2020 First Quarter Press Release
2020 First Quarter Press Release
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PRESS RELEASE
FOR IMMEDIATE RELEASE
May 12, 2020
2020 First Quarter Report
Gabriel Resources Ltd. (TSXV trading symbol GBU - “Gabriel” or the “Company”) announces the publication of
its First Quarter Financial Statements and Management’s Discussion and Analysis Report for the period ended
March 31, 2020.
Summary
Gabriel remains focused on the progression of its arbitration case against Romania under the rules of the
International Centre for Settlement of Investment Disputes (“ICSID”), part of the World Bank (“ICSID
Arbitration”):
o The original hearing on the merits of the claim was held over two weeks in December 2019 (“Hearing”)
with a focus on liability and jurisdiction. A second hearing on the merits of the ICSID Arbitration claim
is scheduled to be held in Paris in the week of September 28, 2020 that will focus on technical and
quantum related matters (“Second Hearing”).
o On March 10, 2020, the tribunal constituted to adjudicate the ICSID Arbitration (“Tribunal”) set out a list
of questions arising from the evidence presented during the Hearing. The Claimants filed their answers
on May 11, 2020 and the Respondent is required to do so in July 2020. The Tribunal also reserved the
possibility of having an additional round of answers to the relevant questions.
Following the Romanian Government’s official request for the “reactivation” of its nomination of the “Roşia
Montană Mining Landscape” as a UNESCO World Heritage site in January 2020 , Gabriel provided to
Romania a notice requesting consultation with regard to Romania’s application to UNESCO (“Notice”)
reserving its right to commence a fu rther arbitration if warranted. The issuance of the Notice does not in
any way interfere with Gabriel’s pursuit of the ICSID Arbitration.
The net loss for the first quarter of 2020 was $6.8 million (Q4 2019 $18.3 million).
As at March 31, 2020 the Company held $15.7 million of cash and cash equivalents.
The Company believes that it has sufficient funding to cover its planned activities through to the fourth
quarter of 2020 and is currently planning to raise additional financing in the short term to maintain its
primary assets and to pursue the ICSID Arbitration through to the issuance of an award by the Tribunal.
At this time, Gabriel believes that the restrictions of the outbreak of the novel coronavirus do not significantly
impact Gabriel’s ability to continue the ICSID Arbitration process or conduct its limited operations in
Romania. Notwithstanding, the Company has determined, as a consequence of the COVID-19 pandemic,
to defer setting a date for its annual general meeting of shareholders due to public health measures and
restrictions on gatherings and to help protect the health and well -being of its shareholders, colleagues,
communities and other stakeholders.
Dragos Tanase, Gabriel’s President and Chief Executive Officer, stated:
“We remain confident on the prospects of the arbitration case . Our priority and focus in the coming months is
on the preparation for the ICSID Arbitration hearing scheduled to be held in September 2020, and on reinforcing
the financing of the Company in order to maintain a strong funding position through to a final award.”
2020 First Quarter Press Release
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Further information and commentary on the results in the first quarter of 20 20 is given below. The
Company has filed its Unaudited Condensed Interim Consolidated Financial Statements for Q1 20 20
and related Management’s Discussion & Analysis on SEDAR at www.sedar.com and each is available
for review on the Company’s website at www.gabrielresources.com.
For information on this press release, please contact:
Dragos Tanase
President & CEO
Phone: +1 425 414 9256
Richard Brown
Chief Financial Officer
Mobile: +44 7748 760276
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the
TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Further Information
Impact of Coronavirus
With respect to the outbreak of the novel coronavirus (COVID-19), Gabriel has carefully considered the
impact, noting the widespread disruption to normal activities and the uncertainty over the duration of
this disruption. The highest priority of the Board of Directors is the health, safety and welfare of the
Group’s employees, cont ractors and community members. Gabriel recognizes that the situation is
extremely fluid and is monitoring the relevant recommendations and restrictions on travel. At this time,
these recommendations and restrictions do not significantly impact Gabriel’s ab ility to continue the
ICSID Arbitration process or conduct the limited operations in Romania. As previously announced, the
Group is currently seeking new investment and it is possible that this will take longer than previously
anticipated. The Group is also looking to sell its long lead time equipment assets, the market for which
may be adversely affected by the effects of COVID -19. As a result, Gabriel will make the necessary
adjustments to the work processes required to maintain the ICSID Arbitration calendar, and, should the
disruption last for an extended duration, review certain planned activities in Romania, and take remedial
actions if it is determined to be necessary or prudent to do so.
