/EINPresswire.com/ -- TORONTO, CANADA -- (Marketwired) -- 03/29/16 -- 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, 2015, together with a proposed private placement to raise up to $20 million, subject to the approval of securityholders and the Toronto Stock Exchange ("TSX").

Summary

--  Romania continues to block and prevent implementation of the Rosia
    Montana gold and silver project ("Project") without due process and
    without compensation. The Company is progressing with an arbitration
    case against Romania before the World Bank's International Centre for
    Settlement of Investment Disputes ("ICSID") under applicable treaties
    for the promotion and protection of foreign investment to which Romania
    is a party ("ICSID Arbitration"). The arbitral tribunal that will hear
    the case is currently being constituted.
--  Despite the Company's expressed preference to engage in discussions to
    seek an amicable resolution of the dispute, the Romanian authorities
    have failed to respond to the Company's offer to do so.
--  The Company has signed subscription agreements with a number of existing
    investors (the "Subscribers") pursuant to which the Company intends to
    raise up to $20 million by way of a non-brokered private placement (the
    "Private Placement"). In addition, the Company intends to enter into
    arrangements with certain existing securityholders to amend certain
    terms of the securities held by such holders (the "Restructuring"). The
    Private Placement and Restructuring are together referred to in this
    announcement as the "Transactions", the terms of which are detailed in
    further information below. The completion of the Transactions is subject
    to securityholder and regulatory approval, as applicable. Proceeds from
    the Private Placement will be used for the ICSID Arbitration and for
    general working capital requirements.
--  As at December 31, 2015, the Company recorded a non-cash write-down of
    $631.2 million relating to all mineral property and a material
    proportion of its property, plant and equipment (the "Impairment").
--  The Company held $18.6 million of cash and cash equivalents as at
    December 31, 2015.

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

"There remains no engagement with the Romanian authorities following the formal notification of our dispute fourteen months ago. It is regrettable that the Company has had to further reduce its workforce, community support and investment in Romania in the last year as a consequence of Romania's failure to address the Project. Our overriding wish remains to achieve an amicable resolution that allows for the construction and operation of a world class gold mine at Rosia Montana. However, in the absence of such a resolution, the Company is fully committed to protecting its rights and interests through the ICSID arbitration process. To this end, the Company intends to raise up to $20 million by way of a non-brokered private placement to finance, amongst other things, the ICSID arbitration."

Further information and commentary on the operations and results in the fourth quarter of 2015 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

Status of the ICSID Arbitration

--  On July 21, 2015, Gabriel and Gabriel Resources (Jersey) Ltd. (together
    the "Claimants") filed a Request for Arbitration (the "Arbitration
    Request") pursuant to the provisions of certain bilateral investment
    protection treaties which the Government of Romania has entered into
    with each of the Government of Canada and the Government of the United
    Kingdom of Great Britain and Northern Ireland for the Promotion and
    Reciprocal Protection of Investments (together the "Treaties").
--  Having encouraged Gabriel's investment in the Project, as well as
    reasonable expectations that the Project would be evaluated on its
    merits, Romania has, through the actions and inaction of the authorities
    and administrative bodies charged with assessment of the Project,
    frustrated and prevented implementation of the Project, including by
    imposing unjustified administrative delays in the permitting process,
    imposing shifting and non-transparent legal requirements, politicizing
    applicable legal and administrative processes, and ultimately abdicating
    the responsibility to make decisions on the permitting of the Project in
    contravention of the applicable legal framework. Simultaneously, Romania
    has required Gabriel to expend significant amounts on mining activities
    and fees and taxes in relation to the exclusive rights to develop and
    operate the Project which were granted to the Company's 80.69% owned
    Romanian subsidiary, Ro ia Montana Gold Corporation S.A. ("RMGC"), in
    June 1999, pursuant to an exploitation concession license agreement
    ("License") and associated property rights.
--  The Romanian State's treatment of Gabriel and its investments in Romania
    is incompatible with Romania's obligations as established under the
    Treaties, gives rise to multiple claims by Gabriel under those Treaties
    and has caused very substantial losses and damage to Gabriel.
--  Whilst the Company's primary objective has always been the development
    of the Project to operational status, in the continued absence of any
    engagement by the Romanian State, the ICSID Arbitration has now become
    the core focus of the Company.
--  The presiding tribunal for the ICSID Arbitration ("Tribunal") has yet to
    be fully constituted. To date the Tribunal consists of the following
    arbitrators: Dr. Horacio Grigera Naon (an Argentinian national appointed
    by the Claimants); and Mr. Zachary Douglas (an Australian national
    appointed by Romania). ICSID has been requested to appoint a President
    of the Tribunal following a period when the Claimants and Romania were
    unable to mutually agree on an appointee. Thereafter, the next step in
    the arbitration process will be the establishment, among other things,
    of the procedural calendar for the ICSID Arbitration.
--  The ICSID Arbitration procedure allows for the Company's filing of one
    or more applications for provisional/interim measures, filing of its
    written submission of the case against Romania and accompanying
    evidence; a response from Romania and accompanying evidence; a reply by
    the Company and a response to that reply by Romania, all prior to oral
    hearings and a written reasoned decision by the Tribunal, which will be
    final subject only to challenge by either party on the basis of limited
    procedural grounds.

