Rosia Montana more than ‘marginal’

Your Aug. 20-26 issue contained two interesting front-page articles — one covering the Gabriel Resources’ feasibility study for the Rosia Montana gold project in Romania, and the other covering Glamis Gold’s expansion into Latin America.

Regarding the latter, you point out that “San Martin has paid off handsomely, with cash operating costs of US$150 per oz. in the second quarter.” I concur; San Martin is operating well, and congratulations are due to Glamis.

On the other hand, you say Gabriel’s Rosia Montana is a large low-grade deposit with marginal economics at today’s metal prices and that the project may fail to attract interest. In addition, you conclude that the on-site operating costs are optimistic. I do not understand the basis for your editorial comments on this project, for the following reason: Rosia Montana has a reserve grade of 1.4 grams per tonne. While that may be low, it is almost double the grade of Glamis’ San Martin property. This is the same one that has “has paid off handsomely.”

An internal return rate of return of 30% at a gold price of $275 per oz. is hardly “marginal economics.” If major gold companies are not interested in a 10.5-million-oz. gold project with those economics, then they have lost interest in gold mining.

In addition, comparing the operating and capital costs, as presented in the Rosia Montana feasibility, to those of the Cadia Hill mine in Australia (which has similar annual throughput), you find the Gabriel estimate to be similar. Your comparison of Cambior’s Omai mine is not justified, as Omai has never come close to mining 20 million tonnes of ore per year; plus, the operating conditions are extremely different.

I am sure Gabriel has many hurdles to overcome in its development of Rosia Montana, but it appears to me that they have been methodical and professional. Rosia Montana seems to be a world-class gold deposit, and I would be surprised if the “majors” were not currently showing keen interest. By the way, I have never been associated with either Gabriel or Glamis, nor do I own their shares.

James Geyer

Spokane, Wash.

Editor’s note: We would draw the distinction that San Martin is a heap-leach operation, whereas Rosia Montana is planned to have a mill.