Rosia Montana on the move

Gabriel Resources (GBU-T) reports that it has acquired 71 properties under its plan to resettle the town of Rosia Montana to clear the way for construction of a new gold mine at the 80% owned project in Romania in 2003.

So far, the company has spent nearly US$1.9 million on relocation compensation payments, and 66 property owners have already completed their moves from the town. In all, more than 600 property owners are currently engaged in relocation-related talks with Gabriel. The company needs to resettle about 500 properties, including 150 houses before construction can begin. Over the mine’s proposed 17-year lifespan, the company will need to acquire another 1,500 properties, including 770 houses.

Gabriel says the only significant delay in the resettlement plan has been the surveying of individual properties and the updating of land cards to accurately document legal titles. So far, titles for 583 of the 2,000 impacted properties have been updated; more than 350 titles are currently being updated.

Based on discussions with local government and residents, Gabriel has selected three resettlement sites, two of which are in the immediate vicinity of Rosia Montana. The company is working on acquiring the sites and submitting construction applications.

Gabriel also notes that while it will continue to negotiate resettlement and relocation packages and purchase agreements with local property owners, final payments under any deals will wait until the company completes a revision of its resettlement plan. The company is currently working to bring the plan in line with all relevant World Bank Group/International Finance Corp. policies and guidelines. Landowners affected by resulting delays in final payment will receive a bonus of 3% of the value of their property.

Earlier this year, Gabriel unveiled an optimization study by SNC Lavalin for the Rosia Montana gold project. The new plan draws upon two feasibility studies completed last autumn; it calls for mining of 13 million tonnes per year over 16 years and the annual production of half a million ounces at a total production cost of US$157 per oz. The initial capital cost of the mine would be US$253 million.

The open-pit operation would target a massive but low-grade reserve totalling 208 million tonnes grading 1.56 grams gold and 7.8 grams silver per tonne (or 10.4 million contained ounces gold and 52 million contained ounces silver).

SNC is working on the project’s basic engineering, which should be completed by the end of the third quarter of 2002.

After a an oversubscribed, non-brokered private placement earlier this year, Gabriel has $68 million in cash.