
Fair Market Value of the Stock, in accordance with the Plan; (ii) to select
the Participants to whom Awards may be granted hereunder; (iii) to determine
whether and to what extent Awards or any combination thereof, are granted
hereunder; (iv) to determine the number of shares of Stock to be covered by
each Award granted hereunder; (v) to approve forms of agreement for use under
the Plan; (vi) to determine the terms and conditions, not inconsistent with
the terms of the Plan, of any Award granted hereunder. Such terms and
conditions include, but are not limited to, the exercise price, the time or
times when Options or Stock Appreciation Rights may be exercised or other
Awards vest (which may be based on performance criteria), any vesting
acceleration or waiver of forfeiture restrictions, and any restriction or
limitation regarding any Award or the shares of Stock relating thereto, based
in each case on such factors as the Committee, in its sole discretion, shall
determine;(vii) to construe and interpret the terms of the Plan and Awards;
(viii) to prescribe, amend and rescind rules and regulations relating to the
Plan, including rules and regulations relating to sub-plans established for
the purpose of qualifying for preferred tax treatment under foreign tax laws;
(ix) to modify or amend each Award (subject to this Section), including the
discretionary authority to extend the post-termination exercisability period
of Options and Stock Appreciation Rights longer than is otherwise provided
for in the Plan; (x) to authorize any person to execute on behalf of the
Company any instrument required to effect the grant of an Award previously
granted under the Plan; (xi) to allow Participants to satisfy withholding tax
obligations by electing to have the Company withhold from the Stock or cash to
be issued upon exercise or vesting of an Award that number of shares of Stock
or cash having a Fair Market Value equal to the minimum amount required to be
withheld (but no more). The Fair Market Value of any Stock to be withheld
shall be determined on the date that the amount of tax to be withheld is to
be determined. All elections by a Participant to have Stock or cash withheld
for this purpose shall be made in such form and under such conditions as the
Committee may deem necessary or advisable; (xii) to determine the terms and
restrictions applicable to Awards; (xiii) to determine whether Awards will be
adjusted for changes in capitalization (including dividends); (xiv) to impose
such restrictions, conditions or limitations as it determines appropriate as
to the timing and manner of any resales by a Participant or other subsequent
transfers by a Participant of any Stock issued as a result of or under an
Award, including without limitation, (A) restrictions under an insider
trading policy, and (B) restrictions as to the use of a specified brokerage
firm for such resales or other transfers; and (xv) to make all other
determinations deemed necessary or advisable for administering the Plan.

Change in Control. (a) Without limiting the authority of the Committee as
provided herein, the Committee, either at the time Options or shares of
Restricted Stock are granted, or at any time thereafter, shall have the
authority to take such actions as it deems advisable, including the right to
accelerate in whole or in part the exercisability of Options and/or to reduce
the Period of Restriction upon a Change in Control. Nothing herein shall
obligate the Committee to take any action upon a Change in Control.

Change in Control" means the occurrence of any of the following events:

The acquisition by any individual entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Exchange Act of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Exchange Act) of
equity securities of the Company representing more than 25 percent of the
voting power of the then outstanding equity securities of the Company
entitled to vote generally in the election of directors (the "Outstanding
Company Voting Securities"), provided, however, that for purposes of this
subsection (i) the following acquisitions shall not constitute a Change of
Control: (A) any acquisition by the Company, (B) any acquisition by any
employee benefit plan (or related trust) sponsored or maintained by the
Company or any corporation controlled by the Company, and (C) an acquisition
pursuant to a transaction which complies with clauses (A), (B), and (C) of
subsection (iii); or

A change in the composition of the Board as of the Effective Date (the
"Incumbent Board") that causes less than a majority of the directors of the
Company then in office to be members of the Incumbent Board provided,
however, that any individual becoming a director subsequent to the Effective
Date, whose election, or nomination for election by the Company's
shareholders, was approved by a vote of at least a majority of the directors
then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with respect to the
election or removal of directors or other actual or threatened solicitation
of proxies or consents by or on behalf of a person other than the Board; or

Consummation of a reorganization, merger, or consolidation or sale or other
disposition of all or substantially all of the assets of the Company or the
purchase of assets or stock of another entity (a "Business Combination"), in
each case, unless immediately following such Business Combination, (A) all or
substantially all of the individuals and entities who were the beneficial
owners of the Outstanding Company Voting Securities immediately prior to such
Business Combination will beneficially own, directly or indirectly, more than
50 percent of the then outstanding combined voting power of the then
outstanding voting securities entitled to vote generally in the election of
directors (or equivalent governing body, if applicable) of the entity
resulting from such Business Combination (including, without limitation, an
entity which as a result of such transaction owns the Company or all of
substantially all of the Company's assets directly or through one or more
subsidiaries) in substantially the same proportions as their ownership,
immediately prior to such Business Combination of the Outstanding Company
Voting Securities, (B) no person (excluding any employee benefit plan (or
related trust) of the Company or such entity resulting from such Business
Combination) will beneficially own, directly or indirectly, more than a
majority of the combined voting power of the then outstanding voting
securities of such entity except to the extent that such ownership of the
Company existed prior to the Business Combination, and (C) at least a
majority of the members of the board of directors (or equivalent governing
body, if applicable) of the entity resulting from such Business Combination
will have been members of the Incumbent Board at the time of the initial
agreement, or action of the Board, providing for such Business Combination; or

Approval by the stockholders of the Company of a complete liquidation or
dissolution of the Company; or

any other event or series of events which the Board reasonably determines
should constitute a Change in Control.

