Gabriel Resources Ltd. ("Gabriel" or the "Company") is pleased to announce that the Romanian Government ("Government") has approved draft legislation relating to the Rosia Montana Project ("Project"). If adopted by the Romanian Parliament ("Parliament") in its next session, commencing September 2, 2013, this legislation will set the framework to significantly accelerate the development of Europe's largest gold mine at Rosia Montana and other mining projects in Romania.
In its meeting on August 27, the Government approved a draft law "on certain measures related to the exploitation of the gold-silver deposits from Rosia Montana and stimulation and facilitation of mining development in Romania" which will be subject to debate and approval by the Parliament ("Draft Law"). The main measures proposed by the Draft Law, as announced by the Government, are:
- Approving an agreement ("Agreement") which envisages, among other things, that:
- Gabriel, as the majority shareholder of the owner of the Project, Rosia Montana Gold Corporation ("RMGC"), will transfer 5.69% of the share capital of RMGC in stages to the minority shareholder controlled by the Romanian State, such that the indirect stake of the Romanian State in RMGC will reach 25% and Gabriel will retain 75% ownership;
- the mining royalty applicable to the Project will increase to 6% of revenues (compared to the current 4%), with the option for the Romanian State to request payment in the form of gold bullion; and
- Gabriel and RMGC undertake to preserve cultural heritage, ensure environmental protection and eliminate historical pollution, while contributing to the sustainable economic and cultural development of the community from Rosia Montana.
- Declaring the Project as being one of public utility and overriding national public interest.
- Empowering certain public entities to carry out certain measures related to the permitting and exploitation of the gold-silver deposits from Rosia Montana.
- Amending certain legislative acts on, among other things, expropriation and construction permits.
- Noting that the Project will create an average of 2,300 jobs in the construction phase and 900 in the operational phase.
As previously announced, Gabriel has been in negotiations with the Government with regards to increased royalty and ownership rates along with other long-term commitments on environment, cultural heritage and a defined route to successful permitting to underpin the Project's status as a world-class, long-term and sustainable investment. The Company is highly encouraged by the recent progress of discussions with the Government since the Project's inclusion in the National Plan for Strategic Investment and Job Creation in July 2013 and the subsequent development of the Agreement and Draft Law ("Documents"). Gabriel can confirm that the Documents also seek to facilitate a significant extension to the mining licence, and other long-term legal and fiscal conditions that the Company wishes to see in place, together with an outline schedule of permitting milestones that include estimated first gold production in November 2016.
Gabriel is currently awaiting receipt of the final form of the Documents, which have been subject to negotiation with, and endorsement of, multiple ministries within the Government in the days leading up to the Government's decision. As matters progress the Company will update the market accordingly.
Jonathan Henry, Gabriel's President and Chief Executive Officer, stated:
"The Romanian Government's decision to approve a law specific to the Rosia Montana Project represents a significant milestone for all stakeholders. We are extremely encouraged by this major step towards progression of the permitting process and consider it to be a clear sign of endorsement by the Government for investment into Romania. A Parliamentary adoption of the proposed law will enable Gabriel to build Romania's first modern mine, creating direct and indirect employment, and providing significant cultural, environmental and economic benefits. We remain fully committed to constructing what will be Europe's largest gold mine."