Gabriel Resources, the Canada-based company, said it may cut 80 percent of the workforce at its Romanian subsidiary Rosia Montana Gold Corporation (RMGC) as of May 1st, if the gold and silver mining project at Rosia Montana is not permitted.
Starting early March the company has sent around 400 employees into structural unemployment, citing “repeated” delays of the government to assess and permit the project.
Jonathan Henry, president and CEO of Gabriel Resources, said in a statement that Romania could become a leading gold producer in Europe through the development of Rosia Montana.
“We still remain fully committed to constructing and operating a mine at Rosia Montana but we need to see a similar commitment from Romania. With no environmental permitting process forthcoming, and following expenditure in Romania of USD 550 million over a fifteen year period, the company has recently had to give almost 400 Romanian employees the notice of redundancy,” said Henry.
“All of these jobs and more will be lost unless we see a real and transparent process from the new government in the coming weeks and months to proceed with the project, which has the potential to create over 3,600 jobs,” he added.
Gabriel Resources has reported a net loss of USD 2.5 million last year, out of which USD 500,000 was registered in the fourth quarter. Its cash and cash equivalents amounted to USD 41.2 million at the end of 2013.
Gabriel expects the special draft law regulating the project at Rosia Montana and other mining activities across the country to be rejected by the Chamber of Deputies when presented. It has already been rejected by the Senate in mid-November 2013.
Amendments to the mining law, which would also impact Gabriel’s project, failed to garner the minimum number of votes required for its adoption last December.
Last year, RMGC was included in a wider investigation of tax evasion and money laundering involving the Kadok Group. Prosecutors are looking at over 100 companies that had business relationships with Kadok, including the miner.
RMGC is challenging the restriction order on USD 300,000 representing the value of goods procured from the group during 2012.