Despite suffering a major setback for its flagship project on Monday, Canadian miner Gabriel Resources (TSX: GBU) hasn’t given up on its massive gold mine in Rosia Montana, Romania, even though it will now cost the firm an estimated US$1.5 billion to bring it into production and cash flow positive.
Delivering its third-quarter financial report Friday, the Toronto-based company said Rosia Montana’s cost is now about $100 million higher than the estimate of US$1.4 billion in October 2012.
The miner reiterated 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 in Romania.
“Gabriel will now assess the impact of the report and the government’s revised strategy on initiating and implementing a new framework legislation for gold and silver mining,” President and CEO Jonathan Henry said in a statement.
He added the company has initiated a defamation suit in response to “completely ungrounded accusations made before the Special Committee concerning the falsification of certain maps relating to the Corna Valley basin and will examine all possible legal action to counter such unfounded allegations and protect its rights.”
While the firm isn’t generating revenue from operations, it said it had $56.2 million of cash and cash equivalents as of Sept. 30.
During the quarter, it received a refund equivalent to $4 million from Romanian authorities in respect to taxes, penalties and interest.
Net profit for the three months was $2.1 million.