TORONTO--(Marketwire - March 10, 2011) - Gabriel Resources Ltd (
Highlights
- Permitting process on track, with the following key events taking place:
- Technical Analysis Committee ("TAC") review of the Rosia Montana Environmental Impact Assessment ("EIA") is ongoing
- Application for Archaeological Discharge Permit for Carnic open pit under review by Ministry of Culture and National Patrimony
- Zonal Urbanization Plans ("PUZ") for Industrial Area and Historical Centre of Rosia Montana are ongoing
- Restoration of historical town centre continues
- Cash and short-term investments at year-end of $121.5 million
- New corporate management team in place
Jonathan Henry, Gabriel's President and Chief Executive Officer, stated:
"The last quarter saw significant progress on the permitting front following the TAC process recommencing in September 2010. We are encouraged by the cooperation between Gabriel and all stakeholders in addressing the key issues to making Rosia Montana one of the most technically advanced and significant gold projects that is due to come on stream in the next few years. The much-needed economic development and employment opportunities this project will bring are clear to all stakeholders not only for the immediate region, but at a national level."
The Company has filed its Annual Financial Statements, Management Discussion & Analysis and Annual Information Form on SEDAR at www.sedar.com and these documents are also available on the Company's website at www.gabrielresources.com.
About Gabriel Resources Ltd ("Gabriel") / Rosia Montana Gold Corporation ("RMGC")
Gabriel is a Canadian-listed resource company engaged in the exploration and development of mineral properties in Romania and is presently in the permitting stage and preparing to develop its 80.46%-owned Rosia Montana gold project (the "Project"). Gabriel is committed to responsible mining and sustainable development in the communities in which it operates. Rosia Montana is expected to bring US$19 billion to Romania as direct and indirect investment according to recent estimates from British-based Oxford Policy Management. The Project will generate thousands of jobs while observing all Romanian and European environmental laws and also helping preserve important historic buildings as well as local cultural heritage. For more information please visit the Company's websites at www.gabrielresources.com and www.rmgc.ro.
Financial Performance
The fourth quarter net loss was $9.0 million and the full year loss was $22.7 million. The quarter and full year losses included foreign exchange losses of $5.8 million and $15.9 million respectively primarily due to a depreciation of the Euro, the currency in which the Company holds the majority of its cash balances. The full year loss also includes the benefit of a $6.9 million tax recovery, recorded in the third quarter. A total of $13.6 million and $38.2 million was spent on development projects during the fourth quarter and full year, respectively.
Liquidity and Capital Resources
Cash, cash equivalents and short-term investments at December 31, 2010 totaled $121.5 million. The base budget and forecast expenditures for 2011 on the Project and corporate overhead totals approximately $65 million. This budget includes only those expenditures and commitments to maintain the value of the Company's investment in mineral properties and to move the Project through EIA approval. The capital cost to complete the development of the Project -- including interest, financing and corporate costs -- is currently estimated at approximately US$1 billion. Once the EIA approval is granted, the Company will re-examine its financing options to optimize the development of the Project.
Rosia Montana Project Development
Political Situation
Throughout the year ended December 31, 2010, the Romanian Government continued to implement austerity measures intended to reduce Romania's budget deficit and comply with the requirements of the International Monetary Fund emergency aid programme. In keeping with the Government's efforts to create economic stimuli, the Project continues to receive support from members of the local and regional political leadership.
On September 17, 2010, the Ministry of Environment ("MOE") recommenced the TAC review of the Project's EIA, which had been suspended since the fall of 2007, and the Project is now receiving the objective analysis the Company has long sought.
Management continues to meet with stakeholders to understand their issues and concerns and to explain the benefits and impacts of the Project. Continued strong local and regional support is welcomed by the Company which seeks to grow that support as a direct result of the Company's outreach. The Company's communication efforts are fact-based, focusing on the critically needed economic benefits the Project will bring to Romania as well as the environmental benefits to an area that has suffered significant environmental damage from many years of historical unregulated mining activities. While some political and NGO opposition remains, broader understanding of these economic and development issues is a factor in the positive reaction to the Project among Romania's governing authorities.
