Gabriel Resources says Romania holding gold project 'hostage'

Gabriel Resources says Romania holding gold project 'hostage'

Rosia Montana is a community of 16 villages located in a district known as the Golden Quadrilateral, in the South Apuseni Mountains of Transylvania, Romania.

After spending 15 years trying to build a $2bn gold mine in Romania, Canada-listed Gabriel Resources (TSX:GBU) is stepping up efforts to reach an “amicable” agreement with local authorities or else seek international arbitration.

In a statement Tuesday the company said its flagship Rosia Montana project "has become hostage to conflicts between rival political factions."

It also claims it has not been given the treatment required under bilateral investment treaties and now faces “substantial losses” if the project does not go ahead.

For years Romanians have protested against Rosia Montana, which they deem as an environmentally risky project and an even larger problem of political corruption.

The pollution concerns are tied to the company’s planned use of cyanide to extract 300 tonnes of gold and some silver from the ore.

Hundreds of jobs

The company, which has spent over $1.5 billion on the project since it first acquired the concession in the late 1990s, argues the mine would bring hundreds of jobs and boost Romania's economy. It also says the project would help the rehabilitation of an area polluted from previous mining.

"The Gabriel Group has invested significant capital on the development of the project, and there is still no certainty on the process to successfully permit the project," it said in the statement.

In September 2013, Gabriel indicated it might seek $4 billion in damages over the rejection of the project.

Without a "satisfactory solution", the company said it was "prepared to present its claims to international arbitration.”

At the end of 2013 Romania’s parliament turned down a measure that would have opened the way for the mine project, which has been deadlocked since then. The lower house may have put the last nail in the coffin in June last year, rejecting the bill that would’ve allowed the Rosia Montana project to proceed.