Canadian mining firm demands $4.4bn from Romania over massive gold mine

WASHINGTON: An embattled Canadian mining company said Thursday it was seeking $4.4 billion from the Romanian government for blocking its attempts to develop a massive gold mine that could bring in billions of dollars.

Gabriel Resources is seeking damages over the long-stalled plans to develop Europe's largest gold mine in Romania's Rosia Montana region and plans to file a claim with a World Bank arbitration panel on Friday, the company said.

The $24 billion gold mine is the company's sole asset, and it has been battling for two decades for permission to develop it. The delays have caused Gabriel's share price to plummet nearly 100 percent from a peak in 2011, CEO Jonathan Henry said.

"We were a $3-billion company when Romania was telling us that everything was okay and we were going to get an environmental permit," he told AFP.

"Now Romania's not even talking to us."

The Romanian government granted the company a license in 1999 to mine in the area, but the project has sparked nationwide protests. Environmentalists have warned that the use of cyanide to extract the gold could leave groundwater contaminated although the company pledged to observe strict environmental safeguards.

But public concerns have been stoked by memories of 2000's catastrophe at Baia Mare, where a tailings dam burst, contaminating local rivers in the worst European environmental disaster since the Chernobyl nuclear accident.

Residents also object to the project which could damage 2,000-year-old underground Roman mining galleries -- a potential UNESCO World Heritage site.

Gabriel Resources had hoped to produce 500,000 ounces of the precious metal annually from an area holding 17 million ounces but local authorities have repeatedly refused permits and violated the company's commercial rights while ignoring efforts at conciliation, according to the company.

Gabriel said it planned to lodge its claim on Friday with the World Bank's International Center for Settlement of Investment Disputes, taking the most significant step in a arbitration process started in 2015.

The World Bank arbitration body is one of a small number global institutions created to resolve international business disputes. Bilateral treaties frequently mandate that complaints be handled by such panels, to avoid the domestic court system.

Romanian authorities will have until February to respond to the company's demand, with a hearing not expected until 2019, and a decision not until 2020.

Gabriel Resources share price on the Toronto Stock Exchange increased more than seven percent following the announcement to CAN $0.30.