Caracas (Platts)--28May2009

Canada's Gold Reserve has vowed to challenge the Venezuelan government's
cancellation Wednesday of its second concession in the Brisas Project, an area
of Bolivar state thought to contain one of the largest gold deposits in South
America.

     "The decree is erroneous and we will fight for our legal rights in the
matter,"  Gold Reserve de Venezuela president Arturo Rivero told Platts late
Wednesday.

     The government Wednesday cancelled Gold Reserve's rights to the El Pauji 
concession, where the company dumps waste material from its neighboring Las
Brisas gold project. Its rights to that concession were cancelled Friday.

     Gold Reserve believes the moves were due to the government's plan to mine
the area itself in a joint venture arrangement with Russian partners.

     "As long as we get fair compensation for our investment in Las Brisas 
we are willing to work with the government and the partner they choose,"
Rivero said. 

     The government formed a joint venture with Rusoro Mining Ltd., a publicly
traded Canadian-Russian firm., late last year to develop the adjoining Las
Brisas and Las Cristinas gold properties in tandem. Gold Reserve vowed to seek
international arbitration to resolve the matter and seek $5 billion in
compensation. 

     Rivero says President Hugo Chavez now has a Russian state gold company in
mind for the project.  

     Las Brisas has estimated gold reserves of 10.2 million ounces of gold and
1.4 billion pounds of copper, according to Gold Reserve.

     Last week, Chavez announced the nationalization of several iron companies
in the country to pave way for a large state-run enterprise, without giving
details.
--George Soules, newsdesk@platts.com