Status of the ICSID Arbitration
The ICSID Arbitration seeks compensation for all of the loss and damage suffered by the Company and
its wholly-owned subsidiary, Gabriel Resources (Jersey) Ltd. (together “Claimants”), resulting from the
Romanian State’s (“Respondent”) wrongful conduct and its breaches of the protectio ns afforded by
certain treaties for the promotion and protection of foreign investment to which Romania is a party ,
including against expropriation, unfair and inequitable treatment and discrimination in respect of the
Roșia Montană gold and silver project and the valuable gold, silver and porphyry copper deposits
defined in the neighboring Bucium concession area (“Projects”) and related licenses.
The Company is well advanced in the ICSID Arbitration process. To date, and in accordance with the
procedural timelines established by the Tribunal, the parties have exchanged a number of substantial
written submissions and participated in the first hearin g on the merits of the claim, which was held in
Washington D.C. between December 2 and December 13, 2019.
The Hearing focused on the evidentiary record in the case and allowed counsel for both parties to
address issues on liability and jurisdiction. The He aring also afforded the Tribunal the opportunity to
hear testimony from certain of the parties’ fact and expert witnesses, as well as to address questions
to each of the parties.
On March 10, 2020, the Tribunal issued Procedural Order No. 27 whereby it set out a list of further
questions arising from the evidence presented during the Hearing. The Tribunal subsequently issued
Procedural Orders No. 28 and No. 31 whereby the parties were instructed to respond to these questions
in a sequential manner . The Trib unal also reserved the possibility of having an additional round of
answers to the relevant questions. The Claimants filed their answers on May 11, 2020 and the
Respondent is required to do so in July 2020.
On April 10, 2020, the Claimants and the Responde nt filed their comments on a written submission to
the Tribunal by the European Commission as a “non-disputing party” in the ICSID Arbitration.
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As previously disclosed, an additional one week oral hearing has been scheduled for the week
commencing September 28, 2020 and will be held at the ICSID hearing facilities in Paris. The Second
Hearing will focus on the technical and feasibility-related aspects of the Project and the quantum of the
damages claimed with further related testimony from certain of the parties’ fact and expert witnesses.
A summary of the procedural aspects of the ICSID Arbitration, together with copies of the procedural
orders of the Tribunal and the principal submissions are available on ICSID's website. Redacted
versions of the transcripts of the Hearing were uploaded to the ICSID website on April 28, 2019.
UNESCO World Heritage
On January 31, 2020, the Ministry of Culture in Romania submitted a letter to UNESCO conveying the
Romanian Government’s official request for the “reactivation” of its nomination of the “Roşia Montană
Mining Landscape” as a UNESCO World Heritage site. The act of applying to UNESCO for such
designation is wholly incompatible with development of the Roșia Montană Project. The application itself
is an undertaking by Romania to protect the subject area from development and precludes mining, as
would a decision by UNESCO formally approving the application.
In light of these recent developments and, for the avoidance of doubt, Gabriel has pr ovided notice to
Romania of a dispute under the Treaties with regard to Romania’s application to UNESCO in relation to
Roşia Montană and has reserved its right to commence a further arbitration if warranted accordingly.
In the Notice, Gabriel confirmed that it is prepared to cooperate in good faith at a senior level with the
Romanian Government and other authorities in a process of consultation with regard to the UNESCO
application. Gabriel is hopeful that Romania will engage constructively and that it will promptly withdraw its
UNESCO application in order to preserve the possibility that Romania, and in particular the local
communities in and around Rosia Montana, can enjoy the significant wide -ranging benefits from the
sustainable development of the Project, as part of an amicable resolution of the dispute regarding Gabriel’s
investments in Romania. Romania has yet to respond to the Notice.
The issuance of the Notice does not in any way interfere with Gabriel’s pursuit of the ICSID Arbitration.
The Company remains focused on the progression and conclusion of the ICSID Arbitration.
VAT Assessment
As previously reported, an assessment of a liability for value added tax in the amount of RON 27m
(approximately $8.6 million) (“VAT Assessment”) was levied against Roșia Montană Gold Corporation S.A.