Nothing in this Section 12 prevents the Committee from providing for an
alternative definition of "Change in Control" in any Award agreement or
related employment, change of control or other agreement that sets forth the
rights with respect to any Award. In the event of any conflict between this
definition and the definition in any such agreement, the more permissive
"Change in Control" language shall prevail.

Amendment, Modification and Termination of Plan. The Board may, at any time
and from time to time, modify, amend, suspend or terminate the Plan in any
respect. Amendments to the Plan shall be subject to approval to the extent
required to comply with any exemption to the short swing-profit provisions of
Section 16(b) of the Exchange Act pursuant to rules and regulations
promulgated thereunder, with the exclusion for performance-based compensation
under Code Section 162(m), or with the rules and regulations of any Exchange.
The Board may also modify or amend the terms and conditions of any
outstanding Option, Restricted Stock, or Stock Appreciation Right, subject to
the consent of the holder and consistent with the provisions of the Plan. No
amendment, modification or termination of the Plan shall in any manner
adversely affect any Option, Stock Appreciation Right or Restricted Stock
theretofore granted to any Participant under the Plan, without the consent of
that Participant. Subject to the foregoing, and avoidance of doubt as it
relates to the TSX guidelines, stockholder approval for the following types
of amendments will not be required:

(a)  amendments of a "housekeeping" nature;
(b)  a change to the vesting provisions of a security issued pursuant to the
        Plan;
(c)  a change to the termination provisions of a security issued pursuant to the
       Plan, which does not entail an extension beyond the original expiry date;
       and
(d)  the addition of a cashless exercise feature, payable in cash or securities,
       which provides for a net deduction of the number of underlying securities
       from the Plan reserve.

Interpretation. Unless otherwise expressly stated in the relevant Agreement,
any grant of Options, Stock Appreciation Rights or performance-vesting
Restricted Stock is intended to be performance-based compensation and
therefore not subject to the deduction limitation set forth in Section
162(m)(4)(C) of the Code.

Date of Grant. The date of grant of an Award shall be, for all purposes, the
date on which the Committee makes the determination granting such Award, or
such other later date as is determined by the Committee; provided, however,
the date of grant of an Option shall be the date when the Option is granted
and its exercise price is set, consistent with applicable law and applicable
financial accounting rules. Notice of the determination shall be provided to
each Participant within a reasonable time after the date of such grant.

SECTION 13. TAX WITHHOLDING
----------------------------------------------------------------------------
Tax Withholding. At such times as a Participant recognizes taxable income in
connection with the receipt of shares, securities, cash or property hereunder
(a "Taxable Event"), the Participant shall pay to the Company or, if
instructed by the Committee or its delegate, the Subsidiary that employs the
Participant an amount equal to the applicable  taxes and other amounts as may
be required by law to be withheld by the Company or, if instructed by the
Committee or its delegate, the Subsidiary that employs the Participant in
connection with the Taxable Event.

SECTION 14. REQUIREMENTS OF LAW
-----------------------------------------------------------------------------
Requirements of Law. The granting of Options or Restricted Stock, and the
issuance of shares of Stock upon the exercise of an Option or Stock
Appreciation Right shall be subject to all applicable laws, rules and
regulations, and to such approvals by any governmental agencies or national
securities exchanges as may be required.

Governing Law. The Plan, and all agreements hereunder, shall be construed in
accordance with and governed by the laws of the Province of Ontario without
giving effect to the choice of law principles thereof.

Listing, etc. Each Option or share of Restricted Stock is subject to the
requirement that, if at any time the Committee determines, in its discretion,
that the listing, registration or qualification of Stock issuable pursuant to
the Plan is required by any securities exchange or under any state or federal
law, or the consent or approval of any governmental regulatory body is
necessary or desirable as a condition of, or in connection with, the grant of
an Option or the issuance of Stock, no Options or Restricted Stock shall be
granted or payment made or shares of Stock issued, in whole or in part,
unless such listing, registration, qualification, consent or approval has
been effected or obtained free of any conditions which are unacceptable to
the Committee or the Board, acting in good faith.

Section 409A Savings Clause. It is the intention of the Company that no Award
shall be "deferred compensation" subject to Section 409A of the Code, unless
and to the extent that the Committee specifically determines otherwise as
provided below, and the Plan and the terms and conditions of all Awards
(current or future) shall be interpreted accordingly. The terms and
conditions governing any Awards that the Committee determines will be subject
to Section 409A of the Code, including any rules for elective or mandatory
deferral of the delivery of cash or Stock pursuant thereto and any rules
regarding treatment of such Awards in the event of a Change in Control, shall
be set forth in the applicable agreement, and shall comply in all respects
with Section 409A of the Code. Following a Change in Control, no action shall
be taken under the Plan that will cause any Award that the Committee has
previously determined is subject to Section 409A of the Code to fail to
comply in any respect with Section 409A of the Code without the written
consent of the Participant.

