Vancouver – Gold Reserve (GRZ-T, GRZ-X) won another fight in its battle against Rusoro Mining (RML-V, RMLFF-O) this week when the Ontario Superior Court of Justice denied Rusoro permission to appeal the injunction blocking its hostile takeover of Gold Reserve.
On April 2, Rusoro argued to an Ontario judge for the right to appeal an interlocutory injunction preventing it from trying to take over its Venezuelan neighbour. In its denial of permission to appeal, the Court said, “The motions judge was very much alive to all the issues raised by the moving parties and…he carefully analyzed the facts then applied well-established principles of law. In granting discretionary remedy, he made no error that would results in my doubting the correctness of his order.”
The Court based its decision on the fact that Rusoro had access to, and likely benefitted from, confidential information about Gold Reserve as a result of its relationship with Endeavour Financial (EDV-T). Endeavour was Gold Reserve’s financial advisor; it also, without telling Gold Reserve, advised Rusoro on preparing its takeover bid. The morning the bid was announced Endeavour emailed Gold Reserve and terminated their business relationship.
Three days after Rusoro announced its takeover bid Gold Reserve filed an action seeking to restrained Rusoro and Endeavour from proceeding. The interlocutory injunction issued in early February was an interim measure, designed to prevent Rusoro’s hand until the trial. At trial Gold Reserve says it will also seek monetary damages of $550 million.
For its part, Rusoro says it will seek $102.5 million in damages. The company withdrew its takeover bid hours after the interlocutory injunction was issued.
The injunction also forbade Endeavour from having any involvement with a hostile takeover bid for Gold Reserve. Further, the court ordered Rusoro and Endeavour to return all confidential information about Gold Reserve they held as well as anything produced from that information.
Aside from its battle with Gold Reserve, Rusoro is not doing too badly. In mid-March the company closed an $80-million financing, selling 133 million share for 60¢ a piece.
And in January the company produced a record 14,835 oz. gold at a cash cost of US$315 per oz. Rusoro is targeting 170,000 to 190,000 oz. gold production for 2009 and expects to keep its cash costs below US$400 per oz. The company plans to bring Increible 6 into production in the second half of the year and is working towards production at its San Raphael-El Placer project in the first quarter of 2010.
The company’s management has, though, been warned by the British Columbia Securities Commission to watch what it says. In a news release and an interview with company’s president, George Salamis, the company referenced gold production, ore, and orebodies with respect to the San Raphael-El Placer property, which has not seen an economic assessment. And Salamis made an insupportable statement about increasing production at Choco 10.
Gold Reserve’s share price has ranged between 75¢ and $1 since mid-February; the company has a 52-week range of 29¢ to $4.30 and has 58 million share outstanding. Rusoro’s share price has moved between 45¢ and 60¢ since early March; it has a 52-week range of 23.5¢ to $1.59 and has 397 million shares outstanding.