Gabriel Resources plunges 53pct; threatens to sue Romania

Romanian Prime Minister Victor Ponta dealt a major blow to Canada’s Gabriel Resources (TSE:GBU) on Monday after urging Parliament to reject draft legislation in support of the Rosia Montana gold mine project – the same legislation Ponta’s ruling party approved just two weeks ago.

Gabriel dropped 53% on the Toronto exchange, trading at $0.71.

The declaration comes after a week of massive anti-mine protests; thousands of Romanians have been rallying on the streets calling on the government to reject the mine.

“There’s no point in wasting time, I want to make sure that the Senate and the Chamber of Deputies vote on the rejection and then this project is closed,” Ponta said, as reported by Bloomberg. “I don’t want the government to be responsible for contracts undertaken by previous cabinets.”

Today’s announcement indicates that the protests may have had a major effect on Ponta who just two weeks ago pushed forward the draft legislation, calling the project- which would be Europe’s largest gold mine – of “overriding national public interest.” Before taking power in May 2012, Ponta said he opposed the mine.

Now, the ruling party admits that they may have opened the door to a lawsuit from Gabriel. The company noted in a statement that if Parliament rejects legislation, the firm would consider suing Romania for “multiple breaches of international investment treaties.”

In Monday’s press release the miner also called on the Romanian government to clarify today’s statements and urged investors to use “caution in the trading of its shares.”

Last week the firm lost more than 13% as investors watched the protests gain momentum. Meanwhile, Gabriel notes that recent polls indicate “majority of support for progression of the Project across Romania.”

Romanians are concerned about plans to use cyanide as part of the gold extraction process and other environmental issues including shaving off portions of mountain peaks.

While the mine would create 900 jobs during operations, Ponta said he would find other ways to drop unemployment figures in the region, the Associated Press reports.

Parliament is expected to vote this month but no date has been set yet.

Image from Wikimedia Commons

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