Financial Performance

--  As at December 31, 2015, the Company assessed the Project for asset
    impairment based on international accounting standards and concluded
    that, among other things, the continued uncertainty regarding the
    development of the Project and whether an amicable resolution can be
    agreed with the Romanian Government had a significant impact on the
    estimated future net cash flows associated with the Project.
    Accordingly, as at December 31, 2015, the Company recorded a non-cash
    write-down of $631.2 million relating to all mineral property and a
    material proportion of its property, plant and equipment.
--  The net loss for the fourth quarter of 2015 was $615.3 million, and for
    the year ended December 31, 2015 was $627.9 million, or $1.63 per share.

Liquidity and Capital Resources

--  Cash and cash equivalents at December 31, 2015 amounted to $18.6
    million.
--  The Company's average monthly net cash usage during Q4 2015 was $2.4
    million, including legal services in respect of the ICSID Arbitration
    and the December interest payment due on the 8% convertible subordinated
    unsecured notes in issue; (Q3 2015: monthly average $2.1 million, 2014:
    monthly average $2.3 million, 2013: monthly average $3.9 million).
    Excluding legal and other advisory services in respect of the ICSID
    Arbitration and excluding the interest payment, the average monthly net
    cash usage during Q4 2015 was $1.3 million (Q3 2015: $1.3 million, H1
    2015: monthly average $1.5 million).

Private Placement and Restructuring

--  Given that the estimated corporate working capital needs and costs of
    pursuing the ICSID Arbitration will be significantly higher than the
    amount of cash and cash equivalents held by the Company, the Company has
    designed the Transactions in order to strengthen and improve the
    financial position of the Company. The Private Placement and
    Restructuring are subject to securityholder and regulatory approval and
    therefore there is no assurance that the Company will be successful in
    completing the Private Placement or the Restructuring to obtain the
    required financing.

Private Placement

--  Pursuant to the Private Placement, the Company intends to issue up to
    20,000 Units, each Unit consisting of (i) $1,000 principal amount of
    zero-coupon convertible subordinated unsecured notes (the "New Notes");
    (ii) 1,610 common share purchase warrants (the "New Warrants"); and
    (iii) one arbitration value right (the "New AVRs").The New Notes will
    mature on June 30, 2021 and will be convertible at any time prior to
    maturity, at the option of the holder, into common shares in the capital
    of the Company ("Common Shares") at a price of $0.3105 per Common Share.
    This conversion price represents a premium of 35% to the volume-weighted
    average closing price of the Common Shares on the TSX for the thirty
    trading days prior to March 29, 2016 ("Transaction Share Price"). At
    maturity, the Company will have the ability to repay the New Notes
    through issuing Common Shares. Each New Warrant will entitle the holder
    to acquire one Common Share at an exercise price of $0.46, representing
    a 100% premium to the Transaction Share Price, at any time prior to June
    30, 2021. Each New AVR will entitle the holder thereof to its pro rata
    share of 7.5% of any proceeds arising from the ICSID Arbitration,
    subject to a maximum aggregate entitlement of $175 million among all
    holders of arbitration value rights issued by the Company ("AVRs"). The
    New Notes, New Warrants and New AVRs are together referred to as the
    "New Securities".
--  The Private Placement has been subscribed by certain existing
    shareholders of the Company, including shareholders who are deemed
    insiders as they each exercise control and direction over 10% or more of
    the issued and outstanding Common Shares of the Company immediately
    prior to the closing of the Private Placement.
--  The Company intends to use the net proceeds of the Private Placement to
    pursue the ICSID Arbitration and for general working capital
    requirements.

