Newmont investment boosts Gabriel (December 19, 2005)

Shares in Gabriel Resources (GBU-T, GBRRF-O) shot up as much as 33, or nearly 14%, to $2.75 in early trading in Toronto on Dec. 6, after it announced that Newmont Mining (NMC-T, NEM-N) had exercised all 15 million of its share purchase warrants for aggregate proceeds to Gabriel of $30 million.

The warrants were issued to Newmont as part of a $24.8-million private placement in September 2004. Newmont now holds 18.9% of Gabriel’s issued and outstanding common shares.

“We are pleased to have the continued support of Newmont as a shareholder,” said Gabriel president and chief executive Alan Hill in a statement. “The proceeds of today’s warrant exercise, combined with our current cash position of over $20 million, puts us in a very strong financial position to complete the permitting of the Rosia Montana project.”

Hill said the investment means that his company would not likely need to issue any further equity before it receives approval for Rosia Montana’s environmental impact assessment, which is expected during the third quarter of 2006.

Thereafter, Gabriel plans to raise enough equity to acquire the remaining surface rights required for the project, order long-lead time items, and make final preparations for construction. Further financing would be required to build the mine.

Gabriel owns 80% of the Rosia Montana project in the Golden Quadrilateral area of Romania’s Transylvania region. Proven and probable reserves stand at 218 million tonnes running 1.52 grams gold per tonne and 7.5 grams silver per tonne, for 10.6 million contained ounces gold and 52.3 million oz. silver. The estimate is based on a cutoff grade of 0.6 gram gold.

The reserve is contained in a broader measured and indicated resource totalling 352 million tonnes at 1.3 grams gold and 4 grams silver, or 14.6 million oz. gold and 67.3 million oz. silver. Another 48 million tonnes of inferred material averages 1 gram gold and 4 grams silver, for 1.5 million and 6 million oz. gold and silver, respectively.

The project is envisaged as a 4-pit operation running at 13.3 million tonnes per year to produce an average of 533,000 oz. gold annually at a total production cost of US$221 per oz.

Gabriel shares traded in the range of $2.40 on Dec. 13.