Restriction on Transfer. Notwithstanding anything contained in the Plan or
any Agreement to the contrary, if the disposition of Stock acquired pursuant
to the Plan is not covered by a then current registration statement under the
U.S. Securities Act of 1933, as amended, and is not otherwise exempt from such
registration, such Stock shall be restricted against transfer to the extent
required by said Act, and Rule 144 or other regulations thereunder. The
Committee may require anyone receiving Stock pursuant to an Option or
Restricted Stock granted under the Plan, as a condition precedent to
receiving such Stock, to represent and warrant to the Company in writing that
such Stock is being acquired without a view to any distribution thereof and
will not be sold or transferred other than pursuant to an effective
registration thereof under said Act or pursuant to an exemption applicable
under said Act, or the rules and regulations promulgated thereunder. The
certificates evidencing any shares of such Stock shall be appropriately
legended to reflect their status as restricted securities.

Notwithstanding anything contained in the Plan or any agreement to the
contrary, Stock issued pursuant to the Plan in reliance on an exemption from
the prospectus requirements of the securities legislation of a province of
Canada may be subject to restrictions on transfer.


Exhibit 3.3 - Letter Agreement with SNC Lavalin Engineers & Constructors, Inc.

Gold Reserve Inc.

August 17, 2005

SNC-Lavalin Engineers & Constructors Inc. 2200 Lake Shore Blvd. West
Toronto, Ont.
Canada M8V 1A4
Attention:   Ian Pritchard Dear Sirs:

Re:   Las Brisas Gold Mine Project, Venezuela (the  Project") Letter of
Intent and Limited Authorization to Proceed

This letter is further to the proposal dated March 31, 2005 ("Proposal")
submitted by SNC Lavalin Engineers & Constructors Inc. ("SNC") to Gold
Reserve Inc. ("GRI") in response to GRI's request for proposals ("RFP") for
engineering, procurement and construction management services ("EPCM
Services") for the Project, and to our subsequent meetings, negotiations and
discussions regarding the Project, the Proposal and a proposed contract for
the EPCM Services (the "EPCM Contract").

Negotiations to Finalize EPCM Contract

This letter is to confirm that GRI and SNC will continue negotiations in good
faith towards finalizing the proposed EPCM Contract. If all matters negotiated
with SNC and if final wording of the EPCM Contract are both resolved to the
complete satisfaction of GRI acting in its own best interests, and within
such time period as GRI at its discretion may require, then it is the
intention of GRI to award the EPCM Contract to SNC. The EPCM Contract will be
comprised of two and perhaps three separate contracts: one for parts of the
EPCM Services performed in Venezuela, one for the EPCM Services performed
outside Venezuela, and if necessary a third, umbrella, contract that
over-rides the other two contracts. The parties ("parties") to each of these
separate contracts will be such affiliates of GRI and SNC as they may
mutually agree.

However, it is agreed that either party may at any time terminate further
negotiations with the other party if an impasse is reached in negotiations
that a party does not believe can be overcome through further discussions
between the parties.

It is also a condition to ongoing negotiations and to the provision of the
Initial Services (as hereinafter defined), that SNC execute and deliver to
GRI the form of confidentiality agreement attached as Schedule 1 -
Confidentiality Agreement.

Authorization to Proceed with Initial Services

In the expectation that the negotiations will be successfully concluded and
that the parties will finalize, execute and deliver the EPCM Contract, GRI
hereby authorizes SNC to provide certain initial work and services
(collectively the "Initial Services") as may be expressly authorized in
writing from time to time by Mr. Doug Stewart on behalf of GRI and in each
case agreed to by Mr. Dale Clarke on behalf of SNC, but subject at all times
to a maximum total aggregate compensation to SNC for all Initial Services of
US$ 1,000,000, plus G.S.T. (the "Maximum Authorization").

The following terms and conditions apply to the performance of the Initial
Services:

SNC will perform each of the Initial Services in accordance with such
schedule as may be mutually agreed by Mr. Stewart and Mr. Clarke.

In performing the Initial Services, SNC will:

exercise no less standard of care than that exercised for services of a
similar nature in respect of comparable mining projects in North America by
recognized North American engineering firms who provide comparable services
for such projects;

observe sound management, technical, engineering and consulting practices to
complete the Initial Services with all due diligence, efficiency and economy;
and

will be subject to all of the confidentiality obligations set out in the
attached Schedule I - Confidentiality Agreement, to the same extent and in
the same manner as if the terms thereof were expressly repeated herein .

3.  GRI will pay, and SNC will receive as full compensation, the following
amounts (collectively the "Advance Compensation") for the Initial Services:

For those personnel expressly authorized by Mr. Stewart to be used by SNC in
the performance of the Initial Services, SNC will be paid:

the applicable hourly rate for such personnel, as calculated in accordance
with Section 9.3 of the Proposal, for only the time spent by them in the
performance of the Initial Services, as verified by daily timesheets that
provide full details of the actual work and time spent each day by such
personnel; and

for all overhead and administration, including all home office expenses and
field office expenses as described in Section 9.4.1 and 9.4.2 of the
Proposal, US$ 8.00 per approved manhour for such personnel.

