Gabriel Resources' Latest Rebel: The Royal Bank of CanadaPublished by MAC on 2003-08-03
Gabriel Resources' Latest Rebel: The Royal Bank of Canada
3 August 2003
Press Release from: Albumus Maior, Romania
Major developments from within the Royal Bank of Canada (RBC) have shed new light as to why Gabriel's recent Can. $28m "bought deal" equity offering with RBC Capital Markets fell through. Ten days after Gabriel Resources ('Gabriel') declared that 'it' was not proceeding with the RBC deal' RBC Financial Group announced to have adopted the 'Equator Principles' - a voluntary set of guidelines to manage social and environmental issues related to large-scale project financing (see http://www.equator-principles.com).
The Royal Bank of Canada is Canada's largest financial institution as measured by market capitalisation and assets, and North America's seventh largest bank by assets and tenth largest bank by market capitalisation. RBC is one of North America's leading diversified financial services companies.
Gabriel Resources (TSX: GBU) is a junior Canadian mining company intending to realise Europe's largest open-cast mining development in Rosia Montana. The project entails, amongst other thins, the involuntary resettlement of over 2000 people. From its onset the development has been beleaguered with scandals and operational problems including local, national and international opposition. For the past months Gabriel has been under severe pressure from a 70% increase in project costs, a 50% drop in share value, a serious shortage of funds, as well as having to deal with the en-bloc resignation of four members of its senior management team. On July 10th 2003 Adrian Nastase, Romania's prime minister, declared that he was "very reluctant" to support Gabriel's Rosia Montana gold/silver mining project because of environmental concerns.
Gabriel intended to use the net proceeds of the Can $28m 'Offering' to finance the development the Rosia Montana gold project and for general corporate purposes.
The 'Equator Principles' were first adopted by ABN AMRO Bank N.V., Barclays plc, Citigroup Inc., Credit Lyonnais, Credit Suisse First Boston, HypoVereinsbank, Rabobank, Royal Bank of Scotland plc, WestLB AG, and Westpac Banking Corporation. They are based on policies and guidelines of the International Finance Corporation (IFC), the World Bank's private lending arm.
"The adoption of the Equator Principles enhances our existing environmental risk management policies and commitment to sustainable development," said Susanne Labarge, vice-chairman and chief risk officer, RBC Financial Group. According to RBC "in adopting the Equator Principles, RBC undertakes to provide loans only to those projects whose sponsors can demonstrate to the satisfaction of RBC that they have addressed key social and environmental issues in accordance with our policies and processes."
Alburnus Maior welcomed the news. "Just as was the case with the IFC - every time Gabriel has to demonstrate to a truly objective party to have addressed key social and environmental issues, they fail. RBC's decision is a further and important confirmation that Gabriel's project is endemically hazardous, unsustainable and thus beyond sound risk assessment. We hope that RBC's message will reach and teach others," said Eugen David, president of Alburnus Maior.
Alburnus Maior is an NGO based in Rosia Montana. It represents the interests of roughly 350 family farms opposed to Gabriel's project on social, environmental, archaeological and economic grounds.