The recent appointment of Cliff Davies as chief executive officer and president of
“Even though Gabriel Resources now has the necessary skills on board to expedite development of the project, the company must still be considered a prime takeover candidate,” Jones notes in a research report, before reiterating the firm’s “buy recommendation” with a target price of $7.
Davis, former chief operating officer of TVX Gold, was involved in efforts to advance TVX’s major Greek gold deposits at Olympias and Skouries. He previously worked for major companies at such well-known mines as Greens Creek (gold-silver) in Alaska, Ridgeway (gold) in South Carolina, and Neves Corvo (copper-tin) in Portugal.
Davis will now direct his attention to Gabriel’s Rosia Montana project in the Transylvanian mountains of central Romania. A feasibility study for the project is expected to be in-hand by mid-2001.
At last report, the gold project boasted an overall resource of 344 million tonnes grading 1.3 grams gold per tonne, or about 14.3 million oz. gold and 67 million oz. silver. The bulk of this resource is in two main deposits, Cetate and Cirnic, while the project itself is in a region extensively worked by the ancient Romans.
Jones says the addition of Davies should demonstrate to the market that Gabriel can build the project and that it does not have to wait for a major buyer in order to realize value. “However,” he adds, “we still believe that a corporate approach is likely, and getting more so, as the key milestones of final approval for construction, freezing of the reserve base, freezing of the metallurgical flowsheet, and completion of the definitive feasibility study all come closer.”
Looking ahead, Jones expects the minable reserves to be confirmed by early May, along with completion of metallurgical testwork. “[Metallurgical] results have so far been described as encouraging,” he adds, “and a report on the flowsheet is expected in the first couple of weeks in May.”
Final approvals for the relocation of the village of Rosia Montana are also expected shortly, which should act as a catalyst in attracting early bidders. The relocation will be carried out in accordance with World Bank standards.
On the financial front, Gabriel has appointed Rothschild to act as advisor on project-related debt. The firm has been associated with Gabriel for more than three years, and two of its funds are among Gabriel’s largest shareholders.
In conclusion, Jones says, Rosia Montana is a large deposit that is “immediately economic, with the flexibility to lift cutoff grades to account for a continued low gold-price environment.”
Gabriel currently trades at $3.48 in a 52-week range of $1.54 to $3.50. It has 78 million shares outstanding (86.1 million fully diluted).
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