Gabriel Resources Ltd.’s costly, epic battle to win approval for its controversial open-pit gold mining project in Romania is on the ropes.
Some 15 years of work and $583-million invested by the Whitehorse-based junior mining company hang in the balance as Gabriel frantically struggles to deal with comments made Monday by Romania’s Prime Minister that Gabriel’s massive Rosia Montana project likely won’t get approved amid protests from fiercely opposed citizens over environmental, heritage and economic concerns.
Gabriel says it’s examining all options if parliamentary debate on a draft bill to allow the project to proceed is halted, as the Prime Minister Victor Ponta has suggested. The launch of a lawsuit “for multiple breaches of international investment treaties” is among those, the company said.
Parliament should move as quickly as possible to reject the project given widespread popular and political opposition, Mr. Ponta said on Monday, according to reports.
Shares in Gabriel plunged more than 50 per cent to 73 cents, their lowest level in more than a year on the Toronto Stock Exchange.
The company said in a statement Monday that it is “urgently seeking confirmation of the actual statements made and clarification of the impact on the proposed permitting of the Project.”
The development is a stunning blow to Gabriel, which is now on its seventh chief executive officer – Jonathan Henry – since launching its bold attempt to build Europe’s biggest gold mine in the village of Rosia Montana in the Transylvanian mountains.
Just last week, Rosia Montana Gold Corp. – a Romanian company in which Gabriel owns an 81-per-cent equity interest, with the rest owned by the state – said it was confident Romania’s Parliament would vote for the project.
“Notwithstanding that the government approved the draft legislation in its meeting on Aug. 27, and recent polls illustrate a majority of support for progression of the Project across Romania it appears that the government has instituted emergency procedures to halt any debate in Parliament,” Gabriel said on Monday.
Apparently anticipating a huge negative impact on the stock, the company warned investors on Monday to exercise “caution in the trading of its shares.”
Gabriel has been beset over the years by a series of problems in getting the green light for the project. Local citizens have been up in arms over what they say will be the virtual destruction of their village. Critics say the area’s heritage, including 2,000-year-old Roman mining corridors and Rosia Montana’s historic centre, are threatened, while environmentalists and the local public are concerned over the use of cyanide in the extraction process. Skeptics say the government is giving away a key asset and getting only a modest amount of job-creation in return.
“It was only last week that the government intended to move forward with the development of Rosia Montana subject to a parliamentary vote that would increase the government’s stake in the project to 25 per cent and increase the royalty rate to 6 per cent,” BMO Nesbitt Burns analyst John Hayes said in a research note.
Gabriel says the mine would follow stringent environmental standards and special measures taken would preserve the local and national cultural heritage in Romania. Five years ago, the Rosia Montana project looked doomed when the government suspended its environmental review.
Company spokesman Bobby Morse said on Monday that Gabriel will not comment further.
Gabriel says the project would bring more than $24-billion (U.S.) to Romania as “potential direct and indirect contribution to GDP,” with the price of gold at $1,200 per ounce. Rosia Montana has estimated resources of 17.1 million ounces of gold and 81.1 million ounces of silver.