Gabriel Resources (TSE:GBU) is on damage control after the parliamentary commission shot down its proposed massive gold mine in Rosia Montana, Romania.
The company’s share price dropped by 11% after the announcement on Monday, but has regained those losses almost entirely after reassuring share holders that all is not lost.
In a statement issued Tuesday, Gabriel said that the parliamentary commission tasked with reviewing the project did not reject the plans. Rather, the commission found that existing mining laws are not broad enough to make decisions on gold and silver mines.
Quoting the commission’s report, Gabriel highlighted the finding that “existing mining law is not sufficient to legislate for the scale and complexity of the Project.”
The commission proposed the rejection the draft law which would have enabled the mine, and instead recommended the creation of a “new legal framework applicable to gold and silver mining projects.”
Gabriel says that it “welcomes any initiative that accelerates the development of an enhanced mining law” and legislation that would allow for a “strong mining industry in Romania.”
“The report of the Special Committee is a first step in defining the next phase of developing Rosia Montana,” CEO Jonathan Henry said in a statement. “Gabriel will now assess the impact of the Report and we look forward to participating in the creation of a modern mining industry in Romania. Our goal remains to bring the Project through to a reality that will significantly benefit Romania and the people of Rosia Montana.”
The company has also threatened to sue the Romanian government. In September, Henry said they had a “very robust case” for up to $4 billion in claims.
But even in the absence of a flat-out rejection, the Rosia Montana gold mine is far from production. According to the Globe and Mail, Gabriel has spent more than half a billion dollars on the project over the past 14 years, and the commission’s rejection will delay approval by several months at best.
Meanwhile, the CEO of Rosia Montana Gold Corporation – Gabriel’s 80%-owned Romanian subsidiary – told AFP reporters that the suggested new legal framework would help the project move forward and “start production in the first half of 2014.”
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