“Gabriel notes the short press release published on the Romanian Government’s website on December 27 in respect of the adoption of an increased rate of royalties for all mineral resources regulated by the Mining Law in Romania, and specifically that the royalty payable to the Romanian state for precious metals production will be increased from 4% to 8%. Gabriel awaits a formal clarification from the Romanian Government on if, or how, the published statement would apply to the project,” Gabriel Resources said in a press release Thursday.
Romania’s Government double the royalties on gold, silver and platinum extraction, from 4% to 8% of the value of production, and increased royalties on other mineral products, such as coal and mineral water, from 4% to 6%, with 20% of the fees to be transferred to the local budgets. The decision was taken Tuesday through an emergency ordinance.
Gabriel Resources owns 80.46% of RMGC’s share capital. Romania owns 19.31%, through state-owned mining company Minvest Deva.
Gabriel Resources continues to work together with the Government on potentially amending the ownership of the project the and on the royalties that will be paid, in the context of the overall expected returns to Romania as well as to Gabriel shareholders from the project, reads the press release. “A proposal in this regard is currently with the Romanian Government for consideration. These discussions remain ongoing and Gabriel awaits a response from the Romanian Government on its proposal.”
An official document presented by MEDIAFAX at the end of October states the Romanian Government is in negotiations with Gabriel Resources to increase its stake in Rosia Montana Gold Corporation from 19.3% to 22.5%.
Private investors rejected the increase of royalties for mining, as well as sharing control with the state. They also conditioned the increase of the state’s stake in RMGC on the adoption of laws supporting mining companies, the document read.
The two parties involved in negotiations discussed three scenarios: keeping royalties for gold mining at 4% and the state’s stake at 19.3%; keeping royalties on gold extraction at 4% and increasing the state’s stake to 25%; increasing royalties to 8%, double compared with the current level, and keeping the state’s stake in RMGC at 19.3%.
The document showed investors rejected the third scenario, the only one that states the increase of royalties for mining, considering the “impact it has on the profitability of mining and the risk regarding lack of financing”. Therefore, investors have only agreed to a “reasonable” increase of the state’s stake.
The biggest gold deposit in Romania is located in Rosia Montana, Alba county, and is leased to the Rosia Montana Gold Corporation. The deposit is estimated to contain around 300 tons of gold and 1,600 tons of silver.