Gabriel Resources Ltd. (TSE:GBU)’s gold mining project in northwestern Romania has been rejected by a Romanian parliamentary commission, likely bringing the company’s 14 year bid to open Europe’s largest open pit gold mine to an end, reports Armina Ligaya for the Financial Post. The news pushed Gabriel Resource’s stock price down 10% on the Toronto Stock Exchange.
“It doesn’t mean the plan is dead in the water. What they have said is that they believed that a project that was as complex as our project shouldn’t go through as a separate bill,” said Gabriel Resources Ltd. (TSE:GBU) CEO Jonathan Henry. He thinks that there is still a good chance that a bill dealing with gold and silver mining more generally will allow the project to move forward.
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But political protest against the gold mines, which would damage the environment around four mountains and three villages in Rosia Montana area, have been growing steadily and the parliament seems to be reacting to popular sentiment. The project would use 12,000 tons of cyanide per year, a cause for serious concern among locals, and would almost entirely destroy archaeological sites in the area. If Gabriel Resources Ltd. (TSE:GBU) hasn’t managed to get the proper permits for more than a decade, and the political opposition is the strongest it’s ever been, there’s really not much reason for optimism.
Gabriel Resources doesn’t have other options
But Gabriel Resources Ltd. (TSE:GBU) doesn’t have many other options. The Rosia Montana Gold Corporation is the company’s principal asset (it has an 80% stake), and the Romanian parliament has essentially declared that asset valueless. It’s hard to imagine Gabriel Resources Ltd. (TSE:GBU) accepting such a devastating decision without looking for some alternative.
Romanian Prime Minister Victor Ponta is on record saying that he rejects the deal, but according to Henry those statements were taken out of context. “Victor Ponta did not say they intend to reject the project… I’ve got the full press transcripts of the press conference. He didn’t say that,” says Henry.
Rosia Montana is the largest gold resource in Europe
The Rosia Montana area is the largest gold resource in Europe, so there’s no chance that mining interest will simply fade away, but until they can convince Romanians that the deal is in their national interest, no one will be extracting it anytime soon.