TORONTO (miningweekly.com) – As a result of repeated delays by the Romanian government to address the assessment and permitting of the Roşia Montană gold/silver project, Canadian project developer Gabriel Resources on Thursday said that it had started the process to retrench about 80% of its workforce, equal to about 400 employees.

The TSX-listed firm said that its subsidiary Roşia Montană Gold Corporation (RMGC) had started legal processes at the beginning of the month to cut back its workforce, which would enable it to terminate the affected contracts on May 1, should no further progress have been made.

The mine had been stuck in limbo for years, waiting for a key environmental permit, and Gabriel had spent $550-million on the project during its 15-year involvement with the project.

The project had drawn fierce opposition from civil rights and environmental groups, which argue it would destroy ancient Roman mine galleries and villages and could lead to an ecological disaster. Neighbouring Hungary had also voiced opposition to the project, which would cost about $1.5-billion to build.

The exploitation licence for the project, which has been billed as the largest undeveloped gold deposit in Europe, is held by RMGC, a Romanian company in which Gabriel currently owns an 80.69% interest, with the 19.31% balance held by Minvest Roşia Montană, a Romanian State-owned mining enterprise.

"Romania has the potential to be a leading gold producer in Europe through the development of Roşia Montană. This would be Romania's first modern mine, built to the exacting environmental standards that international companies are used to operating under in today's world,” Gabriel president and CEO Jonathan Henry said.

UNCERTAIN TRAJECTORY

Gabriel reported that during last year, the project’s public profile rose significantly within the political and public arenas in Romania, after the government included it in a national strategic plan in July, and also with the subsequent introduction of several legislative proposals related to, or impacting on, the project.

Despite 2013 having been a period of increased political stability in Romania, a renewed sense of political uncertainty had emerged since the start of the New Year, with the collapse of the ruling 'USL' government coalition in February and the formation of a new government alliance in March.

The renewed relative political instability and recent Ministerial changes, together with the failed legislative initiatives of 2013, had resulted in a lack of transparency in the process for permitting the project, the company said.

It added that until such time as the company could initiate a new, meaningful dialogue with the government to complete the various permitting processes for the project, including the environmental-impact statement, Gabriel could not provide any assurances or estimates of the likely time required to address and resolve matters currently preventing it from advancing the project.

Last Wednesday, a new coalition government, including the Democratic Union of Hungarians in Romania (UDMR), a political alliance representing the ethnic Hungarians of Romania, was sworn in.

The UDMR had been allocated certain Ministerial and State secretarial offices, including, of particular relevance to the project, the Ministries of Environment and Culture, positions it most recently held when in government in 2012, and the new UDMR Ministers had recently stated that they did not believe the next steps to the permitting of Roşia Montană fell under their responsibilities.

A Parliamentary commission rejected a draft Bill in November that would have allowed Roşia Montană to proceed. A second attempt to approve the project as part of a new mining law failed in December.

The project was expected to bring more than $24-billion (at $1 200/oz of gold) to Romania as potential direct and indirect contributions to the gross domestic product. Gold traded at about $1 372/oz on Thursday.

Gabriel had been waiting for approval to use cyanide to mine about 314 t of gold and 1 500 t of silver in the town of Roşia Montană, in Transylvania.

Gabriel had proposed to build four openpit gold mines over the project’s life span, which would destroy four mountaintops and wipe out three out of 16 villages, while preserving Roşia Montană's historic centre.

The project holds Canadian National Instrument 43-101-compliant measured and indicated resources of 17.1-million ounces of gold and 81.1-million ounces of silver. Proven and probable reserves total 10.1-million ounces of gold and 47.6-million ounces of silver.

The company’s TSX-listed stock on Thursday traded at C$1.19 apiece, having lost almost half its value in the last 12 months.