Gabriel Resources Ltd.: Annual Results and Fourth Quarter Report

TORONTO, CANADA -- (Marketwired) -- 03/12/15 -- Gabriel Resources Ltd. ("Gabriel" or the "Company") (TSX: GBU) announces the publication of its Annual Results and Fourth Quarter Management's Discussion and Analysis Report for the period ended December 31, 2014.

Summary

Capitalized terms used in this summary section are defined in "Further Information" below.

--  In 2014 political activities in Romania have focused on the European
    Parliamentary elections held in May and campaigning in the November 2014
    Presidential election. Consequently, Governmental decision-making for
    major domestic strategic objectives in Romania, including the Project,
    has stalled.

--  In the Presidential election, the centre right candidate, Klaus Iohannis
    defeated the current social democrat Prime Minister, Victor Ponta, and
    his investiture as the new President took place on December 22, 2014.

--  Throughout 2014 and to date, no conclusions have been forthcoming on
    next steps for the TAC to recommend a position to the Government on the
    environmental permitting of the Project.

--  In January 2015, the Company announced that it had issued a formal
    notification to the President and Prime Minister of Romania pursuant to
    the provisions of certain international bilateral investment protection
    treaties requesting that the Romanian authorities engage formally with
    Gabriel in a process of consultation in order to find an amicable
    resolution regarding the development, construction and operation of the
    Project.

--  As at the date of this document, there has been no formal response to
    the Notice and Gabriel has not initiated any arbitration claim or
    application to any international arbitration institution. The outlook
    for the Project remains dependent on a constructive and transparent
    dialogue with the Government and the TAC regarding the completion of
    various permitting processes for the Project and is therefore uncertain
    at this time.

--  Gabriel has made it clear that it is ready to engage at a senior level
    with the Romanian authorities in order to resolve amicably the issues at
    dispute as soon as possible. However, Gabriel is also committed to the
    protection of its rights in Romania, and should the current situation
    continue and no workable solution develop, Gabriel and its affiliates
    may be left with no choice but to pursue legal recourse, including the
    filing of an arbitration claim(s).

--  $44.2 million of cash and cash equivalents were held as at December 31,
    2014.

Jonathan Henry, Gabriel's President and Chief Executive Officer, stated:

"We still await open and transparent dialogue with the Romanian authorities on how they wish to progress based on our full commitment to the construction and operation of a world class gold mine at Rosia Montana. With no permitting progress forthcoming, it is regrettable that the Company has had to make a majority of its Romanian workforce redundant in the last year. The current decision makers in Romanian politics can change the future prosperity of the region by progressing permitting for a project which has the potential to create over 3,600 jobs and allow Romania to become a leading gold producer in Europe.

We remain hopeful that an amicable resolution can be reached without the need to escalate our situation to international arbitration. Our overriding wish remains to avoid any protracted dispute and to partner with Romania in developing a world-class and sustainable mining project for the benefit of Romania and all stakeholders. Dialogue remains our preference, not arbitration."

Further information and commentary on the operations and results in the fourth quarter of 2014 and full financial year, together with events anticipated in the short term, is given below. The Company has filed its Annual Audited Consolidated Financial Statements and 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.

Further Information

Financial Performance

--  The net loss for the fourth quarter of 2014 was $1.4 million, and for
    the year ended December 31, 2014 was $6.3 million, or $0.02 per share.

Liquidity and Capital Resources

--  Cash and cash equivalents at December 31, 2014 amounted to $44.2
    million.

--  In Q4 2014, the Company paid the final tranche of severance payments of
    $1.1 million, as discussed further below, and the first interest payment
    of $1.6 million on the principal amount of convertible, subordinated,
    unsecured notes with a coupon of 8% (the "Notes") issued as part of a
    $35 million fundraising in Q2 2014. Excluding the impact of these items,
    the Company's average monthly net cash usage during Q4 2014 was $1.9
    million (2014: full year average $2.3 million, 2013: full year average
    $3.9 million, 2012: full year average $4.9 million).

