Gold Reserve (TSXV: GRZ; OTCQX: GDRZF) has raised US$36 million ($49 million) primarily for the Siembra copper-gold project in Bolivar state, Venezuela. The project is owned by Siembra Minera, a joint venture of Gold Reserve (55%) and the Venezuelan government (45%).
Gold Reserve issued approximately 8.8 class A common shares at a price of US$4.10 each for gross proceeds of US$36 million. The company now has a total of about 112.8 million issued and outstanding shares. Cantor Fitzgerald Canada was the sole agent and bookrunner, and it received a commission of slightly more than US$1 million. The offer is subject to final approval of the TSX Venture exchange.
Siembra covers 18,950 ha in the Km 88 gold mining district. Mineral rights have been secured for 20 years with two possible 10-year extensions. Gold Reserve plans to provide engineering, procurement and construction services for a fee of 5% over the cost of construction. After the mine goes into production, the company would charge 5% over the cost of operating. The technical services agreement has yet to be completed. Other provisions related to the project are also pending completion.
A preliminary economic assessment was prepare for Siembra in 2018 but was not available at press time through SEDAR.
Gold Reserve said the Venezuelan government is not current with its financial obligations for the project. The obligations include a US$110.2 payment to the company to facilitate the early startup of pre-operation and construction activities. Total capital costs at Siembra are estimated to be in the neighbourhood of US$2 billion.
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