For all travel-related expenses, at direct cost to SNC without markup,
subject to and in accordance with SNC's standard travel policy as previously
provided by SNC to GRI.

No fee as contemplated in the Proposal or otherwise (and whether for profit
or otherwise) will be paid for or in relation to the Initial Services
(subject, of course, to any fee to which the parties agree SNC is entitled
under the EPCM Contract if and when such EPCM Contract is executed, and in
this regard, the provisions of the EPCM Contract, including in respect of
payment of the fee, shall have retroactive effect except as may otherwise be
agreed).

Invoices for the Initial Services will be rendered monthly, supported by such
documentation and in such format as GRI may require to demonstrate and verify
the correctness of the amount claimed. SNC's GST registration number will be
on each invoice. GRI will pay the undisputed amounts of each invoice within
ten (10) calendar days after receipt of the invoice. If any parts of an
invoice are disputed by GRI, then GRI will promptly notify SNC and the
parties will thereafter use reasonable efforts to resolve such disputes as
expeditiously as possible.

Upon payment of the Advance Compensation to SNC, GRI shall be entitled to
keep and use for the Project any and all work product, concepts and ideas
produced for the Project by or through SNC as part of the Initial Services.

SNC will not perform any of the Initial Services in Venezuela, except as may
be subsequently agreed.

GRI may at any time upon not less than ten (10) calendar days' written notice
terminate the Initial Services, in which case SNC will stop performing the
Initial Services as of the effective date of termination specified in such
notice (the "Termination Date"). SNC will not be entitled to any payment for
any part of the Initial Services performed after the Termination Date. Upon
such termination, other than making payment as aforesaid, GRI will be
relieved of any and all obligations and liabilities towards SNC.

Subject only to the express provisions of the EPCM Contract if the EPCM
Contract is finalized and executed by the parties:

other than the Advance Compensation, SNC shall not be entitled to receive any
payment or compensation whatsoever for the Initial Services;

in no event shall GRI be liable to SNC for any amount in excess of the
Maximum Authorization, whether in relation to the Initial Services, the
Project, the RFP, the Proposal, the proposed EPCM Contract or any
negotiations relating thereto;

except for its obligation to pay the Advance Compensation for the Initial
Services, GRI shall have no obligation or liability towards SNC; and

In consideration for agreeing to forego a fee on the Initial Services except
as may be provided for under the EPCM Contract, as set out in paragraph 3(c),
and subject to paragraph 9, SNC's maximum liability to GRI in respect of this
agreement (including without limitation any claims in respect of any defect
or deficiency in the Initial Services), shall, except as is agreed in the
EPCM Contract, be limited to re-performance by SNC at its own cost, of any
defective or deficient Initial Services (and of any Initial Services which
must be re-performed as a result thereof), whether such liability is framed
in contract, tort (including negligence), by statute, or otherwise.

SNC will indemnify and hold GRI harmless from and against claims by third
parties for personal or bodily injury caused by a party, its officers,
directors, employees, consultants and agents in the performance of the
Initial Services.

This agreement will be governed by the laws in force in Ontario, Canada.

If the EPCM Contract is not finalized and awarded to SNC on such terms and
conditions as may be acceptable to GRI at its sole discretion and within such
time period as GRI at its discretion may require, and if the Initial Services
have not been completed and are terminated as provided herein, then GRI (and
its directors, officers, employees, consultants and agents) will be relieved
of any and all obligations and liabilities towards SNC with regard to or in
relation to the Project, the request for proposals, the Proposal, and any and
all negotiations and agreements in relation to the foregoing, except in
respect of payment for the Initial Services rendered as provided herein,, and
GRI will thereafter be at liberty to negotiate with others for the EPCM
Contract and award it to anyone other than SNC that GRI, in its sole and
absolute discretion, considers appropriate and in the best interest of GRI.

EPCM Contract to have Retroactive Effect

The EPCM Contract, as finalized, will include a provision that has
retroactive affect to include  the Initial Services, and all of the Initial
Services shall be merged into and included within the EPCM Contract.

Acknowledgement and Confirmation

Please acknowledge your agreement to the above by signing in the space
indicated below and returning one copy to the undersigned at your earliest
opportunity. This letter shall then constitute the entire agreement between
the parties concerning the subject matter hereof, and shall supersede all
prior agreements, representations, discussions, communications and any and
all other understandings between the parties with respect thereto.

It is agreed that either party may transmit by fax to the other party a copy
of this letter agreement executed by the party transmitting the copy by fax,
the receipt of which faxed copy by the receiving party shall have the same
force and effect as if the original thereof had been delivered to the
receiving party at the same time, and which faxed copy shall be admissible
against the sending party in any legal or arbitral proceeding as evidence of
the due and proper execution of this letter agreement by the sending party.

Yours very truly,

GOLD RESERVE INC.

Per:
/s/ Douglas E. Stewart


ACKNOWLEDGEMENT AND AGREEMENT

SNC-LAVALIN ENGINEERS & CONSTRUCTORS INC. hereby acknowledges and agrees to
the content of this letter, to negotiate and finalize the proposed EPCM
Contract for the Project in good faith, and to perform the Initial Services
as authorized in this letter, all on, in accordance with and subject to this
letter of intent.