--  The Company has continued with initiatives to preserve capital until
    such time as the Government of Romania ("Government") moves ahead with
    permitting the Rosia Montana gold and silver project (the "Project").
    This has included the difficult decision to terminate approximately
    eighty per cent of the employment contracts at Rosia Montana Gold
    Corporation ("RMGC"), effective Q2 2014. Total employee severance of
    approximately $2.6 million was paid in two tranches in Q2 2014 and Q4
    2014.

Notice of Dispute

--  In January 2015, the Company announced that it had issued a formal
    notification (the "Notice") to the President and Prime Minister of
    Romania on behalf of Gabriel and certain of its affiliates, pursuant to
    the provisions of certain international bilateral investment protection
    treaties which the Government has entered into with each of the
    Governments of Canada, the Netherlands and the United Kingdom (together
    the "Treaties"), requesting that the Romanian authorities engage
    formally with Gabriel in a process of consultation in order to find an
    amicable resolution regarding the development, construction and
    operation of the Project.

--  As at the date of this document, there has been no formal response to
    the Notice and Gabriel has not initiated any arbitration claim or
    application to any international arbitration institution.

--  Through the issuance of the Notice, Gabriel reiterated its strong
    commitment to develop the Project and, accordingly, is continuing to
    seek an amicable resolution with the Government to the significant
    delays in the permitting of the Project, as described further below.
    Gabriel has made it clear that it is ready to engage at a senior level
    with the Romanian authorities in order to resolve amicably the issues at
    dispute as soon as possible. During this period, Gabriel intends to
    continue to closely monitor the situation in Romania and to take those
    steps available to it to be in a position to move the Project forward
    should a resolution be achieved, including the advancement, to the
    extent possible, of those activities described further below. However,
    Gabriel is also committed to the protection of its rights in Romania,
    and should the current situation continue and no workable solution
    develop, Gabriel and its subsidiaries may be left with no choice but to
    pursue legal recourse, including the filing of one or more arbitration
    claim(s) under the Treaties.

Background to the Dispute

--  Since obtaining the rights to develop the Project, Gabriel has been
    firmly committed to the Project's realization and, to date, has sourced
    significant funding and invested collectively amounts in excess of $600
    million to finance the Project. This expenditure has enabled the Project
    to comply with the obligations arising in regard to the investment
    rights conferred to Gabriel and its affiliates.

--  Over many years, in reliance on numerous representations made and
    actions taken by the competent Romanian authorities, Gabriel has
    complied in good faith with its obligations under Romanian law and
    diligently pursued the development of the Project as a productive, high-
    quality, sustainable and environmentally responsible mining project,
    using best available techniques as recognized by the European
    Commission.

--  Unfortunately, to date, the actions and inactions of the Romanian
    authorities have prevented the Project from advancing to implementation.
    Ultimately, the Project is no longer the subject of routine, regulatory
    analysis set out by the competent administrative bodies charged with its
    assessment; instead it has become subject to a dysfunctional,
    politicised decision-making process and held hostage to conflicts
    between rival political factions and misinformation that has further
    unnecessarily damaged the ability for development of the Project.

--  This state of affairs, among other things, has prevented progress from
    being made with regard to the issuance of an environmental permit ("EP")
    for the Project, evidenced by the repeated delays to the technical
    analysis committee ("TAC") environmental impact assessment ("EIA")
    review process.

Political Environment

--  During 2014, political activities in Romania focused on the European
    Parliamentary elections, which took place at the end of May, and the
    presidential elections which were held over two rounds in November 2014.
    Contrary to polling forecasts, Klaus Iohannis, the then mayor of the
    city of Sibiu, won the second round of presidential voting with 54% of
    the vote against 46% for the Prime Minister, Victor Ponta. Mr. Iohannis
    was sworn in as the fifth President of Romania on December 21, 2014 and
    Victor Ponta remains as the country's Prime Minister and head of
    Government. The next parliamentary elections in Romania are scheduled
    for late 2016.

--  In December 2014, Prime Minister Ponta announced a reshuffle of his
    cabinet. This move followed the November 27, 2014 announcement of UDMR,
    a political alliance representing the ethnic Hungarians of Romania, that
    it would withdraw from the coalition government.

