Also in the 13D was this letter to the GRZ board of directors from West Face Capital:

To the Board of Directos of Gold Reserve Inc.

West Face Capital Inc. is the beneficial owner of 6.5 million shares and $10.220
million face value of convertible debentures of Gold Reserve ("GRZ"). As a
significant holder of GRZ securities, West Face Capital would like to express
its views concerning the manner in which the directors of Gold Reserve fulfill
their duties to the company and its security holders in the circumstances facing
GRZ today. As described below, in circumstances where GRZ has one key asset,
being a litigation claim against Government of Venezuela, West Face Capital
believes that it is incumbent upon the directors of GRZ to take the necessary
and appropriate actions to increase shareholder and other stakeholder value by,
among other things: (a) preserving its cash and avoiding transactions that may
dilute shareholder value; (b) creating a more optimal capital structure through
debt repurchases; and (c) carrying out an auction process open to all bidders
aimed at maximizing value.


Preserve Cash/Equipment/Avoid Dilution


In order to avoid diluting GRZ shareholder value, West Face Capital believes
that GRZ should immediately cease any negotiations to use its cash and equipment
to buy a new development project or merge with a company that has the same
effect. These kinds of potentially dilutive transactions should be avoided, at
least until such time as a formal auction and sale process has concluded. West
Face Capital believes that any new development project could lead to increased
financial risk or further shareholder dilution as the upcoming June 2012
convertible debenture refinancing could be put into question.


Debt Repurchase


Currently, GRZ has a capital structure that is not optimal with cash earning
almost zero interest while the debt is being paid 5½%. Given that the debentures
are trading at a discount to par value, GRZ also has the ability to reduce debt
at an effective yield in excess of 15% (to the 2012 put date). Any such
purchases below par value will be incremental to the net asset value of GRZ
common shares. West Face urges the company to be more proactive and aggressive
in creating a more optimal, cost effective capital structure. This can be done
by GRZ repurchasing convertible debentures in tranches, and should be started
immediately, before and/or during an auction sale process.


Auction Sale Process


In the circumstances facing GRZ, West Face Capital believes that GRZ should
allow its shareholders to decide the future course of the company by conducting
a formal auction and sale process and allowing its shareholders to accept or
reject the proposal made by the highest bidder.


West Face Capital believes GRZ's core assets of equipment, drilling and
engineering data, as well as the Las Brisas arbitration litigation claim, have
significant value and that a third party may be willing to pay a substantial
premium to current market value for these assets, preferably with cash or highly
liquid equity. It is West Face Capital's view that the implied value the market
is attaching to this litigation asset is de minimis.


In order to maximize value for GRZ and its security holders, West Face Capital
believes that the auction and sale process should be open to all participants
that are willing to table a formal bid. Among other things, this process should
also provide the Government of Venezuela with the opportunity to settle their
legal obligations to GRZ by making a cash offer to the company. West Face
Capital believes shareholders should be given the opportunity to vote on any
proposals that may emerge. If no settlement or takeover offer emerges that is
acceptable to shareholders, then GRZ should be fully able to proceed with its
current arbitration litigation plan.


West Face Capital is grateful for the opportunity to express its views as a
significant security holder of GRZ. It is motivated only by a desire to maximize
the value of its investment in GRZ. It looks forward to working with the board
of directors of GRZ to achieve that result.


West Face Capital