BERAL, INC.
Andrew Racz
Director of Research
300 East 54 Street, Suite 26C
New York, NY 10022
Phone: (212) 319-6949
Fax: (212) 753-1944
E-mail: mlikar@aol.com

GOLD RESERVE, INC.

October 15, 2013

Gold Reserve Inc. ( GRZ-V, GDRZF-OTC)

Price

$3.4

Price Range

$2.42-$3.50

Market Cap

$240.0 M

Shares Outstanding

70 M

   

Gold Reserve Inc. and some 50 oil and mining companies were nationalized with original mineral holdings in Venezuela … This may create a historical picture in the world of finance. Castro started this ,but in the 1960s.

Venezuela is not a poor country. It has the world’s largest oil reserves. It has enormous mining reserves.

China has signed an agreement with Venezuela for valuable mining resources

An agreement was signed by the government of Venezuela and the Chinese state-owned company Citic-Group for prospecting and mapping the country’s mining reserves is being challenged by both the opposition and experts who argue that it will have valuable natural resources dangerously exposed.

Oil and Mining Minister Rafael Ramirez said “the mining map will be used to explore, confirm and quantify the country’s mineral resources” and, over the five years in which the agreement will be implemented, some 400 Venezuelan engineers will be trained “to serve as custodians” of the data compiled by the Chinese consortium.

So far the Venezuelan government has said nothing about how the knowledge gathered by China – the world’s largest consumer of raw materials – with influence future mineral operators since Hugo Chavez took office in 1999, including the Candian companies Placor Dome, Vanessa Ventures and Crystallex, and the Russian company Rusono.

Las Cristinas, in the southeast region of Guayana, has some 20 million ounces in confirmed and potential reserves valued at about $32 billion according to current New York market gold prices.

A. Douglas Belanger

A. Douglas Belanger is a director since August 1988. Mr. Belanger’s principal occupation is President of the Company, a position he has held since January 2004. Mr. Belanger has also served as Executive Vice President from 1988 through January 2004. He has been a director and executive officer of the Company’s Venezuelan and other subsidiaries since 1992 and is Executive Vice President and director of Great Basin Energies Inc. since 1984 and MGC Ventures, Inc. since 1997. Mr. Belanger resides in Spokane, Washington, USA.

Between 1962 and 2012 time and time again Venezuela was ruled by Communist dictators. The lifestyle of the Venezuelans gradually fell down to the level to the life of Cuba and eventually a very friendly relationship developed between the Castro Brothers and Chavez. The relationship was unfortunately tied to Mr. Chavez’s cancer but in many respects the economic relationship existed between the two countries. Cuba received cheap Venezuelan oil and Venezuela benefited from the medical technological advances of Cuba. 

The late Chavez had ambitions to expand Venezuela’s influence to other parts of Central and South America; an ambition which fortunately never materialized and with the death of the dictator, the political power of Venezuela declined.

The current President , is more left wing than Chavez and could be called a Communist and is leaning towards a dictatorship, but he plays less colorful role on the world’s stage.

The new President increased nationalization. The major oil companies operating in the largest oil fields have been nationalized and nationalization of mining assets have become a matter of daily routine.

Curiously the aggressive nationalization campaign which is illustrated in terms of Table 2, have played a positive role in world history.

The international XYZ stabbed him and reviewed case by case the nationalized properties and began to be active in demanding compensation for nationalized assets.

The historical significance of this event is going to have far reaching consequences.
What does Venezuela get out of granting prospecting rights over all of its mineral wealth to a Chinese consortium? Fernando Solo, a legislator who heads the Energy and Mining Commission, the Chinese survey would allow Venezuela to locate and quantify mineral deposits in great depth.

But others like de Grazia question this decision and believe the government should have awarded this prospecting contract to the highest bidder . He claims that Citic Group lacks the necessary credentials in the field.

At the time of writing there are 197 nations, members of the United Nations. At the time of the 1941 Conference in Newfoundland between President Roosevelt and Prime Minister Churchill and the Atlantic Charter was created there were only 28 nations. The Atlantic Charter clearly said that the Allied Powers will restore every country to its original size and restore the properties to its original owners as well as the countries to the original nations. 