Restructuring

--  In May 2014, the Company closed a non-brokered private placement with a
    number of existing shareholders of the Company to raise aggregate gross
    proceeds of $35 million (the "2014 Private Placement"). Pursuant to the
    2014 Private Placement, the Company issued 35,000 units, each unit
    consisting of: (i) $1,000 principal amount of convertible subordinated
    unsecured notes with a coupon of 8% (the "2014 Notes"); (ii) 398 common
    share purchase warrants (the "2014 Warrants"); and (iii) one arbitration
    value right (the "2014 AVR"). The 2014 Notes, 2014 Warrants and 2014
    AVRs are together referred to in this announcement as the "Existing
    Securities" and holders thereof are referred to as "Existing
    Securityholders". None of the Existing Securities has been converted or
    exercised at the date of this document. All of the Subscribers are
    Existing Securityholders as they were also participants in the 2014
    Private Placement.
--  Pursuant to the Restructuring, the Company is proposing to enter into
    one or more agreements with the Existing Securityholders and/or the note
    trustee under the existing indenture, as applicable, in order to amend
    certain terms of the Existing Securities and to align the principal
    terms of the Existing Securities with the terms of the New Securities.
    Pursuant to the Restructuring, among other things, it is proposed that:
    (i) the conversion price of the 2014 Notes will be reduced from $1.255
    to $0.3105 (such reduced amount being a premium of 35% to the
    Transaction Share Price); (ii) the interest rate of 8% per annum payable
    in respect of the 2014 Notes will be eliminated with zero coupon payable
    with effect from January 1, 2016; (iii) the exercise price of the 2014
    Warrants will be reduced from $1.674 to $0.46 (such reduced amount being
    a premium of 100% to the Transaction Share Price); each 2014 AVR will
    entitle the holder thereof to its pro rata share of 7.5% of any proceeds
    arising from the ICSID Arbitration (previously 5% under the 2014 AVR
    terms); the aggregate entitlement of all AVRs issued would be increased
    from $130 million to $175 million; and the maturity date of the 2014
    Notes and 2014 Warrants will be extended until June 30, 2021.

Canadian Regulatory Requirements

--  The Transactions are expected to close in April 2016 or such other date
    as agreed between the Company and the Subscribers, or as otherwise
    required under applicable securities laws and regulations. Closing of
    the Transactions is conditional upon the execution of definitive
    documentation with respect to the Private Placement and the
    Restructuring and upon satisfaction of customary closing conditions and
    deliveries, including receipt of all required regulatory approvals, as
    applicable, including the approval of the TSX.
--  In accordance with the requirements of the TSX Company Manual, the
    Company will be seeking shareholder approval for the Transactions from
    holders of over 50% of its Common Shares (excluding all of the Common
    Shares held by the Subscribers).

Related Party Transaction Exemption

--  Given that certain Existing Securityholders are considered "related
    parties" of Gabriel, the Transactions constitute "related party
    transactions" within the meaning of Multilateral Instrument 61-101
    Protection of Minority Security Holders in Special Transactions ("MI 61-
    101"). While MI 61-101 would generally subject the Transactions to
    minority shareholder approval and formal valuation requirements, the
    Company proposes to avail itself of the exemptions applicable under
    Sections 5.5(g) and 5.7(e) of MI 61-101.

Additional Details

--  The Company will provide additional details regarding the Transactions,
    including among other information, the impact of the Transactions on
    existing securityholders and the specific circumstances under which
    securityholder approval is being sought in due course.

Political Environment

--  During 2015 there were ongoing challenges to the then Romanian Prime
    Minister, Victor Ponta, including votes of no confidence in June and
    September which his government survived. Following street demonstrations
    in the aftermath of a fire at a night club in Bucharest that killed over
    40 people, on November 4, 2015 Mr. Ponta tendered his resignation as
    Prime Minister, citing a view that he no longer enjoyed the support of
    the people.
--  On November 10, 2015 the President of Romania, Klaus Iohannis, proposed
    Dacian Ciolos, a former European Commissioner for Agriculture, for the
    permanent role of Prime Minister and on November 17, 2015 his new
    government was approved by the Romanian Parliament. Mr. Ciolos is
    described in the Romanian press as being an independent technocrat, and
    his cabinet is viewed in a similar light. The next general election is
    scheduled for late 2016.
--  The level of Romanian Government engagement on the Project has been
    extremely limited for an extended period of time.

