Ponta Government saves Carpathian Gold from bankruptcy by granting them the mining license for Rovina

02/06/2015 3368 views

2 June 2015 – Carpathian Gold’s announcement that they were granted the copper and gold exploitation license for Rovina deposit generated an explosion of the company’s stock exchange share price, which saw a 200% rise in two days . The press release was launched to the media in a key moment, when Carpathian Gold was practically in bankruptcy following the difficulties encountered in progressing with another project in Brazil.

Over the last years Carpathian Gold borrowed 207.7 million USD from the Australian bank Macquarie to build the mining project in Brazil. However the company they hold in this country – MRDM Ltda – had to close works because of the floods in 2013 . The mining activity in Brazil is still on hold now. This led to massive capital losses, bringing the company close to bankruptcy. The situation is so severe that Carpathian’s directors resigned at the beginning of 2014 and the Australian bank Macquarie appointed a chief restructuring officer.

According to the statements made in 2013, the company was planning to use the cash-flow from the mine in Brazil for starting the project in Romania. Nevertheless, although lacking the necessary financial stability, Carpathian Gold was offered the license for the project in Romania as a gift from the Romanian National Agency for Mineral Resources (NAMR). All procedures were undertaken in totally non-transparent conditions, but under the direct supervision of the Romanian Government.

Carpathian Gold is a junior company, with no experience

Carpathian Gold holds only two mining concession perimeters, one in Brazil and the other one in Romania. The fact that the company is not experienced is indicated even by the statements of the former general manager, Dino Titaro, in an interview given for BTV in 2013. He was saying that: “We often state internally the RDM project in Brazil is the company starter and our big monster project in Romania is our company maker”.

While the media immediately promoted the good news received by Carpathian Gold, NAMR refuses to respond to requests for information. The sale conditions for Rovina deposit continue to be treated as “confidential information”. Thus neither NAMR nor any other state institution considered it necessary to inform the public on the concession of a 93.5 square kilometre-mining perimeter – almost three times the surface of Deva city – for a 20-year exploitation period. Rovina becomes thus the first mining project held 100% by a foreign company, with no participation of the Romanian state. According to the agreement, Carpathian only has to pay 4% royalties to the Romanian state .

“Coincidence or not, the only way how bankrupt Carpathian could be saved was discreetly provided by the Ponta government through perhaps the most non-transparent institution in Romania: NAMR. There will be of course many speculations on the real beneficiaries of the sudden share value rise. However, regardless whether Romanian public servants or politicians had or not gains from granting the Rovina license, this is a breath of air for the mining operator who was suffocating with debts in Brazil”, commented Roxana Pencea on behalf of Mining Watch Romania network.

Carpathian Gold (CPN:TSX), a Canadian mining junior, intends to open a low-cost monster open-pit copper and gold mine. The Rovina deposit is owned by Carpathian Gold through the company Samax Romania Limited (based in the Virgin Islands), which in its turn holds Samax România, a limited liability company (SRL) registered in Baia Mare, Romania. According to a company announcement of July 2011, Barrick Gold (ABX:TSX), the largest mining company in the world, purchased 9% of the shares of Carpathian Gold against the amount of 20 million dollars.