In 1943 President Roosevelt stated in the Casablanca Conference with Prime Minister Churchill when he said that “we will impose on the current rulers of Germany unconditional surrender.” He stated further that the German people after the War can have their rightful place among civilized nations but it is clearly understood that the Germans do not represent the Master Race.

This remark in 1943 has now become rejuvenated in 2013. No nation can grab economic properties, mineral resources, oil, and mines from a wide variety of stockholders. It is the modern interpretation of the Casablanca Conference saying that in the year 2013 nationalization cannot take place and will not be tolerated.

The Venezuelan case is important because Venezuela is a large country. Venezuela is an oil rich and mineral rich country. Venezuela has 15 million inhabitants and Venezuela occupies a geographically vital role among the civilized nations.

The International Centre for Settlement of Investment Disputes in Washington D.C. is receiving arbitration claims from various companies which have been nationalized.

Pending Cases:

Other companies with pending ICSID arbitration against Venezuela include Gold Service Inc., (GRZ), Tidewater Inc., (TDW), Williams Cos., Inc. (WMB), Koch Industries, Inc., Owens-Illinois, Inc., (OI), Tenaris SA (TEN) and Rusor Mining Ltd. (RML).

ConocoPhillips and Exxon Mobil have won mixed rulings from arbitration claims against state oil company Petroleos de Venezuela SA at the Paris-based International Chamber of Commerce, a separate court known as the ICC.

The investment prospects in general and in particular are very interesting. Nationalized properties as they stand are usually very, very cheap as compared to the realistic value. The most famous example I have in mind is BungaPonto that picked up Cuban nationalized properties and became a $2 billion company run by Hungarian George Salgo who eventually bought the Watergate Complex in Washington.

Shares

70 million

Price

$3.40

Cash Price Distributed

$12+ ( EST)

Configuration

$16

   

The value of acquired nationalized grabbed property politically has to be restored but in practical terms if the property is put back when original corporations are valued not more than 10/20% of the original value.

At the time of writing the International Centre for Settlement of Investment is arbitrating cases on 30 mineral properties. 

Estimates of Original Oil-in-Place

A comprehensive study by Petrolsos de Venezuela S.A. (PDVSA) established the magnitude of the original oil-in-place (OOIP) at 1,180 billion barrels of oil (BBO), a commonly cited estimate for the Crinoco Oil Belt (Florillo, 1987). PDVSA recently revised this value to more than 1,300 BBO (Gonzalez and others, 2006). In this study the median OOIP was estimated at 1,300 BBO and the maximum at 1,400 BBO. The minimum OOIP was estimated at 900 BBO, given the uncertainty of regional sandstone distribution and oil saturation (Florillo, 1987)

Estimates of Recovery Factor

Recovery factor, or the percentage of the OOIP that is determined to be technically recoverable, was estimated from what is currently known of the technology for recovery of heavy oil in the Crinoco Oil Belt AU and in other areas, particularly California, west Texas, and western Canada. The minimum recovery factor was estimated to be 15 percent, the recovery expected for cold production using horizontal wells.

The median recovery factor was estimated to be 45 percent, one the assumption that horizontal drilling and thermal recovery methods might be widely used. The maximum recovery factor was estimated to be 70 percent, on the assumption other recovery processes, it might be eventually be applied on a large scale in the Crinoco Oil Belt AU (Dussault, 2001; Curtis and other, 2002; Acasio and Regardiz, 2006; Fernandez and Bashbrush, 2008). 

The US Geological Survey estimated a mean volume of 513 billion barrels of technically recoverable heavy oil in the Crinoco Oil Belt Assessment Unit of the East Venezuela Basin Province; the range is 380 to 652 billion barrels. The Crinoco Oil Belt Assessment Unit thus contains one of the largest recoverable oil accumulations in the world.

One Trillion Barrels of Heavy Oil

The Crinoco Oil Belt Assessment Unit (AU) of the la Luna-Quercoal Total Petroleum System encompasses approximately 50,000 km2 of the East Venezuela Basin Province that is underlain by more than 1 trillion barrels of heavy oil-in-place. As part of a program directed at estimating the technically recoverable oil and gas resources of priority petroleum basins worldwide, the US Geological Survey (USGS) estimated the recoverable oil resources of the Crinoco Oil Belt AU.

