Today, I have decided to sell the addition that I bought on April 9-th and mentioned in this article:
The reason behind this sell is purely political. Source: http://news.yahoo.com/romanian-government-falls-confidence-vote-125424091.html
BUCHAREST (Reuters) - Romania’s centre-right government collapsed on Friday when it lost a vote of confidence two months after taking office, raising the prospect of months of political turmoil and casting doubts on an austerity programme.
For a new prime-minister was nominated the strong enemy of Gabriel Resources, Victor Ponta. He will soon form the new government. as you know, Mr Ponta said in Oct 2011 – “The Rosia Montana is blocked because not all politicians can be bought”. Even though this might be too aggressive comment as without a green light for Rosia Montana’s mining, Romania will have a huge financial problems and no foreign company will ever want to work there, his comments and views are a big risk. That is why now I hold just the initial purchase of the stock. The risk are too high as you know and even though the reward could be huge, Gabriel Resources should just be a small percentage of your portfolio.
The following are proposed as the Minister of Environment for Romania by Victor Ponta the new Prime Minister: Rovana Plumb, Carmen Moldovan. An internet search of each name AND rmgc provides some telling details. Particularly Ms. Plumb’s stance on the project in a commentary date April 12, 2012 and Mr. Moldovan’s complaint regarding the company’s radio ads in Oct. 2011.
I believe that Rovana Plumb will be the environment minister but who knows. What I believe will happen next is that the new prime-minister will want to re-negotiate the royalties which will lower the economic effects of the mine. The second thing is that permit will probably be given by the environment minister but the cyanide levels proposed will have to be lowered. These news are definitely not good and should be kept in mind. I still feel that Romania will have no other choice but to give the permits because if it doesn’t Gabriel will probably fill for arbitrary lawsuit and ask for huge compensations for the $450 mln CAD already invested the near 14 years time lost. Such an action could cost Romania up to $3 billion CAD which a broken country can’t pay.
That is why going forward, I still see Gabriel Resources working the mine but I have no idea how a royalty change as well as a cyanide level will impact the profits of the gold miner.