Canadian gold mining corporation, Gabriel Resources Ltd. halts Romanian project as support sours - NGO's influence cited

For Gabriel Resources Ltd., things were looking up until last spring.

After years of turmoil, the company's Rosia Montana gold project in Romania was proceeding well, with support at the local and government levels. There was ongoing opposition from non-governmental organizations (NGOs), but work at the project continued despite their interference.

Then, around the start of June, the government abruptly changed its tune and grew hostile toward Gabriel, eventually suspending the permit-approval process at Rosia Montana altogether. That led to yesterday's announcement from the company that it is laying off most of its workers and cancelling a land-acquisition program.

Gabriel says it does not know exactly what caused the about-face by the Romanian government, which is led by a coalition of two parties: the National Liberal party and the Democratic Union of Hungarians in Romania.

"We've been told that we've been traded, that the ethnic Hungarian party wanted to stop our project, and the Liberal party wanted something else, and they traded us," Richard Young, chief financial officer, said in an interview. "We're not sure. But we've seen a clear sea change in the actions of this government."

He is not certain how much of an impact the NGOs had, but said there is "no question" that they influenced some stakeholders. Gabriel's situation highlighted the growing issue of political risk, which is affecting mining projects around the world.

Toronto-based Gabriel is trying to redevelop a deposit that has been mined on and off for nearly 2,000 years. The company has poured more than $300-million into Rosia Montana and has proved and probable reserves of 10.1 million ounces of gold.

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