NB, Bold italics mine.

“Gold Reserve’s Board of Directors believes that the Rusoro Offer is opportunistic, financially inadequate and significantly undervalues the Company, its assets and their relative contribution to the proposed combination,” said Doug Belanger, President of Gold Reserve. “We believe that Rusoro is attempting to acquire Gold Reserve’s valuable assets – including the Brisas Project and our large cash reserves –without offering adequate consideration to Gold Reserve shareholders. Furthermore, we believe that Rusoro’s own weak financial position and lackluster operating performance present significant risks to Gold Reserve shareholders if Rusoro’s unsolicited offer is successful.”

Mr. Belanger added, “Our Board and management team are committed to enhancing shareholder value and are taking all appropriate steps to position the Company for the future. Our plan is to continue to work with the Venezuelan government to finalize the necessary pre-production permits for the Brisas Project. To this end, we expect to meet with the Venezuelan government in January 2009 to address anticipated mining sector reforms and the potential impact on our Brisas Project.”

In its Directors’ Circular and Schedule 14D-9, the Gold Reserve Board strongly recommends that all Gold Reserve shareholders reject the Rusoro Offer and not tender their shares. The Board’s recommendation is based on a number of factors, including, but not limited to, the following:

• The Rusoro Offer does not represent a premium as it does not adequately compensate Gold Reserve shareholders for the fair value of the world-class Brisas Project or Gold Reserve’s cash assets. Under the terms contemplated in the Rusoro Offer, Gold Reserve would contribute 84% of the combined company’s proven and probable gold reserves, 100% of the combined company’s proven and probable copper reserves, 84% of the combined company’s cash and investments, and advanced project engineering, site analysis and drill data. On the other hand, Rusoro would contribute liquidity and operational problems, substantial reserve impairment and a weak asset base. Despite Gold Reserve’s far greater contribution to the value of the combined company, the Rusoro Offer proposes to provide Gold Reserve shareholders with a mere 30% interest in the combined company on a non-diluted basis. Furthermore, the Offer calls for the delisting of Gold Reserve shares from the NYSE Alternext and TSX in exchange for a Canada-only listing on the junior Canadian TSXV exchange, thereby decreasing the combined company’s liquidity in the United States.
• The Gold Reserve Board believes Rusoro lacks the financial resources to fund its aggressive growth plans for the combined company. Rusoro’s contribution to the combined company would expose Gold Reserve shareholders to significantly increased financial risk due to Rusoro’s negative cash flow, working capital deficit and near term debt repayment obligations. Gold Reserve does not believe that Rusoro has the financial resources to continue its existing business activities, let alone its aggressive growth plans for the combined company. Specifically, according to Rusoro’s interim financial statements for the three and nine months ended September 30, 2008 and 2007, Rusoro had current liabilities of approximately $46 million and cash of approximately $21 million, and incurred a loss before income taxes of approximately $74.1 million for the nine months ended September 30, 2008. Rusoro also has long-term debt of $80 million (Hambro/Endeavour Loan), which when aggregated with Gold Reserve’s obligations under Gold Reserve’s 5.5% Senior Subordinated Convertible Notes, equates to an annual interest obligation of approximately $14 million. Furthermore, the entire $80 million loan is due in full on June 10, 2010, yet Rusoro fails to explain how it intends to repay any part of that amount.
• Rusoro’s claim that Gold Reserve shareholders would own approximately 30.4% of the combined company is misleading. Rusoro’s calculation is based on a combined company on an “as issued” non-diluted basis and implies that no additional Rusoro shares will be issued by the combined company. If Rusoro’s options and warrants are exercised and the Hambro/Endeavour Loan converts into shares in the future, Gold Reserve shareholders would only own approximately 22% of the combined company. Furthermore, Rusoro has a history of growth through acquisitions financed by issuing additional shares. Given its aggressive growth plans and the current dislocation in the debt markets, Gold Reserve believes that Rusoro would need to issue a substantial amount of additional equity in the combined company, thereby further diluting the collective ownership of Gold Reserve shareholders.
• Based on Rusoro’s track record, Gold Reserve does not believe Rusoro has the operational expertise necessary to even maintain, much less enhance, the value of the combined company. Rusoro has often failed to achieve its own forecasts in almost all categories, and Rusoro’s management is failing to meet production rates, ore grade and metallurgical recovery projections and is operating at a loss despite historically high gold prices. In fact, Rusoro’s key management has no demonstrated experience in developing gold mining properties, which Gold Reserve believes is reflected in Rusoro’s poor operational results at its Choco 10 mine, where Rusoro’s cost of production exceeds the price at which it sells its gold. During the three months and nine months ended September 30, 2008, Rusoro realized an average gold sales price of $676 and $663 per ounce, respectively, which represents a discount to the international gold spot price of approximately 19% and 26%, respectively, for the same periods. Taken together, there is no reason to believe that Rusoro will be any more successful at achieving its plan and forecasts for the combined company than Rusoro has been at achieving its own plan and forecasts in the past.