--  The existing governing coalition, the fourth government led by Prime
    Minister Ponta in the last three years, is supported by the Social
    Democratic Party (PSD), the Conservative Party (PC), the National Union
    for the Progress of Romania (UNPR) and the centre-right Liberal
    Reformist Party (PLR) led by the President of the Senate and former
    Prime Minister, Calin Popescu-Tariceanu. As at the date of this
    document, the existing Government holds a clear majority of the seats in
    the Senate and the Chamber of Deputies.

--  The level of Government engagement on the Project during 2014 was
    extremely limited. Against this background, during the whole of 2014 and
    to date, there has been no progress in any of the key areas for the
    Project where decision-making is required by the competent Romanian
    authorities.

Environmental Permit

--  Since the recommencement of the EIA review process in September 2010,
    TAC has met on eleven separate occasions, five times in 2011, four times
    in 2013 and twice in 2014, most recently on July 24, 2014, without
    conclusion. The TAC did not meet during 2012.

--  In early 2014, the then Minister of Environment, Attila Korodi, publicly
    declared his intention to contract an expert to prepare a further study
    on the permeability of the Project's tailings management facility. Mr.
    Korodi no longer holds the position of Minister of Environment and, so
    far as the Company is aware, no further action has been taken to
    initiate such further report.

--  Gabriel remains unable to provide guidance on the related timeframes to
    a final decision with regard to the EP.

Other Permitting

--  As previously reported by the Company, an amended zonal urbanism plan
    for the industrial development area of the Project was initiated in 2010
    ("Industrial Area PUZ") and it is currently proposed that, subject to
    the receipt of the relevant approvals, it will replace the existing
    industrial zonal urbanism plan approved for the footprint of the
    proposed mine at Rosia Montana.

--  There was limited progress in 2013 and 2014 in obtaining the required
    endorsements for the Industrial Area PUZ. As at the date of this
    document, RMGC holds 18 valid endorsements out of the total number of 23
    necessary for the approval of the Industrial Area PUZ. In April 2014,
    pursuant to a legal challenge launched by non-governmental organizations
    ("NGOs") opposing the Project, one of the 19 endorsements that existed
    at that time was cancelled by court order, as described further below.
    RMGC, together with the relevant authorities, has submitted an appeal
    against this decision. After obtaining all the necessary endorsements,
    the final approval for the Industrial Area PUZ will be required to be
    given by the local councils of Rosia Montana, Abrud and Bucium.

--  In 2009, the local council of Rosia Montana initiated the process for
    the zonal urbanism plan for the Rosia Montana historical protected area
    ("Historical Area PUZ") and, as at the date of this document, 10 out of
    the total of 13 endorsements necessary for its final approval have been
    obtained. Once the endorsement process is completed, the final approval
    of the local council of Rosia Montana will be then required.

--  In July 2014 the existing general urbanism plans and accompanying local
    regulations ("PUGs") for Rosia Montana and Abrud were extended, pending
    the process for obtaining new PUGs, for a maximum term of three years.
    The processes for local councils to obtain new PUGs for Rosia Montana,
    Abrud and Bucium communes are ongoing and are subject to formal approval
    processes, including public consultation.

--  In January 2014, RMGC submitted the required technical documentation for
    obtaining renewed safety permits for the design of the Project's Corna
    and Cetate dams. In November 2014, the Romanian National Dam Safety
    Commission ("CONSIB") unanimously voted for their issuance; final
    ratification is now with the Ministry of Environment following which it
    is expected to issue new safety permits for the dams.

Litigation

--  The key developments that have occurred in legal proceedings concerning
    the Project during the final quarter of 2014 and certain upcoming court
    hearings in the first quarter of 2015 are detailed in the Management's
    Discussion & Analysis which accompanies this press release and is filed
    on SEDAR at www.sedar.com.

--  Of particular note is that on December 10, 2014, RMGC initiated a legal
    action before the Bucharest Court of Appeal challenging the validity of
    a List of Historical Monuments approved by the Ministry of Culture and
    National Institute of Patrimony in 2010 ("2010 LHM"). RMGC has contested
    the validity of the 2010 LHM on the basis that it substantially extends
    (without legal justification) the protection regime applicable to
    certain monuments within the perimeter of the Project, as compared to a
    2004 list. The first hearing of this claim is scheduled for March 24,
    2015, and its outcome will have some bearing on a number of other legal
    challenges to certificates and permits held by the Project.