This estimate reflects mainly on published geologic and engineering data for reservoirs (not oil-saturated sandstone thickness and extent), petrophysical properties (porosity, water saturation, and formation volume factors), recovery factors determined by pilot projects, and estimates of volumes of oil-in-place)

Upon information and belief, Gold Reserve Inc. is number 4 or 5 in line out of 30 pending arbitrations and a decision will be reached by the end of 2013. The value is estimated about $1 to $2 billion.

Considering that at the time of writing there are 70 million shares outstanding; the stock is $3.40. The total value of $1 billion would mean $15 per share. The company has stated that 90% of the monies obtained may be distributed to the stockholders.

There are many configurations which we tried to list one by one.

  1. Gold Reserve loses the arbitration and in that case the stock will probably fall below $2 a share or even $1.50 a share.
  2. Gold Reserves receives $1 billion.
  3. The possibility exists that as we go about the solution and there is a positive decision on the arbitration then the stock will go from $3.40 to $5 or $6. A current owner therefore could sell 50% of its holding at $5 and the remaining stock value emerges at $1.
  4. Another configuration is that if we move toward a solution, the stock goes to $5, the company could raise probably with its notes and warrants or stock an additional $30-$40 million and the resulting company can be split into two parts.

What I have stated is that there are possibilities to make Gold Reserves an interesting speculation.

I have also stated that as success in arbitration for Gold Reserves Inc. could create an international mining company with meaningful sums of cash.

I have also stated that the entrepreneurial future of Gold Reserve Inc. if they succeed in arbitration with let’s say an award of $1 billion – a new company will be born and its future would reflect success in the American Continent as opposed to the dreaded and despised Communist left wing, illegal dictatorship with arbitrary, non-compensatory nationalization.

Disclaimer

Information contained herein is based on data obtained from recognized statistical services, issuers reports or communications or other sources believed to be reliable. However, such information has not been verified by us and we do not make any representation to its accuracy or completeness. Any statement non-factual in nature constitutes only current opinions which are subject to change. BERAL INC. or their officers, directors, analysts or employees may have positions in the securities or commodities referred to herein, and may as principal or agent buy and sell such securities or commodities. An employee, analyst, officer or a director of BERAL INC. may serve as a director for companies mentioned in this report. Neither the information nor any comment expressed shall constitute an offer to sell or a solicitation of an offer to buy any securities or commodities mentioned herein. There may be instances when fundamental, technical and competitive opinions may not be in concert. This firm may from time to time perform investment banking or other services for or which investment banking or other businesses from any company mentioned in this report.

 

