Sept. 9 (Bloomberg) -- Gabriel Resources Ltd., a Canadian company backed by billionaire hedge-fund manager John Paulson, dropped the most in at least 25 years after Romania’s prime minister urged lawmakers to reject plans for a gold mine.
Gabriel fell 54 percent to C$0.68 in Toronto, the biggest drop since 1988, according to data compiled by Bloomberg.
Romania’s parliament should “quickly vote” on whether to block the Rosia Montana mine, Prime Minister Victor Ponta said today. Crin Antonescu, the head of coalition partner National Liberal Party, and opposition leader Vasile Blaga called for the project to be killed, while the ruling Social Democratic Party is split on the issue.
Thousands of protesters have massed on Romanian streets over the last week to demand Rosia Montana be blocked on environmental grounds. Gabriel has spent more than a decade trying to build what would be Europe’s largest gold mine and plans to use cyanide to extract metal from ore.
“Gabriel is urgently seeking confirmation of the actual statements made and clarification of the impact on the proposed permitting of the project,” the Whitehorse, Yukon-based company said in a statement today.
“If the draft legislation is rejected then the company will assess all possible actions open to it, including the formal notification of its intentions to commence litigation for multiple breaches of international investment treaties,” Gabriel said.
More than 8,000 protesters took to the streets yesterday in Bucharest, according to news website hotnews.ro. The demonstrations come a month after the government approved a draft law that would allow development of the mine.
Romania suffered one of Europe’s worst environmental disasters in 2000 when cyanide-rich mine waste contaminated tributaries of the Tisza river and spread to the Danube.
The Rosia Montana project should be rejected as it lacks public support, which overrides any technical data, Antonescu told reporters earlier today. The statement is a personal opinion and doesn’t reflect the stance of the National Liberal Party, which has yet to agree on a common view, he said.
Gabriel said recent polls “illustrate a majority of support” for the project in Romania.
“It appears the government has instituted emergency procedures to halt any debate in parliament,” the company said in the statement.
The company had expected to get parliamentary approval as soon as November, Chief Executive Officer Jonathan Henry said on Sept. 2.
Gabriel said in August that if parliament adopted the draft law, which increases the state’s stake in the mine to 25 percent and raises its royalty rate to 6 percent, the company would be able to accelerate development of Rosia Montana and other mining projects.
Paulson’s hedge-fund firm Paulson & Co. holds a 16 percent stake in Gabriel, making it the biggest shareholder, according to data compiled by Bloomberg. Rosia Montana holds an estimated 10.1 million ounces of gold reserves.
--With assistance from Sonja Elmquist in New York. Editors: Simon Casey, Steven Frank