Mr. Dragos Tanase reports

GABRIEL RESOURCES LTD. 2024 FIRST QUARTER REPORT

Gabriel Resources Ltd. has published its first quarter financial statements and management's discussion and analysis report for the period ended March 31, 2024.

Summary:

• On March 8, 2024, Gabriel announced that the presiding tribunal had issued a final decision dismissing, by a two to one majority, the ICSID arbitration claims filed against the Romanian state and awarded Romania approximately $10-million (U.S.) to reimburse half of the legal fees and expenses it had incurred in connection the ICSID arbitration:
  • The arbitral decision is binding on the parties, and the amount payable incurs simple interest from the date of the arbitral decision at the three-month U.S. Treasury rate.
  • The company strongly disagrees with the tribunal majority's decision, which it believes is deeply flawed and at odds with the opinion of the dissenting arbitrator and is inconsistent with any objective assessment of the evidence presented.
  • The company is continuing to evaluate the possibility of challenging the arbitral decision through the annulment process prescribed by the ICSID Convention, which requires that any annulment application must be filed within 120 days of the date of the tribunal's decision.
• As at March 31, 2024, the company held $2.2-million of cash and cash equivalents (fourth quarter 2023: $4.6-million).
• On April 26, 2024, Gabriel announced a fundraising of up to $5,575,000 (U.S.), and on May 17, 2024, the company announced closing of an initial tranche of that fundraising with proceeds received of $3.25-million (U.S.).
• Subject to closing the rest of the proposed fundraising and excluding the cost order, Gabriel believes that it has sufficient financing necessary to cover its planned activities through to the end of November, 2024, and will need to raise additional financing thereafter to finance its working capital requirements.
• The net loss for the first quarter of 2024 was $1.8-million (Q4 2023: $16.9-million, including recognition of the cost order).

Further information and commentary on the results in the first quarter of 2024 are given below. The company has filed its unaudited condensed interim consolidated financial statements for Q1 2024 and related management's discussion and analysis on SEDAR+, and each is available for review on the company's website.

Further information

Status of the ICSID arbitration:

• The ICSID arbitration sought compensation for all of the loss and damage suffered by Gabriel and its wholly owned indirect subsidiary, Gabriel Resources (Jersey) Ltd. resulting from the Romanian state's wrongful conduct, including unlawful treatment in respect of the Rosia Montana gold and silver project, together with the gold, silver and porphyry copper deposits defined in the Bucium concession area and related licences.
• The company strongly disagrees with the arbitral decision, which it has carefully analyzed with its professional advisers. Gabriel continues to believe that the arbitral decision is deeply flawed and that the Romanian government's sustained political interference with the claimants' contractual rights prevented the development of a flagship mining project without any substantive or objective regulatory basis.
• Accordingly, Gabriel is evaluating the possibility of challenging the arbitral decision through the annulment process prescribed by the ICSID Convention. An annulment application must be filed within 120 days of the date of the tribunal's decision, and such annulment application will be adjudicated by a new panel of ICSID arbitrators.
• The company considers that the cost order is unjust and inequitable given the manner in which the tribunal conducted, and the Romanian state approached its defence of, the ICSID arbitration case, which introduced significant delays to the procedure and significantly increased claimant costs. The arbitral decision is binding on the parties, and the amount payable incurs simple interest from the date of the arbitral decision at the three-month U.S. Treasury rate.
• The company announced on April 4, 2024, that the government of Romania has requested the claimants to settle the cost order and noted that it will take action to enforce the same. In this regard, the Romanian state has sought precautionary measures in Romania to impose restrictions on the sale or transfer of the shares held by Gabriel Jersey in RMGC, pending settlement of the cost order. The company believes that these actions are premature and suffer from serious procedural infirmities, and Gabriel Jersey and RMGC have submitted complaints before the Romanian courts challenging these measures. Gabriel intends to vigorously defend its rights and interest in Romania and elsewhere.
• There can be no assurances that any annulment process pursuant to the ICSID Convention, if instituted, will advance in a customary or predictable manner or be completed or settled within any specific or reasonable period of time.

Liquidity:

• Cash and cash equivalents at March 31, 2024, were $2.2-million.
• The company's average monthly cash usage during Q1 2024 was $800,000 (Q4 2023: $1.1-million), primarily reflecting the consistent level of continuing operational cost together with reduced payments regarding ICSID-arbitration-related activity quarter on quarter. Q4 2023 cash usage was also offset by cash receipts from the exercise of warrants previously disclosed.
• At March 31, 2024, accruals for costs in respect of ICSID-arbitration-related matters amounted to $4.6-million (third quarter 2023: $4.6-million), reflecting a lower level of activity in pre and postarbitral decision strategic initiatives in the quarter, with the continuation of a fee agreement in respect of certain ICSID arbitration costs incurred before an arbitral decision with payment deferred.