Archive

Bunker Hunt Article
Posted October 27, 2014

Lamb Realty.
Posted October 15, 2014

Chiquita Brands International
Posted August 20, 2014

Emerson Radio
Posted August 24, 2014

Evercore Partners Inc.
Posted August 5, 2014

Moelis & Co.
Posted July 22, 2014

Torchlight Energy Resources, Inc.
Posted May 21, 2014

Andrew Racz
Posted May 19, 2014

Royal Nickel Corporation
Posted May 02, 2014

Recorded Interview Robert Schermer, CEO
Posted March 15, 2014

Cowen Group, Inc.
Posted March 5, 2014

Pacific Booker Minerals Inc.
Posted February 4, 2014

Sandstorm Gold Ltd
Posted January 24, 2014

Global X Gold Explorer ETF
Posted January 16, 2014

Bring Back Mr. Giuliani
Posted December 24, 2013

Gold Reserve Inc.
Posted October 15, 2013

Premier Diagnostics Health Services Inc.
Posted September 25, 2013

Almaden Minerals
Posted September 3, 2013

Electric Cars In New York City
Posted August 27, 2013

The World Without Gold
Posted July 2, 2013

Remembering Mr. Churchill
Posted June 10, 2013

Financial Transactions in the Digital Age
Posted May 15, 2013

Senator Chester Crandell ( R ) Arizona
Posted May 7, 2013

Explor Resources Exs V
Posted April 14, 2013

The Gathering Storm
Posted April 9, 2013

Vietnam - West of Hong Kong
Posted March 11, 2013

Vietnam – In Peace!
Posted February 26, 2013

Wisdomtree Investments Inc
Posted January 28, 2013

Explor Resources Inc.
Posted November 28, 2012

Oremex Silver Inc.
Posted September 18, 2012

Alphamin Resources Corp.
Posted July 26, 2012

Harvest Natural Resources
Posted July 20, 2012

The Man Who Was Created by Gold
Posted July 06, 2012

Recorded Interview With Zach Erdem, President
Posted June 20, 2012

Nortec Minerals Corp.
Posted May 01, 2012

The Fundamentals of Chesapeake Gold Corporation
Posted April 16, 2012

Jourdan Resources Inc. (JOR.V)
Posted March 20, 2012

THE IMF
Posted February 27, 2012

Gold Index Bonds - To Avoid the Money Traps
Posted February 2, 2012

Monarch Casino & Resort, Inc.
Posted February 01, 2012

QMC Quantum Minerals
Posted january 19, 2012

African Metals Corp.
Posted December 21, 2011

The Crisis That Almost Wasn’t
Posted December 7, 2011

DNI METALS, INC
Posted November 18, 2011

The Crisis That Almost Wasn't
Posted November 15, 2011

Ocean Power Technologies, Inc
Posted October 19, 2011

The Mongolian Economic Miracle
Posted October 12, 2011

H. Hunt
The Son of Bunker Hunt
 
Posted August 24,2011

Sandstorm Gold
(SNDXF - NASDAQ)
Posted August 15, 2011

"Silver At $200
Posted July 29, 2011

"First Majestic Silver Corp
 Posted July 26, 2011

"Interview with Brian Kirwin,
President
American Bonanza Gold Corp"

Posted July 21, 2011

"Interview with Ian Foreman
President
Yale Resources Ltd."

Posted June 16,2011

"Interview with Brandon Mckee
Callinan Mines
By Andrew Racz "

Posted June 1, 2011

"Andrew Thompson Interview Soltoro Ltd."
Posted May 15, 2011

"Great Panther Silver Limited"
Posted March 29, 2011

"The 21st Century's Marshall Plan"
Posted March 17, 2011

"Interview With
Houston Hunt"

Posted February 23, 2011

"Esperanza Resources Corp."
Posted February 23, 2011 

"Douglas Lake Minerals"
Posted January 11, 2011 

"Do not bet against Casablanca"
Posted December 10, 2010 

"Palladium"
Posted December 8, 2010 

"Full Circle"
Posted November 19, 2010 

"REMX - NYSE ARCA - MV.RARE EARTH/STRATEGIC METALS"
Posted November 8, 2010 

SilverCrest Mines, Inc.
Posted October 26, 2010

Cache Exploration, Inc.
Posted October 22, 2010 

Silvore Fox Minerals Corp.
Posted September 29, 2010 

Almaden Minerals, Ltd.
Posted August 16, 2010 

"The Path Of A Hungarian Immigrant"
Posted August 12, 2010 

"Interview With
Mark Hazout -
Silver Dragon Resources
"

Posted June 24, 2010

"Who Owns Whom At The Final Tally"
Posted June 15, 2010 

"The World Needs
Bunker Hunt.
"

Posted May 24, 2010 

"Arafura Resources "
Posted April 15, 2010 

"MF Holdings LTD"
Posted April 7, 2010 

"Quest Uranium Corporation"
Posted April 5, 2010 

"Lynas Corporation, LTD"
Posted March 19, 2010 

"Rare Element Resources LTD"
Posted February 9, 2010 

"Mexco Energy Corporation"
Posted January 4, 2010 

"Claude Resources"
Posted December 16, 2009

"The Silver Spirit"
Posted November 25, 2009 

"... from Casablanca to Monte Carlo."
Posted November 20, 2009 

"Sutter Gold Mining, Inc."
Posted November 16, 2009 

"Whose Friends Are They Anyway?"
Posted November 4, 2009

"U.S. Energy Corporation"
Posted October 28, 2009 

"Harris & Harris"
Posted October 13, 2009


"They Made A Difference"
Posted September 30, 2009 

"Bridge Bancorp, Inc"
Posted September 22, 2009 

"Entree Gold - September 2009"
Posted September 3, 2009 

"Who Lost Mongolia"
Posted August 16, 2009 

"Mongolian Prime Minister Sanj Bayar -
A politician of the 21st century"

