Vancouver – If ever a mineral deposit had the potential to transform an economically disadvantaged region, it’s the Rosia Montana deposit in Transylvania, Romania. And based on the results of a newly updated feasibility study, Gabriel Resources (GBU-T) is proposing to do just that by spending an estimated US$638 million to build Europe’s largest gold mining in a rural area devastated by unemployment and the near-collapse of the state-controlled economy.
The updated study envisions an open-pit mine capable of producing 500,000 oz. gold annually, at total cash costs of US$237 per oz., over a 15.6-year mine life. This would allow payback in 3.8 years, and generate an 18% internal rate of return at a gold price of US$500 per oz. The problem for Gabriel is that not everyone is convinced the mine will bring positive changes to the region.
Non-governmental organizations (NGOs) opposed to development have filed legal challenges to the company’s development efforts, including a group that successfully convinced a local court to annul the company’s archeological discharge certificate. An appeal of the ruling, which does not prevent the company from continuing its archeological discharge program, will be heard in April of this year.
In the meantime, Gabriel is completing the last step of its Environmental Impact Assessment (EIA) report, which is expected to be submitted to the Romanian government in the first quarter of this year. The company is also continuing a broad-based media and communications campaign to better inform citizens of the benefits of the proposed mine. Initial feedback is described as “very positive.”
Assuming completion of the archeological discharges and government approvals of the EIA report, Gabriel expects to begin purchasing properties in the village in the third quarter of this year, putting the company on track to obtain construction permits later this year. Construction would take place over about two years, which means the first gold pour is projected for the spring of 2009.
The resettlement program involves the purchase of 960 homes, of which 400 have been acquired to date, and is being conducted under World Bank and other internationally accepted guidelines.
Rosia Montana hosts measured and indicated resources totaling 350.3 million tonnes grading 1.3 grams gold and 6 grams silver per tonne, based on 0.6-gram cutoff grade. Inferred resources add another 30.3 million tonnes at 1.2 grams gold and 3 grams silver. The strip ratio is estimated at 1.2:1 waste-to-ore, with ore processed in a conventional mill with a carbon-in-pulp circuit.
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