(“RMGC”), together with a further demand in respect of RON 18.6 million (approximately $6.0 million) of
related interest and penalties, by the Romanian National Agency for Fiscal Administration (“ANAF”) . The
VAT Assessment relates to VAT refunds previously claimed and received by RMGC from the Romanian
tax authorities in respect of RMGC’s purchase of goods and services from July 2011 to December 2015.
On February 6, 2019, the Alba Court of Appeal (Division for Administrative and Tax Claims) ruled in favour
of RMGC’s annulment challenge of the VAT Assessment. ANAF subsequently filed an appeal against this
decision with the High Court of Cassation and Justice, and the first hearing date has been set as December
2, 2020. RMGC is contesti ng this appeal and a stay of enforcement granted by the Alba Iulia Court of
Appeal remains in effect for the VAT Assessment and for the interest and penalties demand .
The Company, along with RMGC, intends to pursue all available legal avenues to challenge the VAT
Assessment along with the interest and penalties and to fully protect its rights and assets.
Liquidity and Capital Resources
Cash and cash equivalents at March 31, 2020 were $15.7 million.
The Company’s average monthly cash usage during Q1 2020 was $3.3 million (Q4 2019: $4.0 million)
primarily reflecting a $5.7 million reduction in accruals for costs in respect of the ICSID Arbitration at
the end of Q1 2020 (Q4 2019: $6.5 million); higher costs incurred in Q4 2019 related to ICSID Arbitration
related activities, including analyzing the Respondent’s rejoinder and the significant resources
necessary to undertake intense activity preparing for and attending the Hearing; and more limited ICSID
Arbitration activities in the first quarter of 2020.
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The Company believes that it has sufficient sources of funding to enable the Group to maintain its
primary assets, including its License and associated rights and permits, and to fund general working
capital requirements together with the material estimated costs associated with the Company advancing
the ICSID Arbitration through the Second Hearing to the fourth quarter of 2020. Notwithstanding, there
can be no assurances that the ICSID Arbitration will advance in a customary or predictable manner or
within any specific or reasonable period of time.
However, the Company does not have sufficient cash to fund either the development of the Project or
all the long-term activities required to see the ICSID Arbitration through to its conclusion, including in
any potential annulment proceeding and/or litigation to enforce any award . A ccordingly, Gabriel is
currently planning to raise additional financing in the short term to maintain its primary assets and to
pursue the ICSID Arbitration through to the issuance of an award by the Tribunal.
Financial Performance
The net loss for the first quarter of 2020 was $6.8 million, a decrease of $0.9m from a loss of $7.7 million
in the corresponding period in 2019, primarily due to exchange gains of $1.4 million reflecting the strong
appreciation of the US dollar against the Canadian dollar offset by $0.5 million higher costs related to
the ongoing ICSID Arbitration compared to 2019, and $0.3 million higher finance c osts due to the
interest component of the convertible subordinated unsecured notes increasing as the liability to repay
those notes increases over the period to maturity.
Annual General Meeting
The Company intends to hold its annual general meeting of shareholders of the Company (“AGM”) later
in the calendar year at a date yet to be set. The decision to move the date of the AGM, typically held in
June, has been made by the Company due to public health measures and restrictions on gatherings
enacted in response to the COVID -19 pandemic and to help protect the healt h and well -being of its
shareholders, colleagues, communities and other stakeholders. Once the Board of Directors has set
the date for the AGM, the Company will file a notice of meeting and record date and its management
information circular under its profile on SEDAR at www.sedar.com.
About Gabriel
Gabriel is a Canadian resource company listed on the TSX Venture Exchange. The Company’s principal focus has been the explora tion
and development of the Roșia Montană gold and silver project in Romania. The Roşia Montană Project, one of the largest undeve loped
gold deposits in Europe, is situated in the South Apuseni Mountains of Transylvania, Romania, an historic and prolific mining district that
since pre-Roman times has been mined intermittently for over 2,000 years. The exploitation license for the Roşia Montană Project is held
by Roșia Montană Gold Corporation S.A., a Romanian company in which Gabriel owns an 80.69% equity interest, with the 19.31% balance
held by Minvest Roșia Montană S.A., a Romanian state-owned mining company.
