Gabriel suffers setback at Rosia Montana

Gabriel Resources (GBU-T) has shelved plans for a previously announced bought-deal offering of 10 million shares at $2.80 apiece.

The decision comes on the heels of Romanian press reports saying that the country’s Prime Minister has criticized a report on Gabriel’s 80%-owned Rosia Montana gold project as “ambiguous and not convincing.”

The report was completed by a Romanian parliamentary commission, and said the mine would benefit Romania if promised standards were maintained.

It has also been reported that the Prime Minister has asked the Environmental and Interior Ministers to further investigate the project’s environmental impact.

Says Gabriel CEO Oyvind Hushovd: “Gabriel believes the development of the Project is good for Romania and its economy and Gabriel’s development plans for the Project are environmentally sound. Gabriel is currently preparing its environmental impact assessment for the Project, which is being prepared in accordance with all Romanian requirements, as well as all European and international environmental standards.”

The report will be put before the parliament in September.

Gabriel’s plans at Rosia Montana call for mining at a throughput rate of 13.3 million tonnes per year to produce an average of 533,000 oz. gold annually over 16.4 years. Production would average 679,000 oz. gold annually during the first five years, when head grades would be higher.

Gabriel says the operation will employ a cyanide-destruction circuit using the SO2/Air process to ensure environmental protection.

Meanwhile, Gabriel says it is filing a preliminary prospectus for an offering of around 10 million shares on a marketed basis, with RBC Capital Markets acting as sole manager. RBC was also the underwriter for the cancelled offering.

When they resumed trading just after midday on July 11, Gabriel’s shares quickly lost 41, or more than 16% of value, to hit $2.11; they rebounded just as quickly to trade at $2.44, off 8, soon thereafter.