Mining’s old guard needs strong medicine
A new report details subpar investor returns in the mining industry over the last decade, particularly big cap diversified companies which have not adapted to new realities.
It’s not easy being John Paulson on Sunday mornings: For the past seven Sundays in a row, a group of protesters have taken to gathering in front of his townhouse on the Upper East Side of Manhattan, calling on him to withdraw his investment in Canada’s Gabriel Resources (TSE:GBU) – the company behind the proposed Rosia Montana gold mine in Romania.
As reported by New York Magazine, protesters stand in front of the 28,5000-square-foot home, hoping to get a reaction from the hedge fund billionaire – or at least to annoy him.
With a 16% stake in Gabriel Resources’, Paulson is the controversial miner’s biggest individual investor. According to New York Magazine, Paulson believes that without the Rosia Montana mine, Romanian development would be “stunted and its people would remain impoverished.”
Gabriel Resources has been fighting for approval for its gold mine – which would become Europe’s largest – for 14 years now. Earlier this week a parliamentary commission rejected the project, but proposed a new legal framework for reviewing mining applications in the country. Gabriel sees this as a step forward, not an outright rejection.
Other high-profile investors in Gabriel include Seth Klarman and Beny Steinmetz – also known for his involvement in the Simandou scandal.
6 Comments
allritejack
Why do the lame brains always assume the protesters are on the right side. The local gypsies around the mine overwhelmingly support the proposed mine.
Romanian
kla2005
• 2 days ago
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“Romania is in desperate need for investments!”
Mr Kla , did you know that Romania its the top growth contry on Europe this fiscal year with 1.6 percent?
Do we need new Investors , of course and we give any new investor that comes lots of leeway and they benefit. Any new company that invest in our country has acces to the most inteligent people of Europe if not the world. But when you guys want to raise from the face of the herth 4 montains, eradicate 4 historic churches , 7 cemeteries, dislocate thousands of people and move them in new bungalolw like apartaments, like the communists did and after 17 years , leave bihind an 8km in diameter and 400 meter deep of a lake lace with tons of cyanide for the rest of the time,I want to ask you, would you accepet that in Central park if you make as a country 3 billion? Is that good investment Mr Kla ? Is that good for the country of Romania, for its people and future generation ? No Thank You. Like that sign says, GTFO.—>
kla2005
Romania is in desperate need for investments!
The proposed Project shall overlap the existing mine site that was actually deserted by the Romanian state that previously operated the mine!
The environment is heavily impacted by previous mining works and this Project comes to clean up that mess!
Those who are against it have their own agenda being paid by other rivals on the gold market of these investors or they do not know the Project. Because the Project is going to collect all current ARD running out of old mining works and into the downstream river system untreated and the Project will treat that ARD, which is full of diluted heavy metals, and also will start rehabilitation of the impacted environment from the early years of the Project operations!!!
Also, and this is a critical aspect, the Project shall develop the historic mining center of Rosia Montana by fully rehabilitating the patrimony houses, the historic monuments and by developing an impressive mining museum consisting of several exhibitions, among which the best is the Roman underground mines at Catalina Monulesti Gallery where the famous wax-coated tables from Roman times were discovered!!!
The open pits shall be developed in turns not all at the same time!
There are management plans in place to address any risks and to cope with any contingencies!!!
Moreover, the Romanian Government shall receive an Environmental Financial Guarantee of up to 100 million US$ before launching any works!!!
Additionally, through the new Agreement with the Romanian Government the company committed to spend 100 million US$ in developing local heritage and and an additional 46 million US$ to be used by Romanian Ministry of Culture for any cultural heritage project!
The Minister of Culture stated that this amount was never spent by Romania altogether for all its cultural heritage projects developed in the last 20 to 30 years!
Leonid Budge
Using the updated RM CAPEX data, increased state interest and increased royalty and based upon current gold price here are my revised numbers on RM.
CAPEX including sustaining capital and environmental bond: $2,347 million
Revenue $10,340
Direct costs: $3,257 billion
Royalties: $626 million
Taxes: $500 million
State Cashflow (pre-financing): 972 million
RM Cashflow (prefinancing): $2916 billion
Financial Metrics for Gabriel Interest:
NPV @ 10% – $ 617 million
IRR – 19%
The project gives a reasonable return for the risk for a huge investment.
The benefits to Romania are enormous. Let me explain a little about
GDP impact from a point source like the RM project. GDP from a single
from a single project is the market value of all the FINAL goods and
services produced from that project over the life of the project. GDP
impact is not merely the immediate inputs from the project but the
downstream impacts of those unputs. e.g. an employ gets paid (that is a
direct cost), he then spends his income to purchase a service, the
service provider then purchases additional inputs to be able to provide
the service etc etc.
The net impact on GDP of a project like RM is 4-6 times the original
input to the economy. Hence the figure reported as $24 billion . This
was however based upon a gold price of US$ 900 not the current price
hence the higher number.
This project not only poses a small environmental risk – very small –
but it cleans up mess created by Roman age to socialist era mining and
processing activity.
This project is the best thing to happen to Western Romanian in 3 generations.
Leonid Budge
Leonid Budge
We all know what the real issue is here – many of you are deeply
jealous that a foreign company and its shareholders who were encouraged
to invest and invested hundreds of millions in romania – might just
make a profit and you wont benefit directly.
Reward generally needs effort and hard work. Little comes easily in life
without effort – but many of you would prefer to benefit with little
effort. Gabriel has spent 14 years investing $500 million in Romania
and its now time that the country honored its agreement. Failing that
the country will have a massive arbitration case which it will loose in
the amount of $4 billion or so and the rivers and streams of Rosia
Montana will remain polluted for another few generations.
Gabriel is now preparing to go a very different path here as they must be close
to giving up any hope that Romania will honor its agreements and
obligations. This will have a very very negative effect on the country,
its credit rating and future investment opportunities. already
investors are saying – never again in Romania.
Zambila
At last ! the first legal stept to prove CORRUPTION ! :
https://reportingproject.net/occrp/index.php/en/ccwatch/cc-watch-indepth/2251-romanian-mining-company-under-investigation-for-money-laundering
Many more to come !