Gabriel Resources : Romania’s Change Of Govt Improved Dialog On Gold Mining Project

'The recent change in Government has resulted in a more active dialogue with senior members of the Government and key officials, and a greater interest in the full range of benefits that will flow to Romania as a result of the Rosia Montana Project,' Gabriel Resources CEO Keith Hulley said in the opening of the report released Thursday.

'As a result, we are seeing an increase in the political will to see our project move forward,' he added.

The company also reminded in its report that Romanian President Traian Basescu underscored the importance of the Rosia Montana gold mining project during a final presidential debate and Economy Minister Adriean Videanu included the project in the country's governing program.

On the other hand, the report notes, Romania's Environment Minister Laszlo Borbely has voiced skepticism about the project. The company also notes Borbely has publicly stated his intention to visit Rosia Montana, while Basescu has declared his intention to discuss the project in the CSAT, Romania's council on national security issues.

The gold mining project in Rosia Montana, western Romania, which has been on the table since the 1990s, is highly controversial because of the environmental issues the investment would cause because it entails cyanide mining. Another issue of concern is the preservation of archeological sites in the area.

The last key hurdle the Rosia Montana Gold Corporation, a joint-venture with the Romanian state, needs to pass is an environmental impact study approval by the Environment Ministry. Minister Borbely has repeatedly said the final decision belongs to the Government, but warned authorities must be very careful about approving a cyanide mining project after the cyanide spill ten year years ago.

On the night of January 30, 2000, a dam holding contaminated waters, owned by Romanian-Australian firm 'Aurul' Baia Mare, burst, spilling 100,000 cubic meters of cyanide-contaminated water over farmland and then into the Somes river. The polluted waters eventually reached the Tisza and then the Danube, killing large quantities of fish in Hungary and the former Yugoslavia. Hungary demanded USD100 million as reparations for the damage caused by the accident.

Hungary's ambassador to Bucharest, Oskar Fuzes, said in February Hungary opposes the gold mining project in Rosia Montana in western Romania, but underscored the decision belongs to Romanian authorities. He said that if the Romanian Government decides to give green light to the mining project, Hungary will have 'about 300 questions on the matter' targeting common financing to prevent environmental accidents and the protection of archeological sites in the area.

Canada's Gabriel Resources owns 80% of Rosia Montana Gold Corporation (RMGC), the joint venture that would carry out the mining project, while the Romanian state owns 19.3%. The remainder belongs to other shareholders.

Gabriel Resources Budgets Investments Worth EUR27M For Rosia Montana Projects In '10

Canadian company Gabriel Resources allotted a EUR27.3 million budget for the Rosia Montana project in 2010, a sum required for asset maintenance and the environment impact study.

After the conclusion of the environment evaluation, Gabriel Resources estimates additional spending reaching RON66.1 million for the purchase of new plots or the acceleration of activity to obtain the permits and agreements needed for construction approvals, according to the company's financial report.These expenses will be added with EUR4.26 million in costs.

The Canadian company posted in 2009 a loss of EUR18.9million, over six times higher than the EUR2.8 million loss seen in 2008.Company expenses grew by 60% in 2009, to EUR15.64 million, from EUR9.8 million in 2008.In the fourth quarter, Gabriel Resources posted a loss of EUR7.63 million, more than double the EUR2.8 million loss seen in the same interval of 2008.The company holds 80.46% of the share capital of Rosia Montana Gold Corporation (RMGC), while the Romanian state holds a 19.31% stake, through the Minvest Deva company, and the remaining 0.23% of shares are held by other parties.RMGC is developing the mining project at Rosia Montana, in the western Romanian Apuseni Mountains, with projected costs reaching more than $1 billion, through which the company expects to extract 626,000 ounces of gold per year for five years since the launch of the mine. An ounce of gold weighs 28.3 grams.

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