Capital resources

Private placement:

• On April 26, 2024, the company announced a non-brokered private placement of 377,594,750 common shares at a price of two cents per common share for gross proceeds of up to $5,575,000 (U.S.) (approximately $7.5-million).
• On May 17, 2024, the company announced the receipt of $3.25-million (U.S.) (approximately $4.4-million) and the closing of an initial tranche of the 2024 private placement subject to certain conditions, including, but not limited to, the approval of the TSX Venture Exchange and the receipt of all other applicable approvals.
• It is anticipated that the rest of the 2024 private placement would close on or before July 3, 2024, or such later date as may be determined by the company, subject to satisfaction or waiver by the relevant party of the conditions of closing and any applicable approvals (including that of the exchange).
• The company will use the proceeds from the 2024 private placement to finance the continuing costs of the ICSID arbitration and for general working capital requirements.

Future financing requirements:

• Gabriel continues to manage its cash resources and its current and future financial obligations carefully.
• Excluding the cost order, which may be stayed from enforcement in the period from any annulment application, on the basis of the company's balance of cash and cash equivalents as at March 31, 2024, and taking into account: (i) the proceeds from closure of the 2024 private placement; (ii) a fee agreement in respect of the deferral of payment of certain ICSID arbitration costs; and (iii) the continued deferral of a portion of salary and fees for certain employees and directors, the company believes that it has sufficient cash necessary to finance general working capital requirements together with the material estimated costs associated with consideration and preparation of any annulment application through to the end of November, 2024.
• Accordingly, Gabriel will require further financing during the fourth quarter of 2024 to pursue long-term activities (which may include, as appropriate, costs of any potential annulment proceedings) and for general working capital purposes, including to preserve its remaining assets, such as its licence and associated rights and permits. Notwithstanding the company's recent and historic financing, there is a risk that sufficient additional financing may not be available to the company on acceptable terms, or at all.
• There is no assurance that the company will be successful in closing the rest of the 2024 private placement, in which case the company believes that, excluding the cost order, it has sufficient cash to enable the group to finance general working capital requirements together with the material estimated costs associated with the company advancing the ICSID arbitration through to the end of July, 2024, and it will seek alternative sources of additional financing. These events and conditions indicate that a material uncertainty exists that may cast significant doubt about the company's ability to continue as a going concern, and therefore, the company may be unable to realize its assets and discharge its liabilities in the normal course of business.

Mineral tenure rights:

• In March, 2024, RMGC submitted an application to the Romanian National Agency for Mineral Resources, together with the requisite supporting documentation, requesting an extension of the term of the licence for an additional five years, as provided by Romanian law. The term of the licence, as currently extended, is due to expire on June 20, 2024.
• RMGC has also recently urged NAMR to issue the exploitation licences for the two Bucium projects in accordance with the applications made in 2007. Throughout the ICSID arbitration, the Romanian state has consistently maintained a position, relied upon by the majority in the arbitral decision, that the Bucium applications remain pending before the NAMR.

Financial performance:

• Operating loss for the three-month period ended March 31, 2024, of $1.7-million was 300,000 pounds sterling lower than the corresponding period in 2023, primarily reflecting a $500,000 lower share-based compensation charge, offset by a slight increase in corporate, general and administrative expenses together with an initial interest charge on the cost order, in aggregate amounting to $100,000.
• The overall loss for the three-month period ended March 31, 2024, was $1.8-million, the rise from operating loss reflecting a $100,000 increase in foreign exchange loss, compared with an overall loss of $2.0-million in the corresponding period in 2023.

About Gabriel Resources Ltd.

Gabriel is a Canadian resource company listed on the TSX Venture Exchange. The company's principal business had been the exploration and development of the Rosia Montana gold and silver project in Romania. The Rosia Montana project, one of the largest undeveloped gold deposits in Europe, is situated in the South Apuseni Mountains of Transylvania, Romania, a historic and prolific mining district that since pre-Roman times has been mined intermittently for over 2,000 years. The exploitation licence for the Rosia Montana project is held by Rosia Montana Gold Corporation SA, a Romanian company in which Gabriel owns an 80.69-per-cent equity interest, with the 19.31-per-cent balance held by Minvest Rosia Montana SA, a Romanian-state-owned mining company.

Upon obtaining the licence in June, 1999, the group focused substantially all of its management and financial resources on the exploration, feasibility and subsequent development of the Rosia Montana project. Despite the company's fulfilment of its legal obligations and its development of the Rosia Montana project as a high-quality, sustainable and environmentally responsible mining project, using best available techniques, Romania has unlawfully blocked and prevented implementation of the Rosia Montana project without due process and without compensation. Accordingly, the company's current core focus is the ICSID arbitration.

We seek Safe Harbor.