As filed on March 31, 2009

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The information presented or incorporated by reference in this Annual Report contains both historical

information and forward-looking statements (within the meaning of the Securities Act (Ontario), Section 27A of the

Securities Act and Section 21E of the Exchange Act) that may state the Company’s or its management’s intentions,

hopes, beliefs, expectations or predictions for the future. In this report, forward-looking statements are necessarily

based upon a number of estimates and assumptions that, while considered reasonable by management at this time, are

inherently subject to significant business, economic and competitive uncertainties and contingencies. We caution that

such forward-looking statements involve known and unknown risks, uncertainties and other risks that may cause the

actual financial results, performance, or achievements of the Company to be materially different from our estimated

future results, performance, or achievements expressed or implied by those forward-looking statements.

These forward-looking statements involve risks and uncertainties, as well as assumptions that may never

materialize, prove incorrect or materialize other than as currently contemplated which could cause the results of the

Company and its consolidated subsidiaries to differ materially from those expressed or implied by such forwardlooking

statements. The words "believe," "anticipate," "expect," "intend," "estimate," "plan," "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. Numerous factors could cause actual results to differ materially from those in the

forward-looking statements. See - Risk Factors in the AIF. Due to risks and uncertainties, including risks and

uncertainties identified above and in this Annual Report, actual results may differ materially from current

expectations.

Numerous factors could cause actual results to differ materially from those in the forward-looking

statements, including without limitation: concentration of operations and assets in Venezuela; corruption and

uncertain legal enforcement; requests for improper payments; competition with companies that are not subject to or do

not follow Canadian and U.S. laws and regulations; the outcome of any potential proceedings under the Venezuelan

legal system or before arbitration tribunals as provided in investment treaties entered into between Venezuela, Canada

and Barbados to determine the compensation due to the Company in the event that the Company and the Venezuelan

government do not reach an agreement regarding construction and operation of the Brisas Project, or the Brisas

Project is transferred to the Venezuelan government and the parties do not reach agreement on compensation;

regulatory, political and economic risks associated with Venezuelan operations (including changes in previously

established laws, legal regimes, rules or processes); the ability to obtain, maintain or re-acquire the necessary permits

or additional funding for the development of the Brisas Project; the result or outcome of the leave for appeal for

Rusoro Mining Ltd. ("Rusoro") with respect to the interlocutory injunction restraining Rusoro from proceeding with

any unsolicited takeover bid of the Company until the conclusion and disposition at trial; significant differences or

changes in any key findings or assumptions previously determined by us or our experts in conjunction with our 2005

bankable feasibility study (as updated or modified from time to time) due to actual results in our expected construction

and production at the Brisas Project (including capital and operating cost estimates); the method and manner of our

determination of reserves, risk that actual mineral reserves may vary considerably from estimates presently made;

impact of currency, metal prices and metal production volatility; fluctuations in energy prices; changes in proposed

development plans (including technology used); our dependence upon the abilities and continued participation of

certain key employees; the prices, production levels and supply of and demand for gold and copper produced or held

by The Company; the potential volatility of the Company’s Class A common shares; the price and value of the

Company’s notes, including any conversion of notes into the Company’s Class A common shares; the prospects for

exploration and development of projects by the Company; and risks normally incident to the operation and

development of mining properties. This list is not exhaustive of the factors that may affect any of the Company’s

forward-looking statements.

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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 the Company website. All subsequent written and oral forwardlooking

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 or otherwise revise any forwardlooking

statements or the foregoing list of assumptions or factors, whether as a result of new information, future

events or otherwise, subject to its disclosure obligations under applicable rules promulgated by the U.S. Securities and

Exchange Commission (the "SEC").

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.

OVERVIEW

The following discussion of the Company's financial position as of December 31, 2008 and results of

operations for the year ended December 31, 2008 is to be read in conjunction with the Company's consolidated

financial statements and related notes. We prepare our consolidated financial statements in U.S. dollars in accordance

with accounting principles generally accepted in Canada. These financial statements together with the following

management's discussion and analysis, dated March 30, 2009, are intended to provide investors with a reasonable

basis for assessing the financial performance of the Company as well as certain forward-looking statements relating to

the Company's potential. Additional information on the Company can be found at www.sedar.com, www.sec.gov or

the Company’s web-site www.goldreserveinc.com. The Company has one operating segment, which is the exploration

and development of mineral properties. Segmented financial information by geographic region is shown in Note 12 to

the consolidated financial statements.

The Company is engaged in the business of exploration and development of mining projects and continues to

focus the majority of its management and financial resources on its most significant asset, the Brisas gold and copper

project ("Brisas Project", "Brisas" or the "Brisas Property"), and to a lesser extent the exploration of its Choco 5

property, both located in Bolivar State, Venezuela. Historically we have financed the Company’s operations through

the sale of common stock, other equity securities and convertible debt. Management expects Brisas, if constructed, to

be similarly financed along with project and corporate debt financing.

Venezuela continues to experience high levels of inflation, political and civil unrest, government

involvement in strategic industries and during the last several years has proposed changes in regulatory regimens. As

discussed in greater depth under fisk factors contained in the AIF, our operations and investments in Venezuela have

been adversely impacted and could continue to be adversely affected in the future by Venezuelan regulatory changes

and/or domestic and international government policies.