Environmental/Permitting
As noted above, on September 17, 2010 the Romanian MOE resumed the TAC review for the Project's EIA. The first formal TAC meeting involving RMGC was held on September 22, 2010. RMGC subsequently responded to a list of questions received from the TAC and subsequent TAC meetings have been held on December 22, 2010 and March 9, 2011. At this time it is not known how many further TAC meetings will be required to review and make an assessment of the Project's EIA or how long this process may take. Ultimately, the EIA must be approved by a Cabinet decision of the Romanian Government. While the EIA is the most important project approval, there are a significant number of other permits and approvals required to advance the Project to construction, such as zonal urbanization plans for the industrial and protected areas, forestry/agriculture land use change permits, archeological discharge certificates, as well as other permits and approvals that follow EIA approval. To that end, to the extent these permits and approvals are not dependent on EIA approval or the acquisition of surface rights, the processes for each of these will proceed in parallel with the EIA review process.
The Company continues to move forward with the amended industrial zonal urbanization plan ("Amended PUZ"), and on December 29, 2010, as part of the Strategic Environmental Assessment process relating to the Amended PUZ, RMGC presented all information requested by the regional environmental protection agency in Sibiu. The Company is now in the process of defining any follow-up actions necessary to obtain approval. In addition, the Local Council has initiated the process for the zonal urbanization plan for the protected area ("PUZ - Protected Area"). As at December 31, 2010 the Company obtained the PUZ - Protected Area endorsement from the Romanian Waters Authority, the Environmental endorsement issued by the Environmental Protection Agency of Alba and eight other endorsements. The Company has now obtained 10 out of the 12 endorsements necessary for the final approval by the Rosia Montana Local Council.
At this stage it remains management's belief that once the EIA for the Project and the new archeological discharge certificate for the Carnic area are approved by the Romanian Government, in the absence of any other extraordinary events, legal or otherwise, it would take approximately one year to:
- Complete the majority of outstanding surface rights acquisitions;
- Receive the majority of other permits and approvals, including initial construction permits; and
- Complete the control estimate and complete initial documentation on any third party project financing.
Once construction of the mine begins, it is expected to take an estimated 30 months to complete. Ultimately, the Romanian Government determines the timing of issuance of the EIA approval and all other permits and approvals required for the Project, subject to the Romanian courts dealing with litigation from NGOs in a timely manner. In the absence of further unforeseen delays the Project is expected to pour first gold by the end of 2014.
Surface Rights
The Company owns 77 percent of the homes within the Project footprint comprising the industrial zone, protected area and the buffer zone. In addition to the private properties acquired, the Company needs to acquire properties (about 30 percent of the surface area of the Project) which are owned by institutions, including the local administrations of Rosia Montana and Abrud, as well as certain churches and state-owned mining companies. The process to acquire the institutional properties is underway and will only be completed after the approval of the EIA. Ultimately, the Company's ability to obtain construction permits for the mine and plant is predicated on securing all the surface rights within the footprint of the construction permits in the industrial zone, the timing of which is not entirely within the Company's control.
Management and Corporate Office
The Company has recently appointed Max Vaughan, a UK qualified accountant with 18 years finance, financial markets and treasury experience, the majority in the mining sector, to the position of Chief Financial Officer. Richard Brown, a seasoned capital markets executive, with extensive experience in the mining sector, has also recently been appointed to the position of Chief Commercial Officer. The senior management team will be based in Europe and a new corporate office is in the process of being established in London, United Kingdom, with a view to closing the corporate office in Toronto during the course of the second quarter of 2011.
Contact Information:
For further information on this press release, please contact:
Jonathan Henry
President and Chief Executive Officer
Tel: + 44 7798 801783
Buchanan Communications
Bobby Morse
Tel: +44 20 7466 5000