Dated at Toronto, Ont., Canada, this 12th day of August, 2005.

Per:
/s/ Feroz Ashraf
Sr. Vice President
Commercial & Strategic Development
Global Mining and Metallurgy



Gold Reserve


August 24, 2005
SNC-Lavalin Engineers & Constructors Inc. 2200 Lake Shore Blvd. West
Toronto, Ont.
Canada  M8V 1A4
Attention:   Ian Pritchard

Dear Sirs:

Re:   Las Brisas Gold Mine Project, Venezuela (the "Project") Amendment to
Letter of Intent and Limited Authorization to Proceed

This letter is further to the Letter of Intent and Limited Authorization to
proceed dated August 17, 2005 ("LOI") between SNC to GRI in respect of the
Project, and to our subsequent meetings, negotiations and discussions in
respect thereof. This letter comprises an amendment to the LOI.

All capitalized terms herein bear the same meaning as in the LOI.

Fee Payable in Respect of Initial Services Notwithstanding section 3(c) of
the LOI, GRI and SNC hereby agree that GRI shall, in addition to amounts
payable under the LOI in accordance with its terms, pay SNC a fee in the
amount of US$7.92 for each the manhour of the Initial Services. For greater
certainty, SNC may retroactively bill GRI this Fee in respect of Initial
Services performed prior to the date of this letter. LOI in Full Force and
Effect

Except as expressly amended hereby, the LOI remains in full force and effect
in accordance with this terms.

Acknowledgement and Confirmation

Please acknowledge your agreement to the above by signing in the space
indicated below and returning one copy to the undersigned at your earliest
opportunity. This letter, together with the LOI, shall then constitute the
entire agreement between the parties concerning the subject matter hereof,
and shall supersede all prior agreements, representations, discussions,
communications and any and all other understandings between the parties with
respect thereto.

It is agreed that either party may transmit by fax to the other party a copy
of this letter agreement executed by the party transmitting the copy by fax,
the receipt of which faxed copy by the receiving party shall have the same
force and effect as if the original thereof had been delivered to the
receiving party at the same time, and which faxed copy shall be admissible
against the sending party in any legal or arbitral proceeding as evidence of
the due and proper execution of this letter agreement by the sending party.

Yours very truly,

GOLD RESERVE INC.
Per: James Geyer
/s/ James p. Geyer
10/24/2005

ACKNOWLEDGEMENT AND AGREEMENT

SNC-LAVALIN ENGINEERS & CONSTRUCTORS INC. hereby acknowledges
and agrees to the content of this letter.

Dated at Toronto, Ontario, this 25th day of October, 2005.
Per:
/s/ Ian Pritchard________________
(Signature)
Name:   Ian Pritchard
Title:   VP & GM, M & M


Exhibit 12.1     - Chief Executive Officer's Section 302 Certification

I, Rockne J. Timm, certify that:

1.  I have reviewed this Annual Report on Form 20-F of Gold
Reserve Inc.;

2.  Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this report;

3.  Based on my knowledge, the financial statements, and other
financial information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
company as of, and for, the periods presented in this report;

4.  The company's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the company and have:

  (a)  Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the company, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being
prepared;

  (b)  Evaluated the effectiveness of the company's disclosure controls
and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the
period covered by this report based on such evaluation; and

  (c)  Disclosed in this report any change in the company's internal
control over financial reporting that occurred during the period covered by
the annual report that has materially affected, or is reasonably likely to
materially affect, the company's internal control over financial reporting;
and

5.         The company's other certifying officer and I have disclosed, based
on our most recent evaluation of internal control over financial reporting, to
the company's auditors and the audit committee of the company's board of
directors (or persons performing the equivalent functions):

  (a)  All significant deficiencies and material weaknesses in the design
or operation of internal control over financial reporting which are
reasonably likely to adversely affect the company's ability to record,
process, summarize and report financial information; and

  (b)  Any fraud, whether or not material, that involves management or other
employees who have a significant role in the company's internal control over
financial reporting.


Date: March 30, 2006
s/ Rockne J Timm
Rockne J. Timm,
Chief Executive Officer



Exhibit 12.2 - Chief Financial Officer's Section 302 Certification

I, Robert A. McGuinness, certify that:

1.  I have reviewed this Annual Report on Form 20-F of Gold Reserve Inc.;

2.  Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this report;

3.  Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects
the financial condition, results of operations and cash flows of the company
as of, and for, the periods presented in this report;

4.  The company's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the company and have:

 (a)  Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the company, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being
prepared;

 (b)  Evaluated the effectiveness of the company's disclosure controls and
procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the
period covered by this report based on such evaluation; and

 (c)  Disclosed in this report any change in the company's internal control
over financial reporting that occurred during the period covered by the
annual report that has materially affected, or is reasonably likely to
materially affect, the company's internal control over financial reporting;
and

5.  The company's other certifying officer and I have disclosed, based on
our most recent evaluation of internal control over financial reporting, to
the company's auditors and the audit committee of the company's board of
directors (or persons performing the equivalent functions):

 (a)  All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are reasonably
likely to adversely affect the company's ability to record, process,
summarize and report financial information; and

 (b)  Any fraud, whether or not material, that involves management or other
employees who have a significant role in the company's internal control over
financial reporting.


