Shares of Gabriel Resources climbed 17.7% in heavy volumes on Thursday, bringing its gains since last Friday to 32% as ongoing turmoil in Romanian politics are being interpreted as positive for the Canadian company's plans to build a massive gold mine in Transylvania.
The ruling coalition under current Romanian Prime Minister Victor Ponta – the fourth to serve in that role this year – has been losing support according to recent polls after a failed attempt to oust the country's president through a referendum.
New general elections are scheduled for November and various bodies including the IMF and EU have raised serious concerns about Ponta's efforts to consolidate power and undermine independent institutions.
Ponta, 39, is known as a pro-green politician and has been critical of Gabriel Resource's 80%-owned Rosia Montana Gold Corp project to revive an area where mining dates back to Roman times. Ponta is also pushing for changes to the Romania's royalty rates.
Gabriel Resources has spent more than $500 million under no fewer than seven different CEOs advancing the project since the firm first obtained the concession in 1999.
In its recent second quarter update Gabriel Resources struck a cautious tone saying no decisions on the latest government review of Rosia Montana will be forthcoming until after the elections.
Over the years Rosia Montana has become a favourite target of the green movement and a political weapon for Romania's many successive governments.
The project remains a talking point on TV talk shows and political debates in Romania, but Gabriel Resources said it has scaled back its own communications efforts and will focus on cost-cutting. It still has $100 million in the bank.
The company still need several more environmental and safety approvals and has to acquire more land to establish an open-cast mine which once in production will be Europe’s largest producing 500,000 ounces of gold per year. The property holds 10 million ounces of gold and 47 million ounces of silver.
Gabriel Resources have been successful in Romanian courts fighting various legal challenges but said in the Q2 report NGOs continue to register new challenges in local, regional and national courts to stop permits and approvals for the project. Certain endorsements have also expired as the process drags on Gabriel Resources said.
The company is continuing to revive the historical center of the town of Rosia Montana and is doing archaeological work to open up historical galleries and establish a permanent museum.
Romania also backed out of a $262 million privatization sale of its Cupru Min Abrud copper mine in April.
Image of visible gold in a drill core from the Bucium exploration concession, shown under magnification courtesy of the company.