Posted July 16, 2009 

"Romios Gold"
Posted July 7, 2009 

"The Grand Alliance"
Posted July 6, 2009 

"Sandstorm Resources, Inc."
Posted June 22, 2009 

"Ireland, Inc."
Posted June 16, 2009 

"The Brave New World! - Gold at $1000"
Posted June 5, 2009 

"Claude Resources, Inc."
Posted May 28, 2009 

"Bullion Management Group"
Posted May 11, 2009

"Golden Hope Mines, Inc. - Retraction"
Posted May 4, 2009 

"Silvercrest Mines, Inc."
Posted April 1, 2009 

"Silver Dragon Resources"
Posted February 27, 2009

"In Gold We Trust"
Posted February 26, 2009

"Entree Gold: An Unusual Asset Accumulation"
Posted February 20, 2009 

"The Ultimate Colorful Fate of Edmond Safra, Bernie Madoff, and Governor Bill Richardson"
Posted January 12, 2009

"Silvermex Resources, LTD"
Posted December 13, 2008 

"Prime Minister of Mongolia"
Posted December 11, 2008 

"US Gold Corporation"
Posted December 1, 2008 

"Rubicon Minerals"
Posted November 5, 2008 

"Gold Coins & The Money Game"
Posted October 29, 2008 

"Gold and the Chinese Millennium"
Posted October 20, 2008

"JNR Resources, Inc."
Posted September 30, 2008

"Three Immigrants In Front Of The Court"
Posted September 24, 2008 

"Governor
Walter J. Hickel Interview"

Posted September 11, 2008

"The Alaskan Queen"
Posted September 9, 2008 

"Evercore Partners, Inc."
Posted September 3, 2008 

"Stalin In The
White House"

Posted September 2, 2008 

"Cal-Maine Foods Inc."
Posted August 4, 2008 

"The Mongolian Revolution"
Posted July 10, 2008 

"Mongolian Newsletter, First Edition"
Posted July 2, 2008 

"Goldsource Mines, Inc."
Posted July 1, 2008

"The Douglas Lake Story In The Age Of Fear"
Posted June 25, 2008 

"Mongolia: The 10th Richest Country in the World"
Posted June 10, 2008 

"North American Gem, Inc."
Posted June 5, 2008 

"The Emergence of Tanzania"
Posted June 4, 2008

"Tanzania - An Up & Coming Mineral & Agricultural Producer In Africa"
Posted June 2, 2008

"Western Potash Corp.
(WPX-VSE) "

Posted May 12, 2008 

"Judy Garland &
The Subprime Crisis"

Posted April 29, 2008 

"Altek Power Corp."
Posted April 27, 2008 

"Letter to Prime Minister of Mongolia"
Posted April 24, 2008 

"The Mongolian Manifesto"
Posted April 4, 2008 

"Prime Minister Sanj Bayar of Mongolia Receives The Nobel Peace Prize"
Posted March 17, 2008 

"Olympus Pacific Minerals, Inc."
Posted February 28, 2008 

"Tanzania Gold - Douglas Lake Minerals - Harp Sangha"
Posted February 21, 2008

"Warren Buffett Receives A Call From Franklin Roosevelt"
Posted February 19, 2008

"Gold At 2000!!"
Posted February 14, 2008

"Entrée Gold, Inc"
Posted February 11, 2008

"The Unexpected
Mongolian Dilemma"

Posted February 2, 2008 

"Mongolian Gold"
Posted January 8, 2008

"Sir, Do Not Abdicate"
Posted December 27, 2007

"No More Munich -
The Mongolian Version of 1938"

Posted December 11, 2007

"Watergate Saved Nixon's Life"
Posted November 28, 2007

"The Mongolian Wakeup Call"
Posted November 16, 2007 

"Sanj Bayar -
The Prime Minister of Mongolia"

Posted November 15, 2007 

"Stalin & Chavez"
Posted November 9, 2007 

"Tagish Lake Gold Corp."
Posted November 1, 2007 

"Gold Indexed Bonds"
Posted October 11, 2007

"Jasper Mining Corporation"
Posted September 27, 2007

"Ghengis Kahn Returns"
Posted September 27, 2007

"Interview with Professor William Pfaffenberger - Torch River Resources"
Posted September 22, 2007 

"Interview with
Jim Davis - President of Leeward Capital Corporation"

Posted September 4, 2007 

"Interview with
David Hjerpe - Newmac Resources, Inc."

