Gabriel Resources goes back to the drawing board

Romania’s Supreme Court has annulled a crucial archaeological certificate that Gabriel Resources (GBU-T, GBRRF-O) needs to advance its Rosia Montana gold project in the East European country.

The Supreme Court did not give any reasons for its decision, which it ruled was final and could not be appealed. 

The news sent Gabriel Resources’ shares down 20¢ apiece, or 16%, to close at $1.05, with 1.4 million shares changing hands.  

A team of more than 80 internationally known archaeological specialists from more than 23 organizations in three different countries worked as a team from 2001 to 2004 to prepare the certificate, Gabriel says.

And the Romanian National Archaeology Commission – a group of 21 Romanian archaeologists and historians — had recommended to the Minister of Culture that it should grant the discharge certificate to Gabriel.

Gabriel says it will remedy any deficiencies in the current document and prepare a new discharge certificate once the court explains the rationale behind its decision. 

So far the Toronto-based junior has invested more than US$350 million on its 80%-owned Rosia Montana and plans to spend more than US$2.5 billion to develop and operate the project.

Gabriel has long fought political opposition to its gold project, which includes foreign-funded NGOs. Last fall, after the ruling coalition suspended its review of the project’s environmental impact assessment, Gabriel launched a lawsuit against the Environment Ministry and minister, and the Secretary of State.

Rosia Montana has a gold reserve of more than 10 million oz., making it among the top 10 undeveloped gold deposits in the world.

At the Denver Gold Forum in October, Alan Hill, Gabriel Resources’ president and chief executive, told analysts and investors that Romania had to elect a new government in order for the Rosia Montana project to move ahead. At that time the Romanian government was run by a coalition of the Liberal Party, or PNL, and the ethnic Hungarian party, the Union of Democratic Hungarians in Romania.

Since then, parliamentary elections on Nov. 30 have changed the political landscape. The centrist Democratic Liberal Party won 115 seats in the chamber of deputies and 51 seats in the Senate.

The leftist Social Democratic Party won 114 seats in the chamber and 49 in the Senate, while the center-right Liberal Party won 65 seats in the chamber of deputies and 28 seats in the Senate.

The ethnic Hungarian party, the Union of Democratic Hungarians in Romania, won 22 seats in the chamber of deputies and nine seats in the Senate.

Neither Hill, nor Kathy Sipos, Gabriel’s head of investor relations, could be reached for comment.

Gabriel has 255.5 million shares outstanding. Over the last year it has traded in a range of $1.07-$3.12 per share.