--  Due to the inherent uncertainties of the judicial process, the Company
    is unable to predict the ultimate outcome or impact, if any, with
    respect to matters challenged in the Romanian courts. In all
    circumstances, the Company and/or RMGC will vigorously maintain its
    legal rights and will continue to work with local, county and federal
    authorities to ensure the Project receives a fair and timely evaluation
    in accordance with Romanian and EU laws. However, there can be no
    assurance that any claims will be resolved in favour of the Company,
    RMGC or the Project. The implications of a negative court ruling will
    only be known once such a decision is issued formally by the relevant
    court and the position of the Government is assessed.

Outlook

--  The Company is focused on trying to engage formally with the Government,
    as contemplated by the Notice. In parallel, Gabriel will continue to
    reduce its cost base to align it with the prevailing situation in
    Romania vis-a-vis the Project's permitting activities and the repeated
    delays of the Government to properly address the regulatory assessment
    and permitting procedures for the Project. Such initiatives have a long-
    term goal of ensuring that the Company remains financially strong, and
    capable of maintaining, as far as possible, all existing licenses and
    permits in good standing, and progressing, to the extent possible,
    various other similar applications.

--  Cost-reduction measures have included, amongst other things, a material
    reduction in the workforce of Gabriel and RMGC from approximately 500
    employees as at December 31, 2013 to approximately 110 in March 2015.

--  In the short-term, the Company's principal objectives include:

    --  trying to engage formally with the Romanian authorities, as
        contemplated by the Notice;

    --  continuing efforts, to the extent possible, to (i) clarify the
        remaining procedural events and authorisation requirements necessary
        to move the Project, and in particular the permitting process,
        forward; and (ii) advance existing permitting applications including
        the EIA review process;

    --  continuing to reduce the Company's cost base and to carefully manage
        its cash resources; and

    --  maximizing shareholder value, while optimizing benefits of the
        Project to all stakeholders.

About Gabriel

Gabriel is a Canadian TSX-listed resource company focused on permitting and developing its world-class Rosia Montana gold and silver project. The exploitation license for the Project, the largest undeveloped gold deposit in Europe, is held exclusively by Rosia Montana Gold Corporation, a Romanian company in which Gabriel currently owns an 80.69 percent equity interest, with the 19.31 percent balance held by Minvest Rosia Montana S.A., a Romanian state-owned mining enterprise. Gabriel and RMGC are committed to responsible mining and sustainable development in the communities in which they operate. The Project is anticipated to bring over US$24 billion (at US$1,200/oz gold) to Romania as potential direct and indirect contribution to GDP. The Project will generate thousands of employment opportunities. Gabriel intends to build a state-of-the-art mine using best available techniques and implementing the highest environmental standards whilst preserving local and national cultural heritage in Romania.

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 Gabriel's operating environment.

These forward-looking statements may include statements with respect to the future financial or operating performance of the Company and its subsidiaries, the perceived merit of properties, exploration results and budgets, mineral reserves and mineral resources estimates, work programs, capital expenditures, operating costs, cash flow estimates, production estimates and similar statements relating to the economic viability of a project, timelines, strategic plans, including the Company's plans and expectations relating to the Project, the anticipated outcomes of the application processes for permits, endorsements and licenses, including but not limited to the ongoing review of the environmental impact assessment, required for the Project, or other statements that are not statements of fact.

Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance (often, but not always, identified by words or phrases such as "expects", "is expected", "anticipates", "believes", "plans", "projects", "estimates", "assumes", "intends", "strategy", "goals", "objectives", "potential", "possible" or variations thereof or stating that certain 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.

Forward-looking statements are based upon certain assumptions and other important factors regarding present and future business strategies and the environment in which the Company will operate in the future, which could prove to be significantly incorrect. Forward-looking statements are inherently subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of the Company and/or its subsidiaries to be materially different from those expressed or implied by such forward-looking statements.

