This Stock Is Soaring +40% On Anticipation Of A Windfall Cash Settlement
Gold Reserve had invested US$300 million in the Brisas Project in Venezuela before the government of Venezuela expropriated the gold project in 2009.
One of today’s biggest gainers on the TSX-Venture is Gold Reserve Inc. (TSX-V:GRZ), GRZ shares were up 39% at last check.
GRZ.V (Weekly)
The company didn’t even publish a news release today, but there was an important development that has resulted in the rerating that is underway.
Before we discuss today’s new development, let’s understand what Gold Reserve is and set the context for today’s share price surge. Gold Reserve isn’t a typical exploration or development company. In fact, GRZ isn’t drilling a project or even planning to drill anything anytime soon. Instead, the company is focused on managing and monetizing a collection of legal and arbitral claims related to the expropriation of its Venezuelan gold assets. These claims include the CITGO Proceedings, Portugal Attachment Proceedings and the Siembra Minera Arbitration Proceedings.
Gold Reserve stands to receive a windfall payment from the country of Venezuela due to a US$740 million ICSID arbitration award related to the expropriation of its “Brisas Project” gold‑copper concession back in 2009.
Before the expropriation in 2009, Gold Reserve had invested US$300 million in Brisas, advancing the project to the construction decision stage of the mining life cycle. Brisas hosts proven and probable reserves of approximately 9.2 million ounces of gold and 1.2 billion pounds of copper in 414 million tonnes of ore grading 0.69 grams of gold per tonne and 0.13% copper in an open-pit deposit setting.
🏆 Arbitration & Award
In September 2014, the International Centre for Settlement of Investment Disputes (ICSID) found Venezuela had violated its obligations under the Canada‑Venezuela Bilateral Investment Treaty by revoking Gold Reserve's mining permits for the Brisas and adjoining parcels—stranding a project that had already attracted hundreds of millions in investment.
The tribunal awarded Gold Reserve US$713 million plus pre‑award interest (~US$22 million) and post‑award interest accruing at about US$51,000 per day, plus US$5 million in legal costs—bringing the total to approximately US$740.3 million.
💼 Settlement Agreement: What It Covers
To facilitate collection (starting in 2016), Venezuela entered a settlement with Gold Reserve that includes:
US$792 million to fully satisfy the ICSID Award and accrued interest.
US$240 million to purchase Gold Reserve’s proprietary technical and geological “mining data.”
That brings the total expected cash to about US$1.032 billion in structured payments.
💵 Payment Schedule & Collateral
The deal entailed multiple monthly installments:
Initial US$40 million received in mid‑2017.
Around 20 monthly payments of US$29.5 million and 3 of US$40.8 million, totaling about US$712 million.
A final US$285 million due by June 2019.
Venezuela also pledged US$350 million in financial instruments held in trust as collateral.
Enforcement & Collection Efforts
Although initial payments began, Venezuela has delayed or defaulted on large portions of the settlement (about US$994 million delinquent, including interest).
To enforce the award, Gold Reserve has:
Obtained attachment orders in the U.S. and Portugal against Venezuelan assets, including shares and bank accounts tied to PDV‑holdings and Citgo Petroleum.
Pursued legal and enforcement proceedings across multiple jurisdictions.
In Summary
Gold Reserve stands to receive a massive cash payment from Venezuela because:
It secured a binding ICSID tribunal award after being expropriated.
Venezuela agreed to pay over US$1 billion through a settlement to resolve the dispute.
While some payments have been made, significant amounts remain outstanding—and Gold Reserve is actively pursuing enforcement worldwide to collect the full amount.
Today’s development that Vitol, the global commodities trading giant, submitted a whopping US$10 billion+ bid for PDV Holding—Citgo’s U.S. parent company—in a Delaware court–ordered auction. This bid combines approximately US$5 billion in cash with credit bids to cover claims, and it also includes provisions for Venezuelan bondholders.
Citizens and investors (including Gold Reserve) stand to recover part of their Venezuela-related claims from auction proceeds. A larger total recovery pot—driven by Vitol’s bid—could mean a higher pay-out per creditor share. However, final distribution depends on seniority of claims, legal challenges, and court approval; larger bids like Vitol’s may drive higher recovery rates across the board.
While I am not clear on what percentage of its US$1 billion settlement, Gold Reserve shareholders actually stand to receive, there is a great deal of positive momentum with a final resolution likely over the coming months.
Despite not producing any drill results or economic studies, GRZ’s share price has been especially volatile; GRZ shares traded above $6/share in 2024 and traded as low as $1.90/share just six weeks ago.
Betting on legal outcomes isn’t for the faint of heart.
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