Upon obtaining the License in June 1999, the Group focused substantially all of their management and financial resources on the exploration,
feasibility and subsequent development of the Roşia Montană Project. Despite the Company’s fulfilment of its legal obligation s and its
development of the Roşia Montană Project as a high -quality, sustainable and environmentally -responsible mining project, using best
available techniques, Romania has blocked and prevented implementation of the Roşia Montană Project without due process and without
compensation. Accordingly, the Company’s current core focus is the ICSID Arbitration. For more information please visit the Company’s
website at www.gabrielresources.com.
Forward-looking Statements
This press release contains “forward-looking information” (also referred to as “forward-looking statements”) within the meaning of applicable
Canadian securities legislation. Forward -looking statements are provided for the purpose of providing information about management’s
current expectations and plans and allowing investors and others to get a better understanding of the Company’s operating environment.
All statements, other than statements of historical fact, are forward-looking statements.
In this press release, forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered
reasonable by the Company at this time, are inherently subject to significant business, economic and competitive uncertaintie s and
contingencies that may cause the Company’s actual financial results, performance, or achievements to be materially different from those
expressed or implied herein. Some of the material factors or assumptions used to develop forward -looking statements include, without
limitation, the uncertainties associated with: the ICSID Arbitration, actions by the Romanian Government, conditions or events impacting
the Company’s ability to fund its operations (including but not limited to the completion of further funding noted above) or service its debt,
exploration, development and operation of mining properties and the overall impact of misjudgments made in good faith in the course of
preparing forward-looking information.
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Forward-looking statements involve risks, uncertainties, assumptions, and other facto rs including those set out below, that may never
materialize, prove incorrect or materialize other than as currently contemplated which could cause the Company’s results to differ materially
from those expressed or implied by such forward -looking statements. Any statements that express or involve discussions with respect to
predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance (often, but n ot always,
identified by words or phrases such as “expects”, “is expected”, “is of the view”, “anticipates”, “believes”, “plans”, “projects”, “estimates”,
“assumes”, “intends”, “strategy”, “goals”, “objectives”, “potential”, “possible” or variations thereof or stating that certai n actions, events,
conditions or results “may”, “could”, “would”, “should”, “might” or “will” be taken, occur or be achieved, or the negative of any of these terms
and similar expressions) are not statements of fact and may be forward-looking statements.
Numerous factors could cause actual results to differ materially from those in the forward-looking statements, including without limitation:
• the outbreak of the coronavirus (COVID ‐19) may affect the Company’s operations and/or the anticipated timeline for the ICSID
Arbitration;
• the duration, required disclosure, costs, process and outcome of the ICSID Arbitration;
• the advancement of Romania’s nomination of the “Roşia Montană Mining Landscape” as a UNESCO World Heritage site;
• changes in the liquidity and capital resources of Gabriel, and/or the group of companies of which it is directly or indirectly parent;
• access to funding to support the Group’s continued ICSID Arbitration and/or operating activities in the future;
• equity dilution resulting from the conversion or exercise of new or existing securities in part or in whole to Common Shares;
• the ability of the Company to maintain a continued listing on the TSX Venture Exchange or any regulated public market for tra ding
securities;
• the impact on business strategy and its implementation in Romania of: unforeseen historic acts of corruption, uncertain fiscal
investigations; uncertain legal enforcement both for and against the Group and political and social instability;
• regulatory, political and economic risks associated with operating in a foreign jurisdiction including changes in laws, governments and
legal regimes and interpretation of existing and future fiscal and other legislation;
• volatility of currency exchange rates; and
• the availability and continued participation in operational or other mat ters pertaining to the Group of certai n key employees and
consultants.
This list is not exhaustive of the factors that may affect any of the Company’s forward-looking statements.
Investors are cautioned not to put undue reliance on forward -looking statements, and investors should not infer that there has been no
change in the Company’s affairs since the date of this press release that would warrant any modification of any forward-looking statement
made in this document, other documents periodically filed with or furnished to the relevant securities regulators or documents presented on
the Company’s website. All subsequent written and oral forward -looking statements attributable to t he Company or persons acting on its
behalf are expressly qualified in their entirety by this notice. The Company disclaims any intent or obligation to update publicly or otherwise
revise any forward-looking statements or the foregoing list of assumptions or factors, whether as a result of new information, future events
or otherwise, subject to the Company’s disclosure obligations under applicable Canadian securities regulations. Investors are urged to read
the Company’s filings with Canadian securities regulatory agencies which can be viewed online at www.sedar.com.
ENDS