Date: March 30, 2006
s/ Robert A. McGuinness
Robert A. McGuinness,
Vice President-Finance & CFO

Exhibit 13.1 - Chief Executive Officer's Section 906 Certification

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Gold Reserve Inc. on Form 20-F for
the year ending December 31, 2005 as filed with the Securities and Exchange
Commission on the date hereof, I, Rockne J. Timm, Chief Executive Officer of
Gold Reserve Inc., certify to my knowledge, pursuant to 18 U.S.C. 1350, as
adopted pursuant to 906 of the Sarbanes-Oxley Act of 2002, that:

(1)   The Annual Report on 20-F fully complies with the requirements of
section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)   The information contained in the Annual Report on Form 20-F fairly
presents, in all material respects, the financial condition and result of
operations of Gold Reserve Inc.

s/  Rockne J. Timm
    Rockne J. Timm
    Chief Executive Officer
    March 30, 2006

Exhibit 13.2 - Chief Financial Officer's Section 906 Certification

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Gold Reserve Inc. on Form 20-F for
the year ending December 31, 2005 as filed with the Securities and Exchange
Commission on the date hereof, I, Robert A. McGuinness, Vice
President-Finance & CFO of Gold Reserve Inc., certify to my knowledge,
pursuant to 18 U.S.C.  1350, as adopted pursuant to 906 of the Sarbanes-Oxley
Act of 2002, that:

(1)   The Annual Report on 20-F fully complies with the requirements of
section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)   The information contained in the Annual Report on Form 20-F fairly
presents, in all material respects, the financial condition and result of
operations of Gold Reserve Inc.

s/   Robert A. McGuinness
     Robert A. McGuinness
     Vice President-Finance & CFO
     March 30, 2006


Exhibit 99.1 - Consent of Independent Accountants

We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 (File No 333-127336 and No 333-127337) Gold Reserve
Inc. of our report dated February 17, 2006, which appears in Gold Reserve
Inc.'s Annual Report on Form 20-F for the year ended December 31, 2005.

s/  PRICEWATERHOUSECOOPERS LLP
    Chartered Accountants
    Vancouver, BC, Canada
    March 30, 2006


Exhibit 99.2 - Consent of Pincock, Allen & Holt

Pincock, Allen & Holt does hereby consent to the reference to this firm in
the Annual Report on Form 20-F of Gold Reserve, Inc. filed with the
Securities and Exchange Commission on or about March 31, 2006. We also
consent to the incorporation by reference in the Registration Statements on
Forms S-8 (File No. 333-127336 and File No. 333-127337) of Gold Reserve Inc.,
the reference to this firm, which appears in this Form 20-F. In giving this
consent, we do not thereby admit that we are an "expert" within the meaning
of the Securities Act of 1933, as amended.

s/  Pincock, Allen & Holt
    March 30, 2006


Exhibit 99.3 - Consent of SNC-Lavalin Engineers & Constructors, Inc.

SNC-Lavalin Engineers & Constructors, Inc. does hereby consent to the
reference to this firm in the Annual Report on Form 20-F of Gold Reserve,
Inc. filed with the Securities and Exchange Commission on or about March 31,
2006. We also consent to the incorporation by reference in the Registration
Statements on Forms S-8 (File No. 333-127336 and File No. 333-127337) of Gold
Reserve Inc., the reference to this firm, which appears in this Form 20-F. In
giving this consent, we do not thereby admit that we are an "expert" within
the meaning of the Securities Act of 1933, as amended.

s/  SNC-Lavalin Engineers & Constructors, Inc.
    March 30, 2006


Glossary of Significant Terms

Certain terms used throughout this report are defined below.
alluvial...   1) Used to identify unconsolidated or clay-like materials
deposited over time by moving water. 2) Used to describe a strata of material
that constitutes a concession, i.e. relating to the Brisas alluvial concession.

andesite...   A volcanic rock of intermediate composition. It is fine-grained
and contains 55% to 60% silica.

assay...   An analysis performed on a rock sample to determine its metal
content.

ball mill...   A steel cylinder partially filled with steel balls into which
crushed ore is fed. The ball mill is rotated, causing the balls to cascade
and grind the ore.

Bankable Feasibility Study...  An analysis to determine the economic
viability of the Brisas project mineralization done in accordance with
industry standards in sufficient detail for a financial institution to
provide financing for the Brisas project.

batholith...   A mass of igneous rock with a surface area greater than 100
square kilometers.

Bolivar...   The basic monetary unit of the Republic of Venezuela. As of
March 2006, 2,150 Bolivars equaled one U.S. Dollar.

breccia...   A clastic rock in which angular fragments are surrounded by a
fine-grained matrix or minerals cement.

BRISAS...   Compania Aurifera Brisas del Cuyuni, C.A., a Venezuelan
corporation and the subsidiary of the Company that owns the Brisas property.

Brisas alluvial concession...   The mining title granted to BRISAS by the
Ministry of Energy and Mines (predecessor to the Ministry of Basic Industries
and Mines) to explore and commercially develop and exploit gold contained in
alluvial material on the Brisas property.

