Speaking at the Denver Gold Show Conference this week, Gabriel Resources’ CFO Richard Young provided an update on the status of the company’s Rosia Montana Gold Project in western Romania. In his Denver remarks, Young told the conference that solid progress was being made in the permitting and development of the Rosia Montana Project until the Minister of Environment’s unilateral decision to suspend the EIA permitting process on September 13, 2007. Young said the company is looking at both its legal and political options for resuming the EIA review process, underlining the illegal grounds of the Minister’s action.

He highlighted the project benefits, including: 

• $2.5 billion in economic benefit to Romania
• 1,200 direct jobs during construction and more than 600 during operation as well as an estimated 6,000 indirect jobs in a region designated as a ‘Disadvantaged Zone’ by the Romanian Government
• $1.5 billion in Romanian goods and services purchased by the project and a further $1.0 billion to the Romanian Treasury from its 20% share of profits and taxes
• The project will help re-establish Romania’s mining industry, where over 300,000 miners have lost their jobs as 500 state run mines have been shut down since the fall of communism in 1989
• The project will also remediate past environmental damage done by 2000 years of uncontrolled mining, leaving the area cleaner and better conserved than the company found it
• The project will set a new standard for mining in the EU and around the world and will set a new standard for sustainable development
• The project will rescue and preserve Romania’s cultural patrimony.

Young also identified and discussed the opposition to the project, noting that despite all of the many benefits the project offers, the high design standards and strong local support, the project is faced with a persistent disinformation campaign. In Young’s view, as the company has progressively answered all serious concerns about the project’s environmental impact, it has become clearer that the opposition to the Rosia Montana project has more to do with geo-politics – and is a coordinated effort of forces generally coming from outside of Romania, and from Hungary specifically.

Young said that on September 13, “the Romanian Minister of Environment – a member of Romania’s ethnic Hungarian party which echoes Hungarian Government opposition to our project – imposed an administrative suspension of the review process for the Rosia Montana EIA, applying a new law retroactively, and asserting a linkage to the EIA process that is not supported by Romanian law.” He reiterated the company’s earlier statement: “We are extremely disappointed by the actions of the Minister, as it seems to display a total disregard for the rule of law in Romania.”

Young made note that on September 21, the company filed an Administrative Complaint against the Romanian Ministry of Environment and Sustainable Development (MESD) regarding its decision to suspend the TAC review process of Rosia Montana’s EIA. The Ministry has 30 days to respond to this Administrative Complaint, after which the company will be given the right to commence litigation. The filing of the Administrative Complaint is a necessary first step in filing a formal lawsuit against the MESD.

Acknowledging the near-term negative reaction to the Minister’s action both inside and outside Romania, Young reminded the audience that the current parliamentary government, of which the Minister is a part, is fragile. The company says “the Romanian media is widely reporting that the government appears to be increasingly under siege, with opposition parties poised to launch a no confidence vote.” Young let investors know that at this time, the company is unable to determine what impact the current political turmoil may have on the timing of the resumption of the EIA permitting process.

Gabriel says it “remains in a strong financial position with approximately $175 million in cash.” Its financing plan has proceeded as far as it can be taken it until the company moves nearer to EIA approval. All required long-lead-time equipment orders have been placed, and the engineering team is working on the control estimate, which is expected to be completed during fourth quarter 2007. In addition, Gabriel continues to acquire necessary surface rights at Rosia Montana.

The company says it intends to use all means at its disposal to get the TAC process back on track, even as it continues to evaluate the implications associated with a prolonged delay. Once the TAC process recommences and in the absence of any other extraordinary events, Gabriel anticipates that it would take approximately six months to complete the EIA approval process, complete the purchase of the outstanding properties and receipt of all other permits and approvals, including construction permits. Construction of the mine would then take approximately 24 months. Ultimately, the Romanian Government determines the timing of the issuance of the EIA approval and all other permits and approvals required for the Rosia Montana project.