The Romanian Prime Minister is under investigation; Carpathian’s Rovina licence is now the least of his concerns

05/06/2015 5602 views

June 5th, 2015/ Romania – Carpathian Gold announced on May 27, 2015 that the company “has been granted a 20-year mining license on its Rovina Valley Project.” This took Romanians by surprise as there was no previous public announcement of this intention issued by relevant national authorities. More to this, investors should be aware of the massive opposition in Romania towards large scale open pit gold mining. Gabriel Resources, the company who unsuccessfully tried to open the Rosia Montana mine seems to focus now rather on obtaining compensations from the Government rather than permits.

Carpathian Gold was facing huge financial trouble, having activities suspended in their Brazil project after seeing management quit job. The announcement of being granted a license in Romania looked like a huge breath of fresh air. However the company misinterpreted Romanian laws and is now facing the uncertainties of local politics. Whether Carpathian Gold intentionally misled investors or got tangled into Romania bureaucracy makes no difference. In any case, Carpathian managed to capitalize on a license it does not have.

According to the Romanian mining law (Legea minelor 85/2003), an operator is considered to own a final exploitation license after several procedures that lead to its publication in the Official Gazette. According to a press release issued by the National Agency for Mineral Resources, Carpathian through its Romanian subsidiary SAMAX , still has to obtain a final Government decision based on an inter-ministerial consultation and on agreements from various other institutions.

The press release of ANRM reads at the end: “The Government Decision approving the concession a license for exploitation activities is subject to publication in the Official Gazette of Romania, Part I, the publication date of which shall be the starting date of validity of this license.” From a strictly legal point of view SAMAX and implicitly Carpathian do not own yet a license that allows them to start obtaining permits. The company still needs various procedures to be undertaken by a government whose Prime Minister now has other worries.

The Romanian National Anticorruption Directorate (DNA) announced that its prosecutors started a criminal investigation on Prime Minister Victor Ponta for alleged corruption offenses. Ponta was summoned today, June 5, to take note of the accusations against him. Meanwhile, the opposition parties submitted a no-confidence motion against the Government.

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.