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News :: Environment
Gabriel Resources: No Financing Resources and Significant Risks
06 May 2004
Gabriel Resources (TSX: GBU), a junior Canadian mining company, intends to realize Europe's largest open-cast mining development in Rosia Montana; entailing, amongst other, the involuntary resettlement of over 2000 people as well as the destruction of unique archaeological and natural sites. From its' onset the development has been beleaguered by scandals, operational problems and vehement local, national and international opposition.
http://www.rosiamontana.org


Chronicle of a Death Foretold
Gabriel Resources: No Financing Resources and Significant Risks

Rosia Montana, Romania; 5. May 2004 - Gabriel Resources has sent a warning signal to its investors; confirming many of the significant risks inherent to the development of its' Rosia Montana gold mining project. The company acknowledges the serious possibility that the project will never be put into production.

Gabriel Resources (TSX: GBU), a junior Canadian mining company, intends to realize Europe's largest open-cast mining development in Rosia Montana; entailing, amongst other, the involuntary resettlement of over 2000 people as well as the destruction of unique archaeological and natural sites. From its' onset the development has been beleaguered by scandals, operational problems and vehement local, national and international opposition.

In a report dated 1. April 2004, Gabriel Resources (GR) for the first time ever draws a dramatically realistic image about some of the inherent issues pertaining the realization its' Romanian mining developments. The document focuses on the numerous risks and uncertainties for obtaining permits and approvals, acquisition of land properties, financing and insuring, as well as possible disputes over its' mining title and GR's limited experience. Importantly, the report states that a shift away from political support for the mining industry; this particularly in the context of EU accession, may "prevent Gabriel from developing a new mine at Rosia Montana."

The report's highlights include; as quoted:
-"Gabriel has limited financial resources, no source of operating cash flow and no assurance that additional funding will be available for further exploration and development of its project. . Failure to obtain such additional financing could result in. the possible loss of such properties."
-"The per share price of Gabriel's common shares fluctuated from a high of $5.20 to a low of $1.65.. Such fluctuations could negatively impact Gabriel's ability to raise all necessary financing."
-"For the year ended December 31, 2003, Gabriel incurred a loss of $16.7mio.. Corporate, general and administrative expenses have increased significantly .due primarily to two independent investigations.."and "a $2mio severance payment made to the former Chairman of the Company."
-Gabriel may elect not to insure against certain risks due to high premiums or for various other reasons. .Should such liabilities arise, any future profitability could be reduced or eliminated.."
-".Investors can not expect to receive a dividend on its common shares in the foreseeable future."
-"The business of exploring for minerals and mining involves a high degree of risk. Few properties that are explored are ultimately developed into producing mines.."
-"Title to and the area of mining concessions may be disputed."
-Gabriel has limited experience in placing resource properties into production..There can be no assurance that Gabriel will have available to it the necessary expertise if, as and when it places the resource into production."
-"The mineral reserve and resource estimates . are estimates only and no assurance can be given that any particular level of recovery of minerals will in fact be realized or that an identified reserve or resource will ever qualify as a commercially mineable (or viable) deposit which can be legally and economically exploited."
- "In order to develop the Rosia Montana project, Gabriel must acquire all necessary surface rights, which will include the need to relocate and resettle the communities.Gabriel may encounter difficulties in acquiring proper titles to those surface rights.."

"We repeatedly told Gabriel's investors that this project simply is never going to happen. By now everyone should have come to understand that even the initial costs for this project are unrealistic and beyond any economic rationale. The facts now are black on white. Whilst no serious investor would ever take such risks, no government would ever be as irresponsible as to approve such a mad development. My recommendation to Gabriel's investors is: Sell, sell, sell", commented Eugen David, president of Alburnus Maior.
The full report can be found on: http://www.sedar.com/csfsprod/data44/filings/00628827/00000001/j%3A%5CTo

* * *
For more information contact Eugen David on +40 740 280309 or Stephanie Roth on +40 740 342104.
http://www.rosiamontana.org
See also:
http://www.rosiamontana.org

This work is in the public domain
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