Environmental and Other Permitting

--  As previously disclosed, one of the most significant permits required
    for the Project is the environmental permit ("EP"). Since the
    recommencement of the Project's environmental impact assessment ("EIA")
    review process in September 2010, a procedure which forms the basis upon
    which the Romanian Government evaluates the Project's impacts and issues
    the EP, the Technical Assessment Committee ("TAC") of the Romanian
    Government met on twelve separate occasions.
--  The last TAC meeting was held in April 2015 and failed to issue any
    recommendation on the EP or otherwise take steps to complete the EIA
    process. Ultimately, the Romanian Government has failed to act on the
    EP, thus making it impossible for the Project to proceed.
--  On February 15, 2016, an order of the Minister of Culture was published
    in the Official Gazette designating, amongst other things, the village
    of Ro ia Montana, and a radius of two kilometers, as a site of national
    historic interest. Management considers that such revised list of
    historical monuments further extends (without legal justification) the
    protection regime applicable to certain historical monuments, as
    compared to the 2004 list of historical monuments issued by Romania,
    and, in particular, fails to take into account, and is inconsistent
    with, the extensive programs of exploratory and preventative archaeology
    undertaken and financed by RMGC and the archaeological discharge
    certificates issued to RMGC by the Romanian authorities to date.
--  In February 2016, the Ministry of Culture publicly announced the
    inclusion of the Ro ia Montana site on Romania's tentative list of
    UNESCO World Heritage sites, the first procedural step in having it
    included on the UNESCO World Heritage List ("UNESCO List").
    Notwithstanding this announcement, as at the date of this document, the
    Company has been unable to verify whether the Ministry of Culture has
    submitted documentation to UNESCO for the Project site's inclusion on
    the tentative list and whether the site has been included on such list.
    It is the Company's understanding that the required consultation with
    the local community has not yet occurred and that the inclusion of Ro ia
    Montana on the UNESCO List would be subject to a review process that may
    take several years, however should such inclusion be realized it would
    have a material adverse impact on the Company's business, assets and
    ability to carry out mining activities on the License. Pending the
    outcome of any consultation and review process, the Company is not aware
    of any interim impact on the Project of the reported inclusion of the
    Ro ia Montana site on Romania's tentative list of UNESCO World Heritage
    sites.

Litigation and RMGC Withdrawal from Legal Proceedings

--  In light of the prevailing situation of the Project, Gabriel has re-
    evaluated RMGC's involvement in a number of litigation cases pending
    before the Romanian courts, in which RMGC is acting as either plaintiff,
    third party intervenor or defendant in respect of disputes concerning
    administrative documents, permits or authorizations issued for the
    Project.
--  After taking into account, amongst other matters, the continued failure
    of the competent authorities to address the assessment procedures of the
    Project thereby blocking and preventing its implementation, the
    protracted and uncertain nature of the judicial process and the
    continued requirement for the Company to reduce its cost base and
    mitigate its losses, Gabriel determined in October 2015 that RMGC should
    withdraw from a number of pending litigation cases.
--  The majority of the legal proceedings from which RMGC has sought to
    withdraw concern the claims of third parties challenging administrative
    deeds issued by public authorities directly or indirectly related to the
    Project. RMGC appeared before the courts in these actions only as a
    third-party intervenor to support the position of the competent public
    authorities insofar as appropriate in view of the interests of RMGC as
    developer of the Project. Accordingly, the fact that RMGC will not
    continue as an intervenor will not, of itself, terminate the
    proceedings. The public authorities remain the defendant in those
    actions and as such remain bound to continue to defend their position.
--  Certain developments that occurred in legal proceedings concerning the
    Project during the fourth quarter of 2015 and the status of RMGC's
    withdrawal from such proceedings are detailed in Management's Discussion
    & Analysis which is filed on SEDAR at www.sedar.com.

Outlook

--  Notwithstanding the commencement of the ICSID Arbitration, the Company
    continues to seek engagement with the Romanian authorities in order to
    achieve an amicable resolution of the dispute. In the meantime, the
    Company's immediate plans for the ensuing year are as follows:
    --  the advancement of the ICSID Arbitration, including the constitution
        of the Tribunal, the establishment of a procedural calendar, the
        filing of applications for provisional/interim measures and the
        preparation and filing of its memorial in support of its claim;
    --  the continued assessment of the Company's activities and reduction
        of costs to those that support the preservation of its core assets
        and rights;
    --  to carefully manage its cash resources (including the potential
        disposition of mining equipment acquired for the Project);
    --  the protection of its rights and interests in Romania (including, so
        far as reasonably practical and desirable, ensuring that existing
        licenses and permits remain in good standing); and
    --  the completion of the Transactions to support the anticipated
        activities of Gabriel for 2016 and beyond.