Brisas hardrock concession...   The mining title granted to BRISAS by the
Ministry of Energy and Mines (predecessor to the Ministry of Basic Industries
and Mines) to commercially develop and mine gold, copper and molybdenum
contained in the veta or vein material on the Brisas property.

Brisas Property or Project...   The Brisas property or project consists of
the Brisas alluvial concession, the Brisas hardrock concession beneath the
alluvial concession, applications for other mineralization (primarily nominal
values of copper and silver) contained in these concessions, and contracts and
concessions for mineralization (primarily gold, copper and molybdenum) and
infrastructure use on land parcels contiguous to the existing concessions.

Choco 5 Property...  Grass-roots exploration target leased from Minerven, a
subsidiary of CVG.

concentrate...   A finely ground product of the milling process, containing a
high percentage of valuable metal, which is typically sent to a smelter for
further processing.

concession...   A privilege, license or mining title granted by MIBAM to
explore and, if warranted, produce minerals from a specified property.

Corporacion Venezolana de
Guayana (CVG)...   A Venezuelan government-owned entity formed to foster
industrial development and to explore and develop mineral resources in the
Guayana region of Venezuela, including the State of Bolivar.

cyanidation...   A method of extracting gold or silver from a crushed or
ground ore by dissolving it in a weak cyanide solution.

dilution...   Waste rock that is, by necessity, removed along with the ore in
the mining process, subsequently lowering the average grade of the ore
processed.

dip...   The angle at which a vein, structure or rock bed is inclined from
the horizontal as measured at right angles to the strike.

environmental impact
statement (EIS)...   A report, compiled prior to a production decision that
examines the effects of proposed mining activities on the natural
surroundings.

feasibility study...   A comprehensive study of a deposit in which all
geological, engineering, operating, economic and other relevant factors are
considered in sufficient detail that it could reasonably serve as the basis
for a final decision by a financial institution to finance the development of
the deposit for mineral production.

flotation...   A process for concentrating minerals based on the selective
adhesion of certain minerals to air bubbles in a mixture of water and ground
up ore. When the right chemicals are added to a frothy water bath of ore that
has been ground to the consistency of talcum powder, the minerals will float
to the surface. The metal rich flotation concentrate is then skimmed off the
surface.

gold equivalent...   Gross value of copper at a stated value per pound
divided by the gross price of gold at a stated value per ounce.

Gold Reserve de Venezuela
C.A. (GLDRV)...   A Venezuelan corporation and a foreign subsidiary of the
Company. GLDRV was organized in September 1992 to manage the exploration and
future development activities on the Brisas property.
grade...   The relative quantity or the percentage of ore-mineral content in
a mineralized body, i.e. grams of gold per tonne or percent of copper per
tonne.

gravity separation...   Recovery of gold from crushed rock or gravel using
gold's high specific gravity to separate it from the lighter material.

hardrock...   Solid rock underlying an alluvial deposit. Also referred to as
bedrock.

hectare...   A metric measurement of area equivalent to 10,000 square meters
or 2.47 acres.

igneous...   Rocks formed by the cooling and solidifying of magma.

Imataca Forest Reserve...   A 3.6 million hectare area of tropical forest
located in the State of Bolivar in southeastern Venezuela that was set aside
as a region for forest exploitation by the Venezuelan government in the
1960s. The Company's Brisas Project is located in an area within the reserve,
which was previously designated for mining activities.

indicated mineral resource...   That part of a mineral resource for which
quantity, grade or quality, densities, shape and physical characteristics,
can be estimated with a level of confidence sufficient to allow the
appropriate application of technical and economic parameters, to support mine
planning and evaluation of the economic viability of the deposit. The estimate
is based on detailed and reliable exploration and testing information gathered
through appropriate techniques from locations such as outcrops, trenches,
pits, workings and drill holes that are spaced closely enough for geological
and grade continuity to be reasonably assumed.

inferred mineral resource...   That part of a mineral resource for which
quantity and grade or quality can be estimated on the basis of geological
evidence and limited sampling and reasonably assumed, but not verified,
geological and grade continuity. The estimate is based on limited information
and sampling gathered through appropriate techniques from locations such as
outcrops, trenches, pits, workings and drill holes.

intrusive...  Rock which while molten penetrated into or between other rocks,
but solidified before reaching the surface.

Kilometer 88 mining district
(Km 88)...   An area in the State of Bolivar in southeastern Venezuela
containing significant alluvial and hardrock deposits. The Company's Brisas
Project is located in this district.

measured mineral resource...   That part of a mineral resource for which
quantity, grade or quality, densities, shape, physical characteristics are so
well established that they can be estimated with confidence sufficient to
allow the appropriate application of technical and economic parameters, to
support production planning and evaluation of the economic viability of the
deposit. The estimate is based on detailed and reliable exploration, sampling
and testing information gathered through appropriate techniques from locations
such as outcrops, trenches, pits, workings and drill holes that are spaced
closely enough to confirm both geological and grade continuity.

metamorphism...   Rock of sedimentary or igneous origin that has been altered
by high temperature and/or pressure.

mill...   A processing plant where ore is crushed and ground, usually to fine
powder, and the metals are extracted by physical and/or chemical means. Output
from a mill usually requires further processing in a smelter or refinery to
produce pure metal.

mineral...   A naturally occurring homogeneous substance having fixed
physical properties and chemical composition.