We are dependent on Venezuelan regulatory authorities issuing to us various permits and authorizations

relating to Brisas that we require prior to completing construction of and subsequently operating Brisas. A new mining

law has been discussed by the current Venezuelan administration for a number of months and, as a result, the rules

and regulations related to the Venezuelan mining sector are in transition. Although various alternative changes have

been addressed publicly in the past 12 months, the specific provisions of any new law is still unclear and the

government has not yet announced when any new mining law will be approved and enacted.

The Venezuelan Ministry of Mines (“MIBAM”) approved the operating plan for Brisas during 2003 which

was a prerequisite for submitting the Brisas Environmental and Social Impact Study for the Exploitation and

Processing of Gold and Copper Ore (Estudio de Impacto Ambiental y Sociocultural) (“ESIA”)to the Venezuelan

Ministry of Environment (“MinAmb”). MinAmb approved the ESIA in early 2007 and in March 2007 issued the

Authorization for the Affectation of Natural Resources for the Construction of Infrastructure and Services Phase of the

Brisas Project (the “Authorization to Affect”).

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Based on the issuance of the Authorization to Affect in 2007, we commenced significant pre-construction

procurement efforts with the assistance of SNC-Lavalin awarding contracts for Brisas site prep and construction camp

facilities and placing orders for the gyratory crusher, pebble crushers, SAG and ball mills, mill motors and other

related processing equipment, early-works construction equipment and various other site equipment totaling

approximately $125.3 million, accelerated detailed project engineering, hired a number of senior technical staff,

completed the sale of approximately $103.5 million of convertible notes and $74 million in new equity, launched a

number of environmental and social initiatives and commenced preparation of the Brisas site for construction

activities.

In May 2008, the Company received notification from the MinAmb of its decision to revoke the

Authorization to Affect. MinAmb referenced in its formal notice the existence of environmental degradation and

affectation on the Brisas property, the presence of a large number of miners on the property and the Imataca Forest

Reserve as the basis for their decision. Venezuelan legal counsel has advised management that the Authorization to

Affect was granted to our Venezuelan subsidiary by MinAmb, a competent authority, following the corresponding

legal procedure and in accordance with applicable laws and regulations. At the time the Authorization to Affect was

issued, there was no legal norm prohibiting MinAmb from authorizing performance of mining activities in the area of

the Brisas Project. Further, in response to the various points contained within the revocation notice, Venezuelan legal

counsel has advised management that the revocation of the Authorization to Affect is groundless and legally

unsupported.

Shortly after the revocation the Company filed an appeal with the Minister of MinAmb outlining the factual

flaws referenced in the revocation and requested the Minister to reinstate the Company’s Authorization to Affect.

MinAmb has not yet issued an official decision regarding our appeal and on advice of counsel and in order to protect

our rights under Venezuelan law, the Company filed an appeal with the Political Administrative Chamber of the

Venezuelan Supreme Court on March 25, 2009. Although the filing in the Supreme Court is more formal that the

appeal filed with MinAmb, the substance of our arguments and the merits of our position remain substantially the

same.

Since we received the revocation notice, management has communicated with members of MinAmb,

MIBAM and other government officials with the intention of obtaining a resolution to the impasse. A number of

alternatives have been discussed with government officials. Although these discussions appear to be consistent with

the proposed changes to the mining law that have been addressed publically in the past 12 months, the final provisions

that might be enacted are still unclear.

We believe that (1) through the new Mining Law or another legal instrument the Venezuelan government

may seek to participate in all mining projects through a state company or joint venture, (2) if the government

participates in the mining projects, it may pay its pro rata share of investments to date and its share of future capital

costs relating to the projects, and (3) the government believes that the Brisas Project and the Las Cristinas project,

which is contiguous and to the north, should be combined into a single project in which the benefits to all participants,

including the local communities and the government, will be maximized. Until the government clearly and

unequivocally announces (1) the provisions of the new mining law and policies and, (2) its intentions regarding the

Brisas stand alone project or the Brisas/Las Cristinas combined project, we can give no assurance as to what the

outcome will be.

We believe there are three courses of action available to us in Venezuela at this time:

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If the government seeks to enter into mixed enterprise joint ventures with mining companies operating in

Venezuela, we believe it will be possible that the Company and the Venezuelan government could reach an agreement

or arrangement on acceptable terms with respect to an enterprise through which the Company and Venezuela jointly

construct and operate the Brisas Project or a combined Las Cristinas and Brisas Project.

If an acceptable agreement or arrangement is not offered by the government to the Company, we would seek

to negotiate with the Venezuelan government an acceptable amount of compensation for our investment and rights in

the Brisas Project.

If we and the Venezuelan government were unable to reach an agreement as to a mutually acceptable amount

of compensation, we would pursue claims under Venezuela’s domestic legal system or through arbitration under

bilateral investment treaties entered into between Venezuela, Canada and Barbados, for compensation that will reflect

our approximately $250 million investment plus interest over our 17 year investment period, as well as a claim for lost

profits reflecting the economic conditions prevalent at the time of the revocation of the permit.