Thursday, September 5, 2013

Gabriel Resources’ Rosia Montana gold mine rests in Romanian parliament’s hands

Peter Koven 
| 13/09/04 | 

After years of delays and political turbulence, Gabriel Resources Ltd. may finally be on the cusp of building Europe’s biggest gold mine.

Gabriel’s saga has been one of the longest and most disappointing in Canada’s gold sector. The Whitehorse-based company has been trying to develop the Rosia Montana gold project in Romania since the 1990s, but has faced vicious opposition from anti-mining activists, which spread rhetoric against the project. Successive governments were reluctant to give Gabriel the go-ahead amid such a heated environment.

Things have changed. Current Prime Minister Victor Ponta won a convincing victory in last year’s election, and has majority control over parliament. That has allowed him to be far more aggressive than his predecessors in approving large capital projects that can boost the economy.

One of his priorities is Rosia Montana. Last week, his government approved a draft law that sets out a course for development of the mine. It now needs to be approved by parliament.

“What gives us the comfort this is real and the process will happen is that we are in the early term of a new parliament that has a significant majority of the population behind them,” Gabriel chief executive Jonathan Henry said in an interview. “And therefore, they can actually get things done.”

Of course, there is still strong opposition to Rosia Montana. Over the past couple of days, thousands of people have taken to the streets in Romania to protest the project. They are particularly concerned about the use of cyanide, which is common in gold mines. The crowds may grow even larger and more volatile if parliament approves the draft law.


But Mr. Henry takes comfort from polls that suggest 70% to 75% of the Romanian population is supportive. He also said that a number of politicians visited the project, which helped to counter a lot of the criticism that was spread by opponents. For example, one common refrain is that the mine would wipe out the local village. Gabriel says that is nonsense. It claims there is pollution from 2,000 years of unregulated mining, and it would spend money to clean that up.

If the project is ultimately approved, the years of delays will have been well worth it for Gabriel. Rosia Montana has more than 17 million ounces of gold resources, including 10.1 million ounces of reserves. Gabriel would hold 75% of the mine, according to the draft law, with the state holding the balance. It is the largest gold resource on the continent.

The law sets a timetable for Rosia Montana that sees first production in late 2016. While that may seem far-fetched for longtime followers of this story, Mr. Henry maintained that it is achievable.

“It’s very much up to the parliamentary process,” he said. “If there’s an overwhelming majority that want this project to go ahead, it’s up to them to make a quick decision and we’ll get on with things. Unfortunately, history shows that things get delayed on this project.”

Gabriel has already poured an estimated US$550-million into Rosia Montana, according to BMO analyst John Hayes. “The introduction of the law demonstrates that the government is engaged on the project,” he wrote in a note.

Financial Post

pkoven@nationalpost.com

No comments: