Gabriel Resources, a Toronto-listed gold company that has spent more than 20 fruitless years trying to open Europe’s biggest gold mine, has lost yet another CEO as its development prospects vanish.
Gabriel announced that Jonathan Henry, the Irishman who has led the company since 2010, was leaving immediately to “pursue other opportunities.” No other explanation was given for his departure and the hunt is under way for a new chief executive while chairman Keith Hulley acts as interim CEO.
Mr. Henry’s departure follows a familiar pattern at Gabriel, which went public on the Toronto exchange in 2000. Each new CEO vowed a breakthrough that would allow Gabriel to build an enormous open-pit gold mine in Romania, where its Rosia Montana project in the mountains of Transylvania has proven and probable reserves of 10.1 million ounces of gold and 47.6 million ounces of silver. But each CEO failed after running into a firestorm or protests that persuaded successive Romanian governments to withhold the final authorizations for mine construction.
Gabriel has gone through at least seven CEOs, including Mr. Henry, since the company’s launch and has spent more than US$700-million trying to develop the mine, with nothing to show for it.
Finding a new CEO might not be easy, since Gabriel is now more of an arbitration play for investors than a mining play. In 2015, after it became apparent the Rosia Montana project was going nowhere, Gabriel filed an arbitration case against the Romanian government at the International Centre for Settlement of Investment Disputes, claiming US$4.4-billion in alleged losses stemming from what the company claimed were several breaches of international investment treaties.
The waning prospects to see any gold coming out of the ground have nearly destroyed Gabriel’s shares. In 2011, a year after Mr. Henry was hired, Gabriel’s shares traded as high as $8. By the close of Monday, when Gabriel announced Mr. Henry’s departure, they were down to 32 cents, giving the company a market value of only $117-million.
At one time, Gabriel was considered a hot development play. There was no exploration risk, since Rosia Montana’s low-grade but vast reserves were well known. The region had been a mining site since pre-Roman days. Seven kilometres of the mines worked by the Romans still exist and are partly open to tourists. The seizure of gold deposits and bullion in the early second century by the Roman emperor Trajan was considered such a coup that Rome ordered 123 days of celebrations.
Eight or nine years ago, Gabriel’s fortunes were considered so promising that the company attracted a bevy of high-profile investors. At various points, they included Thomas Kaplan’s Electrum Group, John Paulson’s Paulson & Co. and BSG Capital Markets, which was controlled by Beny Steinmetz, the Israeli diamond tycoon whose BSG Resources Holding Company went into voluntary administration earlier this year in the face of legal proceedings stemming from bribery allegations. Newmont Mining, the biggest American gold-mining company, was also a shareholder.
But from the onset, the Rosia Montana project was held up by well-organized and well-funded protesters. Collectively known as the Rosia Rebels, they included local farmers who did not want their properties seized to make way for the mine, billionaires such as George Soros and celebrities such as Vanessa Redgrave. In 2005, a documentary, New Eldorado, which went on to win several awards, presented Rosia Montana’s gold as a curse, not an asset. Ms. Redgrave, an Oscar-winning actor, dedicated a lifetime-achievement award to Alburnus Maior, the Transylvania protest group that worked tirelessly to stop the mine.
The protesters argued the mine was too big and too destructive; it would bury some towns, fill an entire valley with waste and release enormous amounts of cyanide-laced sludge. For its part, Gabriel argued it would use the cleanest mining methods known to technology and that the project would generate US$24-billion for Romania’s economy and about 3,000 jobs over its 16-year mining life in a region that suffers from high unemployment and poverty.
Gabriel’s arbitration case seems nowhere near a resolution. The company’s suit reportedly suffered a setback recently when the Romanian government told the arbitrators they were not entitled to hear Gabriel’s claim. In the meantime, UNESCO, the United Nations cultural agency, has offered to evaluate Rosia Montana and its ancient mining galleries for possible inclusion on its World Heritage list. But Romania’s Culture Minister requested a delay in the evaluation until the arbitration case is resolved.
“We will fight for Rosia Montana to become a UNESCO World Heritage Site and not an open pit with a cyanide lake,” said Stéphanie Roth, the French-Swiss environmental activist who has devoted much of her career to stopping the Rosia Montana project.