Posted August 27, 2007 

"The Age of Special "Corporate" Relationships"
Posted August 23, 2007

"Entrée Gold Inc."
Follow Up Report #1

Posted July 24, 2007

"Aldershot Resources Ltd."
Posted July 16, 2007 

"Portal Resources"
Posted June 12, 2007 

"Ghengis Kahn Was Hungarian"
Posted May 31, 2007

"Bayswater Uranium Corp."
Posted May 30, 2007 

"Brilliant Mining Corp."
Posted May 22, 2007

"Golden Valley Mines, Ltd"
Posted April 21, 2007

"Warren Buffett - Franklin Roosevelt"
Posted March 15, 2007

"Rubicon Minerals Corp."
Posted March 1, 2007

"Robert Friedland -
The Man of The Year"

Posted February 21, 2007

"Lexam Exploration, Inc."
Posted February 11, 2007

"My Father Died In Auschwitz"
Posted January 19, 2007

"WisdomTree Investments, Inc."
Posted December 26, 2006

"Entrée Gold Inc."
Posted December 13, 2006

"Aero Mechanical Services, Ltd"
Posted November 17, 2006

"This Year I"m Voting For Dick Nixon"
Posted November 7, 2006

"Global Options
Group, Inc."

Posted November 1, 2006

"The Arrival of the
Nickel Billionaires"

Posted October 18, 2006

"The Kennedy-Nixon debate revisited"
Posted October 4, 2006

"Brilliant Mining Corp."
Posted September 17, 2006

"A Matter of Reasonable Doubt"
Ken Lay - Enron

Posted August 30, 2006

"Silver Wheaton - SLW"
Posted August 28, 2006 

"Silver In The
Twenty-First Century"

Posted August 16, 2006

"The Age of Mediocrity"
Posted July 19, 2006

"Let There Be Sunshine"
Kirk Kerkorian

Posted July 12, 2006

"Oil & Gas
Energy Crisis Solution"

Posted July 3, 2006

"I Am An Immigrant!"
Posted June 7, 2006

"Northern Star
Mining Corp."

Posted May 19, 2006 

"Gateway Gold:
It"s A Gold Story"

Posted May 15, 2006

"Ken Lay's Legacy"
Posted May 8, 2006

"The Principal Guest Was Missing"
Posted April 25, 2006

"J.P. Morgan Offers Advice To Ken Lay"
Posted April 11, 2006

"Pocketful Of
Miracles"

Posted April 8, 2006 

"Midway Gold
Corporation
"
Posted March 23, 2006 

"Harvest Gold"
Posted March 2, 2006 
 
"Sparton Resources"
Posted March 1, 2006 

"Interview with
Robert McEwen-
U.S. Gold Corporation
"
Posted February 22, 2006 

 
"A Tribute to
Rudy Giuliani
"
Posted February 15, 2006
 
"Your Money Is Not Yours"
-Enron & Martin Siegel, Esq.

Posted February 9, 2006

"Other People"s Money -Enron & Martin Siegel, Esq."
Posted January 28, 2006

"Northern Star Mining"
Posted January 16, 2006 
 
"Sonesta International Hotels Corporation"
Posted December 29, 2005 

"The Currency of Mass Destruction"
Posted December 5, 2005
 
"Bunker Hunt-Silver-China"
Posted November 28, 2005

"50 Relatives Worse Than Yours"
Posted November 14, 2005

"Then And Now"
Posted November 9, 2005 

"The Business of Hungary is Business!"
Posted October 31, 2005

"Mr. Prime Minister"
Posted October 13, 2005
 
"U.S. Gold Corp."
Posted September 29, 2005

"Orezone"
Posted September 23, 2005

"Mr Clarke -
Call In The Boys"

Posted September 12, 2005
 
"A Letter To
President Bush"

Posted September 8, 2005

"Mr. Smith Goes To Hungary"
Posted September 1, 2005
 
"Orko Gold"
Posted August 18, 2005

 "Near Hit"
Posted August 16, 2005

"An African Queen"
Posted August 11, 2005

"1848 and Beyond"
Posted August 4, 2005

 

 

Andrew Racz. 300 East 54 Street, Suite 26C, New York, NY 10022
Phone: (212) 319-6949 Fax: (212) 753-1944. E-mail: mlikar@aol.com

Copyright © 2011 Andrew Racz. All Rights Reserved.

Disclaimer