Gabriel Seeks $4.4 Billion After Decades Wait for Romanian GoldBy
Company has been trying to build Europe’s biggest gold mine
Gabriel plans to file claim to World Banks’s settlement arm
What was supposed to be Europe’s largest gold mine may now turn into one of its biggest compensation battles as developer Gabriel Resources Ltd. seeks $4.4 billion from Romania for destroying the value of the long-stalled project.
Gabriel will log the claim Friday with the World Bank’s international settlement arm, the company said in a statement Thursday. Gabriel, which has spent two decades trying to build its Rosia Montana mine in the eastern European country, said the government has unlawfully blocked permits, disregarded existing license rights and ignored all requests for conciliation and negotiation.
“Romania has taken this asset away from us, it’s tantamount to expropriation,” said Chief Executive Officer Jonathan Henry. “If they want to do that it’s fine, but they have to compensate us.”
Gabriel was on the verge of getting the go-ahead for the $1.4 billion project in 2013, when the Romanian government approved a draft law declaring the mine to be of “exceptional national interest.” However, as the vote for parliamentary backing neared, thousands of protesters took to the streets in Bucharest and then-Prime Minister Victor Ponta urged lawmakers to reject the plan. The project has been stalled since then, with little prospect of future progress.
The company was once worth more than C$2.7 billion ($2.1 billion), but its value has collapsed to a fraction of that as the chance of the mine ever being built evaporated. Gabriel, which is backed by big-name shareholders including billionaire Beny Steinmetz and Newmont Mining Corp., had planned a mine that could produce 500,000 ounces of gold a year on a site that holds 17 million ounces of the precious metal.
The company raised about C$60 million last year, including from Tenor Capital Management, which helps fund arbitration cases.
“We don’t see a way of us being able to build a mine,” said Henry. “We want cash compensation for what has been taken away from us.”
While Gabriel said its mine would operate to the highest environmental standards, much of the opposition has been over the use of cyanide, which is used to dissolve and separate gold from ore. The plan rekindled anger over Romania’s 2000 Baia Mare spill, which is listed by the United Nations Environment Programme alongside Chernobyl as one of Europe’s major human-caused disasters. The spill happened when a dam holding back mine debris burst, flooding the Somes, Tiza and Danube rivers with tens of thousands of tons of cubic meters of cyanide-contaminated water.
Romania has until February to respond to Gabriel’s submission. Arbitration is scheduled to start in 2019 and an outcome is not expected until 2020, the company said.