These risks, uncertainties and other factors include, without limitation, the attitudes and actions of the Romanian government related to the Company's investment in Romania, including the response of the Romanian authorities to the filing of the Notice; the ability of the Company to realize value from its investments in Romania pursuant to the Treaties and potential international arbitration proceedings in the event that the Company and the Romanian authorities do not reach an agreement regarding development, construction and operation of the Project; the advancement of any potential international arbitration proceedings in a customary manner; the outcome of any potential international arbitration proceedings before arbitration tribunals as provided in the Treaties, including the timing and value of any arbitral award or settlement; management's expectation with regards to the amount of costs, fees and other expenses and commitments payable in connection with any potential arbitration; any inability or delay in recovering from Romania the amount of any award or settlement. In addition, such risks, uncertainties and other factors include, without limitation, the political and economic risks of operating in Romania, including those related to controls, regulations, political or economic developments and government instability in Romania; uncertainty of estimates of capital costs, sustaining capital costs, operating costs, production and economic returns; permitting risks, including the risk that permits and governmental approvals necessary to develop and operate the Project will not be available on a timely basis or at all, risks of maintaining the validity and enforceability of necessary permits and risks of replacing expired/cancelled permits and approvals; uncertainties relating to the assumptions underlying the Company's mineral resource and mineral reserve estimates, such as metal pricing, metallurgy, mineability, marketability and operating and capital costs; risk related to the acquisition of all necessary surface rights for the development of the Project, including the risk that the Company may not acquire all such rights, or acquire such rights at acceptable prices; risks related to the Company's ability to commence production and generate material revenues or obtain adequate financing for its planned exploration and development activities;

risks of defective title to mineral property, including the risk of successful legal challenges to the validity of the Company's exploitation license; risks related to the Company's ability to finance the development of the Project through external financing, strategic alliances, or otherwise; litigation risks, including the uncertainties inherent in current and future legal challenges relating to the Project; risks related to the availability of infrastructure, water, energy and other inputs; uncertainty inherent in litigation including the effects of discovery of new evidence or advancement of new legal theories, the difficulty of predicting decisions of judges and the possibility that decisions may be reversed on appeal; uncertainties relating to prices for energy inputs, labour, material costs, supplies and services (including, but not limited to, labor, cement, steel, capital equipment, reagents and fuel); risks related to changes in law and regulatory requirements, including environmental regulation; risks related to the subjectivity of estimating mineral resources and mineral reserves and the reliance on available data and assumptions and judgments used in interpretation of such data; risks related to currency fluctuations, particularly in the value of the United States dollar and/or the Canadian dollar relative to each other and to the Euro and the Romanian leu; risks related to the future market prices of gold and silver and other mineral and commodity price fluctuations, and volatility in metal prices; risks related to the need for reclamation activities on the Company's properties and uncertainty of cost estimates related thereto; risks associated with maintaining substantial levels of indebtedness, including potential financial constraints on operations; dependence on cooperation of state-owned joint venture partner in the development of the Project; risks related to the loss of key employees and the Company's ability to attract and retain qualified management and technical personnel; risks related to market events and volatility of global and local economic climate; taxation, including change in tax laws and interpretations of tax laws; mining and development risks, including risks related to infrastructure, accidents, equipment breakdowns, labor disputes or other unanticipated difficulties with or interruptions in development, construction or production; risks related to opposition to the Project from non-governmental organizations or civil society; share capital dilution and share price volatility; and increased competition in the mining industry.

Forward-looking information contained herein is made as of the date of this press release. There can be no assurance that forward-looking information or statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information or statements. Accordingly, for the reasons set forth above, readers should not place undue reliance on forward-looking statements. The Company does not undertake to update any forward-looking statements, except in accordance with applicable securities laws.

Contacts:
Jonathan Henry
President and Chief Executive Officer
Mobile: +44 7798 801783
[email protected]

Max Vaughan
Chief Financial Officer
Mobile: +44 7823 885503
[email protected]

Bobby Morse / Gordon Poole
Buchanan
Tel: +44 20 7466 5000
[email protected]
[email protected]

Source: Gabriel Resources Ltd.

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