By Thomas Biesheuvel & Irina Savu - Sep 11, 2013
Gabriel Resources Ltd. (GBU), backed by billionaire hedge-fund manager John Paulson, threatened to seek as much as $4 billion of damages should Romanian lawmakers vote to oppose its gold mine project in the country.
“We have a very, very robust case, and we believe we have claims up to $4 billion that we can send to the Romanian state,” Gabriel Resources Chief Executive Officer Jonathan Henry said today in a telephone interview. “We will go ahead and do that if the vote is against.”
Gabriel Resources, also backed by Newmont Mining Corp. (NEM) and BSG Resources Ltd., has spent more than a decade trying to build the $1.4 billion mine amid opposition by campaigners to the use of cyanide to extract gold. It agreed last month to increase the government’s stake to 25 percent from about 19 percent and accept a jump in mining royalties to 6 percent from 4 percent.
The company slumped 54 percent in Toronto trading on Sept. 9 after Prime Minister Victor Ponta said that parliament should “quickly” vote on whether to abandon the Rosia Montana project because of levels of opposition. Crin Antonescu, head of the junior ruling coalition National Liberal Party, and opposition leader Vasile Blaga called for the development to be terminated.
“If parliament rejects this, they are leaving themselves exposed as a country to a significant lack of foreign direct investment,” Henry said. “I can’t see why other foreign investors would see Romania as the destination of choice. Romanian politicians have to take that on board.”
Gabriel Resources said Sept. 9 that it would “assess all possible actions open to it” including litigation should draft legislation making way for the development be rejected. Ponta yesterday responded by saying that the country “wouldn’t want to pay anything” and was ready to defend itself in court.
Last month, the government said the gold development was of “exceptional national interest” in a statement on its website.
Gabriel, which estimates that the site holds 17 million ounces of gold, will also need an environmental permit before starting to raise the $1.4 billion it needs to develop the mine.
Government spokesman Andrei Zaharescu declined to comment.
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