TORONTO (Reuters) - Shares of Canada's Gabriel Resources (GBU.TO: Quote) plunged on Thursday after the miner said an environmental review of its controversial Rosia Montana project in Romania had been suspended, delaying construction of the gold mine.
Gabriel stock had shed 76 Canadian cents, or 21.4 percent, to C$2.80 by midafternoon on the Toronto Stock Exchange. It was the biggest percentage loser on the index.
Romania's Ministry of Environment suspended its environmental assessment of the project -- which would be Europe's biggest gold mine -- because of a court challenge to the validity of an urbanism certificate, Gabriel said in a statement, calling the move "outrageous."
The Toronto-based miner said the certificate is "merely an information document detailing the list of documents needed to apply for a construction permit."
It said this type of document is not capable of being challenged in court, and was unrelated to the assessment process. The challenge came from two nongovernmental organizations.
The project, which requires the relocation of thousands of villagers in the Carpathian Mountains, had been expected to yield gold in late 2008 or early 2009.
The company said on Thursday it now expects construction to begin in the first quarter of 2008, with the first pour of gold in the first quarter of 2010.
An analyst, however, said the project is more likely to begin commercial production in 2011.
"The suspension of the review process suggests that the Ministry of Environment is supporting the NGOs' claim and possibly trying to delay or, even worse, derail the entire Rosia Montana project -- although the latter would be an extreme case," Paul Burchell, of Dundee Securities, wrote in a research note.
The Rosia Montana project has been repeatedly delayed by reluctant authorities and green groups that say drilling would destroy ancient Roman mines, and that using cyanide will harm the environment.