The Rosia Montana Project was expected to be Europe’s largest open pit gold mine operation.
80% owned by Gabriel Resources (TSX:GBU) a Canadian (very) junior mining company with a major U.S. miner, Newmont Mining (NEM:NYSE) upping it’s interest to 19.9% of Gabriel and American Electrum Strategic Holdings a further 17.85% of Gabriel, things looked rosy (no pun intended) for the project.
Reserves of gold and silver are the largest in Europe and mining has been carried out, on and off, in this scenic district for over one thousand years.
When we last posted on the Rosia Montana dilemma two years ago, resistance to the project was underway by local environmentalists but the outcome was clouded by the political corruption endemic to Romania in the post Ceausescu era.
The main bone of contention was the environmental damage caused by the use of cyanide pits in the extraction process.
Now that Romania has joined the European Union more pressure has been put on the prevention of the project.
In particular neighbouring Hungary has voiced its opposition and the River Danube, a key source of water and transport would be vulnerable to extensive pollution.
This, together with more focus on corruption now the country is within the EU, has led to a Romanian court decision to delay the project for an unspecified period.
No doubt there will be further appeals, applications and sops to the environmentalists before this saga is eventually resolved. The fact remains that this few square kilometres contains resources of great value to Romania and to investors alike.
In the current economic climate and at a time when the financial foundations of European countries are under pressures, the like of which have never before been experienced, gold in the Romanian coffers may prove a temptation to far.
Playing this miner is similar to betting on a rank outsider but if, eventually it proves a winner – WOW!