Gabriel Resources says troubled Rosia Montana project will cost US$1.5 billion

TORONTO – Gabriel Resources Ltd. (TSX:GBU) says it will cost an estimated US$1.5 billion to bring the troubled Rosia Montana mining project in Romania into production and cash-flow positive.

That’s about $100 million higher than an estimate of US$1.4 billion in October 2012, which in turn was up from an earlier estimate of US$876 million.

The Toronto-based company provided the revised estimate in a third-quarter financial report issued Friday.

Gabriel’s stock has plunged amid continued uncertainty that the Rosia Montana project will be approved amid concerns about its potential impact on the environment and historical artifacts.

Gabriel says the proposed mining operation can generate than US$24 billion for the Romanian economy, and has support from some sectors because of the potential jobs.

However, the plan to use highly toxic candle in the gold extraction process and the mine’s location in an area that has seen gold mining for about 2,000 years has raised opposition to the open pit mine.

Rosia Montana has reported resources of 17.1 million ounces of gold and 81.1 million ounces of silver, and is held by Rosia Montana Gold Corp., a Romanian company that is 81 per cent owned by Gabriel.

Gabriel, which isn’t generating revenue from operations, reported Friday that it had $56.2 million of cash and cash equivalents as of Sept. 30.

During the quarter, it received the a refund equivalent to $4 million from Romanian authorities in respect to taxes, penalties and interest.

Net profit for the three months was $2.1 million.