mineral resource...   A concentration or occurrence of natural, solid,
inorganic or fossilized organic material in or on the Earth's crust in such
form and quantity and of such grade or quality that it has reasonable
prospects for economic extraction. The location, quantity, grade, geological
characteristics and continuity of a Mineral Resource are known, estimated or
interpreted from specific geologic evidence and knowledge.

mineral reserve...  The economically mineable part of a Measured or Indicated
Mineral Resource demonstrated by at least a preliminary feasibility study.
This study must include adequate information on mining, processing,
metallurgical, economic and other relevant factors that demonstrate, at the
time of reporting, that economic extraction can be justified. A Mineral
Reserve includes diluting materials and allowances for losses that may occur
when material is mined.

mineralization...   The presence of minerals in a specific area or geological
formation.

Ministry of
the Environment
and Natural Resources
(MARN)...  Venezuelan governmental entity, which exercises supervisory
jurisdiction over the environment.

Ministry of Basic Industries
and Mines (MIBAM)...   Venezuelan governmental entity, which until early 2005
was previously referred to as the Ministry of Energy and Mines (MEM), which
exercises supervisory jurisdiction over the Brisas Project and the Company's
activities thereon.

Minerven  A mining company wholly-owned by CVG.

molybdenum...   An element (Mo), usually in the form of molybdenite,
primarily used in alloys and lubricants.

open pit...   A mine that is entirely on surface. Also referred to as an
open-cut or open-cast mine.

Precambrian...   All geologic time before 570 million years ago.

preliminary feasibility study...   A comprehensive study of the viability of
a mineral project that has advanced to a stage where the mining method, in
the case of underground mining, or the pit configuration, in the case of an
open pit, has been established, and which, if an effective method of mineral
processing has been determined, includes a financial analysis based on
reasonable assumptions of technical, engineering, operating, economic factors
and the evaluation of other relevant factors which are sufficient for a
qualified person, acting reasonably, to determine if all or part of the
mineral resource may be classified as a mineral reserve.

probable mineral reserve...
Probable (Indicated) Reserves...   Consolidated Ontario Securities Act
("CSA") N.I. 43-101
The economically mineable part of an indicated mineral resource, and in some
circumstances, a measured mineral resource demonstrated by at least a
preliminary feasibility study. This study must include adequate information
on mining, processing, metallurgical, economic, and other relevant factors
that demonstrate, at the time of reporting, that economic extraction can be
justified.
SEC Industry Guide 7
Reserves for which quantity and grade and/or quality are computed from
information similar to that used for proven (measured) reserves, but the
sites for inspection, sampling, and measurement are farther apart or are
otherwise less adequately spaced. The degree of assurance, although lower
than that for proven (measured) reserves, is high enough to assume continuity
between points of observation.

Proterozoic...   That part of the Precambrian time represented by rocks in
which traces of life appear or the younger part of Precambrian time.

Proven (Measured) Reserves...   CSA N.I. 43-101
The economically mineable part of a measured mineral resource demonstrated by
at least a preliminary feasibility study. This study must include adequate
information on mining, processing, metallurgical, economic, and other
relevant factors that demonstrate, at the time of reporting, that economic
extraction is justified.
SEC Industry Guide 7
Reserves for which: (a) quantity is computed from dimensions revealed in
outcrops, trenches, workings or drill holes; grade and/or quality are
computed from the results of detailed sampling; and (b) the sites for
inspection, sampling and measurement are spaced so closely and the geologic
character is so well defined that size, shape, depth and mineral content of
reserves are well-established.

reclamation...   The restoration of a site after mining or exploration
activity is completed.

recovery...   The percentage of valuable metal in the ore that is recovered
by metallurgical treatment.

stock...   An igneous body smaller than a batholith with a subcircular
section.

stratabound...   Used to describe mineral deposits that are restricted to a
single stratagraphic unit.

strataform...   Mineral deposits whose geometry is similar to that of its
host rock.

strike...   The direction, or bearing from true north, of a vein or rock
formation measured along a horizontal line on the surface of the vein or rock.

strip ratio...   The tonnage of non-mineralized waste material removed to
allow the mining of one tonne of ore in an open pit. Also referred to as
waste-to-ore ratio.

tailings...   The material removed from the milling circuit after separation
of the valuable metals.

troy ounce...   Unit of weight measurement used for all precious metals. The
familiar 16 ounce avoirdupois pound equals 14.583 troy ounces.

vein...   A sheet-like or tabular discordant mineralized body formed by
complete or partial infilling of a fracture or fault within a rock.

veta...   1) Used to describe veins of mineralization and/or deeper, hardrock
mineralization, 2) used to describe a strata of material that constitutes a
concession, i.e. relating to the Brisas hardrock concession.

CONVERSION FACTORS:
1 Troy ounce  =  31.1034
Grams1 Tonne     =  1.1023
Short tons or 2204.6 Pounds
1 Hectare   =  2.4711  Acres
1 Kilometer   = 0.6214  Miles
1 Meter     =  3.28084  Feet

SYMBOLS:  Au    =  Gold
Cu    =  Copper
gpt    =  Grams per tonne
kt    =  Thousand tonnes
Au Eq    =  Gold equivalent