Exploration boosts resource at Rosia Montana

By mid-2001, Gabriel Resources (GBU-T) expects to have completed a feasibility study for its 80%-owned Rosia Montana gold project, in central Romania. The independent study will take into account results from last year’s exploration effort, which aimed to both increase the overall resource by testing new areas and upgrade the existing resource classifications by infill and definition drilling.

Gabriel believes it has accomplished the objectives of its 2000 work program, as evidenced by a 77% increase in gold resources and a 36% increase in silver resources over previous estimates. Based on a cutoff grade of 0.6 gram gold per tonne, Rosia Montana now boasts 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, both of which were expanded in all directions and at depth last year.

Rosia Montana is north of Deva in the Transylvanian mountains, within a historic mining region that was first worked by the Romans. Gabriel was the first mining company to venture into the nation after the collapse of a repressive communist regime in the late 1990s. Through two local subsidiaries, it acquired rights to several properties in the district. One held Rosia Montana and the Bucium projects, while the other held rights to explore the Certej and Zlatna projects, as well as several less-advanced properties.

A reorganization last year resulted in the creation of a new entity, European Goldfields (EGU-V), which now holds rights to the Certej, Zlatna, Bolcana and Baita-Craciunesti projects. Gabriel continues to hold Rosia Montana and Bucium, an advanced exploration project.

During the past year, Gabriel completed 28,233 metres of surface reverse-circulation and 21,540 metres of surface and underground diamond drilling in 312 holes, plus 3,541 metres of surface and underground channel sampling. This represents a 75% increase in the size of the total resource database. The current resource, therefore, is based on 38,009 metres of reverse-circulation and 27,752 metres of surface and underground diamond drilling in 405 holes, plus 59,625 metres of underground channel samples.

The measured and indicated categories of the overall gold resource were increased by 128% last year to about 13 million oz. gold within 296 million tonnes grading 1.4 grams gold and 6 grams silver.

A highlight of last year’s program was the discovery of a new deposit at Orlea, which is situated northwest of, and across the valley from, the Cetate deposit.

Mineralization at Orlea is hosted in variably silicified, veined and argillically altered vent breccia, occurring from surface. The deposit has been drilled to a depth of about 200 metres along a roughly east-west-trending zone, about 500 metres long and 200 metres wide. It remains open to the east and west.

The new discovery contributed 52 million tonnes grading 1.2 grams gold to the resource. This is equivalent to 1.95 million contained ounces gold and 3.52 million contained ounces silver.

New mineralized zones were delineated at Jig, Igre, Cos and Carpeni. These zones remain open to the north and west. Mineralization at Rosia Montana remains open at depth, and to the north at Carpeni, Cetate and Cirnic.

Gabriel’s land package is prospective for additional discoveries similar to Rosia Montana, where gold occurs in two mineralized and hydrothermally altered sub-volcanic dacite intrusives into a sequence of Cretaceous meta-sediments and volcano-sediments over an area of at least 3 by 3.5 km.

Once the feasibility study is delivered, Gabriel expects to move forward with mine planning and scheduling studies, and the calculation of final minable reserves. The final components of metallurgical tests are expected shortly, along with final approvals for the relocation of the village of Rosia Montana, which will be carried out according to World Bank standards.

Gabriel enjoys a high level of local and government support for its mine plans, which would revitalize a region suffering from high unemployment. Most analysts expect Gabriel to vend the project to a senior mining company.

The feasibility study will include updated cost estimates for an open-pit mine. A positive prefeasibility, completed in late 1999, estimated that capital costs would be about US$205 million for an owner-mined project, or US$188 million if contract miners are used.

The base-case option examined in that study predicted annual production of 411,000 oz. annually for about 10 years, at a cash operating cost of US$113 per oz. for owner mining, and US$127 per oz. for contract mining. However, these estimates were based on resource figures that have since been expanded significantly.

Preliminary metallurgical tests showed recoveries of about 80% for gold and recoveries of 64.6% for silver from a conventional grinding, gravity-concentration, cyanide leaching and carbon-in-pulp recovery.