All that glitters is not gold and Canadian mining company Gabriel Resources has found out the hard way.
It says it cannot pay $9.5 million to Romania in damages and court costs after its shares fell by 95%, after losing its litigation the lawsuit with the Romanian state over a failed gold and silver mine.
In the opening of the Toronto Stock Exchange, Gabriel Resources shares were quoted at less than 5 cents, down 95%. They increased spectacularly in February, after rumors spread that Romania would lose the case at the International Court of Arbitration.
In a statement, the company said it does not have the funds to pay damages and legal costs of $ 9.5 million. It says it still has $2 million in financial reserves, which will be depleted by May. This would mean that Romania would have to sue and force the firm to pay.
Gabriel Resources Ltd. announced on March 8, that the Company’s ICSID arbitration claims against the Romanian government were dismissed by a two to one majority and the tribunal awarded Romania approximately US$10 million in legal fees and expenses.
Gabriel called the decision ”deeply flawed and a travesty of justice. This decision blatantly ignores or intentionally misconstrues the vast body of evidence presented to demonstrate that Romania’s decision to deny necessary permits was politically motivated and without any substantive or objective regulatory basis.”
Romanian President Klaus Iohannis, however, hailed the decision as “a moment of truth.”
In 2014, following years of nationwide protests, the Romanian government, which owned 20% of the project, officially withdrew its support leading to the lawsuit.
The company had had sought up to US$6.7 billion damages from Romania in its claim filed at the World Bank’s International Center for Settlement of Investment Disputes in 2015 for losses related to the stalled project.
On Monday,the company would continue to analyze the judgment with its legal advisers to evaluate its options, including to challenge the decision through the annulment process prescribed by the ICSID Convention.
In the complaint filed in court, Gabriel Resouces claimed to have invested $700 million in Romania. The value cannot be verified from independent sources, but the assets it had in Romania have already been liquidated.
The prospect of compensation has been used to attract money. In 2016, Gabriel Resources promised a private placement of $ 20 million, and the payment would have been made from the compensation received from the Romanian state.
Gabriel Resources Ltd. is a Canadian TSX-V-listed resource company focused on permitting and developing contested Roșia Montană gold and silver mine located in western central Romania.
Rosia Montana is also home to ancient Roman mining galleries, which were added to UNESCO’s World Heritage list in 2021.
Pure gold: Romania’s government predicted it would lose court case with mining company. Then it won