About Gabriel

Gabriel is a Toronto Stock Exchange listed Canadian resource company. The Company's principal focus has been the exploration and development of the Ro ia Montana gold and silver project in Romania. The Project, one of the largest undeveloped gold deposits in Europe, is situated in the South Apuseni Mountains of Transylvania, Romania, an historic and prolific mining district that since pre-Roman times has been mined intermittently for over 2,000 years. The exploitation license for the Project is held by Ro ia Montana Gold Corporation S.A., a Romanian company in which Gabriel owns an 80.69% equity interest, with the 19.31% balance held by Minvest Ro ia Montana S.A., a Romanian state-owned mining company. It is anticipated that the Project would bring over US$24 billion (at US$1,200/oz gold) to Romania as potential direct and indirect contribution to GDP and generate thousands of employment opportunities.

Since the grant of the License in June 1999, the Company has focused substantially all of its management and financial resources on the exploration, feasibility and subsequent development of the Project. Despite the Company's fulfilment of its legal obligations and its development of the Project as a high-quality, sustainable and environmentally-responsible mining project, using best available techniques, Romania has blocked and prevented implementation of the Project without due process and without compensation.

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 the Company's operating environment. All statements, other than statements of historical fact, are forward-looking statements.

In this press release, forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable by the Company at this time, are inherently subject to significant business, economic and competitive uncertainties and contingencies that may cause the Company's actual financial results, performance, or achievements to be materially different from those expressed or implied herein. Some of the material factors or assumptions used to develop forward-looking statements include, without limitation, the uncertainties associated with: completion of the Transactions, the ICSID Arbitration, actions by the Romanian Government, conditions or events impacting the Company's ability to fund its operations or service its debt, exploration, development and operation of mining properties and the overall impact of misjudgments made in good faith in the course of preparing forward-looking information.

Forward-looking statements involve risks, uncertainties, assumptions, and other factors including those set out below, that may never materialize, prove incorrect or materialize other than as currently contemplated which could cause the Company's results to differ materially from those expressed or implied by such forward-looking statements. 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.

Numerous factors could cause actual results to differ materially from those in the forward-looking statements, including without limitation:

--  the requirement for regulatory, shareholder and noteholder approvals,
    where applicable, to effect the Transactions;
--  the duration, required disclosure, costs, process and outcome of the
    ICSID Arbitration against Romania;
--  changes in the Gabriel Group's liquidity and capital resources;
--  access to funding to support the Gabriel Group's continued ICSID
    Arbitration and/or operating activities in the future;
--  equity dilution resulting from the conversion or exercise of existing
    securities (and those contemplated to be issued pursuant to the
    Transactions) in part or in whole to Common Shares;
--  the ability of the Company to maintain a continued listing on the
    Toronto Stock Exchange or any regulated public market for trading
    securities;
--  the impact on business strategy and its implementation in Romania of:
    unforeseen historic acts of corruption, uncertain legal enforcement both
    for and against the Gabriel Group and political and social instability;
--  regulatory, political and economic risks associated with operating in a
    foreign jurisdiction including changes in laws, governments and legal
    regimes;
--  volatility of currency exchange rates, metal prices and metal
    production;
--  the availability and continued participation in operational or other
    matters pertaining to the Gabriel Group of certain key employees and
    consultants; and
--  risks normally incident to the exploration, development and operation of
    mining properties.

This list is not exhaustive of the factors that may affect any of the Company's forward-looking statements.

Investors are cautioned not to put undue reliance on forward-looking statements, and investors should not infer that there has been no change in the Company's affairs since the date of this report that would warrant any modification of any forward-looking statement made in this document, other documents periodically filed with or furnished to the relevant securities regulators or documents presented on the Company's website. All subsequent written and oral forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by this notice. The Company disclaims any intent or obligation to update publicly or otherwise revise any forward-looking statements or the foregoing list of assumptions or factors, whether as a result of new information, future events or otherwise, subject to the Company's disclosure obligations under applicable Canadian securities regulations. Investors are urged to read the Company's filings with Canadian securities regulatory agencies including Gabriel's Annual Information Form for the year ended December 31, 2015, which can be viewed online at www.sedar.com.

Contacts:
Gabriel Resources Ltd.
Jonathan Henry
President & Chief Executive Officer
Mobile: +44 7798 801783
jh@gabrielresources.com

Gabriel Resources Ltd.
Max Vaughan
Chief Financial Officer
Mobile: +44 7823 885503
max.vaughan@gabrielresources.com

Gabriel Resources Ltd.
Richard Brown
Chief Commercial Officer
Mobile: +44 7748 760276
richard.brown@gabrielresources.com

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