• Financial and mining experts raise material concerns regarding Rusoro. The Gold Reserve Board retained two independent experts to review Rusoro’s public disclosures regarding its financial statements and its mining operations. Rosen & Associates Limited, an independent litigation and investigative accountant, reviewed Rusoro’s public financial disclosures and concluded, “In our opinion, Rusoro’s financial reporting of its historical results and of the pro forma combined entity does not provide sufficient information for GRI’s shareholders to make an informed assessment about the Offer. The available information indicates that there are serious concerns that need to be addressed, such as the discrepancies in Rusoro’s gold sale prices, its accounting for production costs and its extensive related party dealings.” Behre Dolbear & Company (USA), Inc., an independent mining industry consultant, reviewed Rusoro’s public technical disclosure concerning its operations and concluded, “Succinctly, based on our review, Behre Dolbear has concluded that Rusoro’s filings lack sufficient information from which a typical investor could make an informed decision.” 1
• Rusoro has accessed Gold Reserve’s Choco 5 Project without Gold Reserve’s authorization and has conducted unauthorized exploration sample drilling. In May or early June 2008, agents or employees of Rusoro’s subsidiary Promotora Minera de Guayana, S.A. entered onto Gold Reserve’s Choco 5 Project and obtained drill samples without Gold Reserve’s permission. Since Gold Reserve first became aware of Rusoro’s unauthorized actions, Gold Reserve has repeatedly demanded the drilling results improperly obtained by Rusoro. Rusoro has acknowledged possession of the drilling data, but has never provided any of those results to Gold Reserve. Since Rusoro has stated that one of the four reasons for its Offer is to “identify opportunities to optimize the development of Gold Reserve’s Choco 5 Project,” Gold Reserve believes that Rusoro must have, or must think that it has, material information regarding the value of the Choco 5 Project. Importantly, while Rusoro had this data in its possession in formulating its Offer, to date, neither Gold Reserve nor its shareholders have had the same benefit of this information in their evaluation.
• There is no reason to believe that Gold Reserve shareholders would benefit from Rusoro’s purported “established” relationship with the Venezuelan government. Rusoro’s contention that Gold Reserve shareholders will benefit from Rusoro’s “established” relationship with the Venezuelan government is unsubstantiated. Rusoro continues to be subject to the same mining law and government actions as all mining companies operating in Venezuela. Despite Rusoro’s claim that is has an “established” relationship with the Venezuelan government, a Venezuelan government entity, Ferrominera del Orinoco (“FMO”), has instigated legal proceedings against a Rusoro subsidiary, Promotora Minera de Guayana S.A. (“PMG”), asking for the annulment of a shareholders meeting whereby FMO’s equity stake in PMG was diluted from 30% to 0.02%. In addition, Rusoro has not obtained all of the permits required by the Venezuelan government for the Choco 10 mine and Cooperativa de Molineros El Callao II RL has commenced an action against Rusoro in the Venezuelan courts claiming possession of the Choco 10 mine site and damages in the amount of approximately US$10,500,000 for eviction from the Choco 10 mine site. Neither the Board of Corporación Venezolana de Guayana, a Venezuelan state company, nor the council of Ministers has approved Rusoro’s claimed 95% ownership interest in Choco 4 and Choco 10. Finally, if the Venezuelan government reforms the mining law in a manner that allows mining companies to participate profitably in mixed enterprise joint ventures, which Gold Reserve believes is likely, then Gold Reserve believes its shareholders would benefit more fully without a dilutive combination with Rusoro.
• Gold Reserve’s financial advisors, J.P. Morgan Securities Inc. and RBC Capital Markets, have each provided a written opinion dated December 30, 2008 that the consideration offered under the Rusoro Offer is inadequate, from a financial point of view, to Gold Reserve shareholders.
• The Rusoro Offer is not a “Permitted Bid” under Gold Reserve’s Shareholder Rights Plan. At the time of its Offer, Rusoro had the ability to make a Permitted Bid under Gold Reserve’s Rights Plan, but chose not to make a Permitted Bid. In addition, Gold Reserve believes Rusoro collected information regarding Gold Reserve’s Choco 5 Project through unauthorized drilling, thereby precluding the Rusoro Offer from being a Permitted Bid under the amended Rights Plan, which excludes any takeover bid made by a party who possesses confidential information concerning Gold Reserve without an appropriate confidentiality agreement. Similarly, despite Rusoro’s claims to the contrary, Gold Reserve believes that Rusoro has also benefited from direct or indirect access to confidential information regarding Gold Reserve’s operations because Rusoro’s financial advisor in connection with the Offer, Endeavour Financial, has served for a number of years as Gold Reserve’s financial advisor.
• The timing of the Rusoro Offer is opportunistic and disadvantageous to Gold Reserve shareholders. Gold Reserve believes that the Rusoro Offer is opportunistically timed to take advantage of recent low trading prices of Gold Reserve Class A Shares, which, like the share prices of many companies, have been depressed at least in part as a result of the global economic crisis. The Board believes the Rusoro Offer is also timed to deprive Gold Reserve shareholders of the benefits of the expected near term announcement and implementation of mining sector reform in Venezuela.

Shareholders are encouraged to read Gold Reserve’s Directors’ Circular and Schedule 14D-9, which are available at www.sedar.com or www.sec.gov respectively, to carefully consider the reasons for the Board’s recommendation.

J.P. Morgan Securities Inc. and RBC Capital Markets are acting as financial advisors to Gold Reserve. Fasken Martineau DuMoulin LLP and Baker & McKenzie LLP are serving as legal advisors.

Gold Reserve Inc. is a Canadian company, which holds the rights to the Brisas gold/copper project and the Choco 5 gold exploration property in Bolivar State, Venezuela.