Gabriel Resources Ltd. — Interim / Quarterly Report 2021

Aug 4, 2021

Management’s Discussion and Analysis

This Management’s Discussion and Analysis (“ MD&A ”) provides a commentary to enable a reader to assess material changes in the financial condition and results of operations of Gabriel Resources Ltd. (“ Gabriel ” or the “ Company ”) and its subsidiary companies (together the “ Group ”) as at and for the six-month periods ended June 30, 2021 and 2020.

The MD&A should be read in conjunction with the unaudited condensed interim consolidated financial statements and notes thereto of the Company as at and for the six-month periods ended June 30, 2021 and 2020 (“ Financial Statements ”). The Financial Statements have been prepared in condensed format in accordance with International Financial Reporting Standards (“ IFRS ”) as applicable to the preparation of interim financial statements, including International Accounting Standard IAS 34 (‘Interim Financial Reporting’). The Financial Statements should be read in conjunction with the audited consolidated financial statements and notes thereto of the Company as at and for the year ended December 31, 2020, which have been prepared in accordance with IFRS.

All amounts included in the MD&A are in Canadian dollars (“ $ ”), unless otherwise specified. This report is dated as of August 3, 2021 and the Company’s public filings can be reviewed on the SEDAR website (www.sedar.com).

This MD&A contains forward-looking statements about the Company’s objectives, strategies, financial condition, operations and businesses within the Group. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements of the Group to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based upon the beliefs, expectations, reasonable investigation and opinions of Management as of the date of this MD&A. All forward-looking statements, including those not specifically identified herein are made subject to (i) the impact, if any, of the coronavirus pandemic as considered on pages 6, 17, 18 and 25 and (ii) the cautionary language beginning on page 24. Readers are advised to refer to the cautionary language when reading any forwardlooking statements.

Overview

Gabriel is a Canadian resource company with its common shares (“ Common Shares ”) listed on the TSX Venture Exchange (“ Exchange ”). Gabriel’s activities over many years were previously focused principally on the exploration, permitting and development of the Roșia Montană gold and silver project in Romania (the “ Project ”). The Project, one of the largest undeveloped gold deposits in Europe, is situated in an area known as the Golden Quadrilateral in the South Apuseni Mountains of Transylvania, Romania, an historic and prolific mining district that has been mined intermittently for over 2,000 years.

The exploitation concession license for the Project (“ License ”) is held by Roșia Montană Gold Corporation S.A. (“ RMGC ”), a Romanian company in which Gabriel owns an 80.69% equity interest, with the 19.31% balance held by Minvest Roșia Montană S.A. (“ Minvest RM ”), a Romanian State-owned mining company.

Management’s Discussion & Analysis Second Quarter 2021

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Upon obtaining the License in 1999, RMGC along with Gabriel and its subsidiary companies focused substantially all of their management and financial resources on identifying and defining the size of the four ore bodies, engineering to design the size and scope of the Project, building strong community relations, surface rights acquisitions, rescue archaeology and environmental assessment and permitting.

In reliance on numerous representations made and actions taken by the Romanian authorities and, in the reasonable expectation that the Company’s projects would be evaluated in accordance with the law and reasonable technical standards and, ultimately, on its merits, over US$700 million was invested to maintain and develop the Project and to define two valuable mineral deposits at the Rodu-Frasin (epithermal gold and silver) site and Tarniţa (porphyry copper-gold) site, both within the Bucium area located in the vicinity of Roşia Montană (“ Bucium Projects ”), in accordance with all applicable laws, regulations, licenses, and permits.

Having encouraged that investment, and despite the Group’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, the Romanian State has frustrated and prevented the implementation of the Project and the Bucium Projects in an unlawful, discriminatory and nontransparent manner by refusing to make permitting and other administrative decisions in accordance with the established procedures required by law.

On July 21, 2015, the Company and its wholly-owned subsidiary, Gabriel Resources (Jersey) Ltd. (together “ Claimants ”), filed a request for arbitration (“ Arbitration Request ”) before the World Bank’s International Centre for Settlement of Investment Disputes (“ ICSID ”) against the Romanian State (the “ Respondent ”) pursuant to the provisions of international bilateral investment protection treaties which the Romanian Government 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 ”) (“I CSID Arbitration ”).

Since the Arbitration Request, the ICSID Arbitration has become the Company’s core focus. Accordingly, any information set out in this MD&A relating to the Project, the License, and the Group’s development activities in Romania is for background purposes only and should not be interpreted as being indicative of the Company’s expectations as at the date of this document regarding the future development of the Project.

ICSID Arbitration

As a consequence of Romania’s acts and inactions, the Project and the Bucium Projects have been blocked politically, depriving the Claimants of the use, benefit and entire value of their property rights associated with the Project and the Bucium Projects, which have effectively been taken without compensation in contravention of the applicable legal and administrative processes and requirements.

The ICSID Arbitration seeks compensation for all of the loss and damage resulting from the Romanian State’s wrongful conduct and its breaches of the Treaties’ protections, including expropriation, unfair and inequitable treatment, discrimination, and other unlawful treatment in respect of the Project, the Bucium Projects and related licenses.

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Status of the ICSID Arbitration and Recent Developments

The ICSID Arbitration process is well advanced. To date, and in accordance with the procedural timelines established by the presiding tribunal for the ICSID Arbitration (“ Tribunal ”), the parties have delivered to ICSID a number of substantial written submissions and participated in two hearings on the merits of the claim, each as summarized below:

• On June 30, 2017, the Claimants filed their memorial on the merits of the claim (“ Memorial detailing, amongst other things, the factual and legal arguments supporting their claim against Romania and the quantum of the damages sustained;

• On February 22, 2018, the Respondent filed its counter-memorial (“ Counter-Memorial ”) in response to the Memorial;

• On May 25, 2018, the Respondent filed a supplementary further preliminary objection with ICSID (“ Jurisdictional Challenge ”) challenging the jurisdiction of the Tribunal to hear the claims presented by Gabriel Resources (Jersey) Limited;

• On November 2, 2018, the Claimants submitted their reply in support of the claims (“ Reply and responding to the Counter-Memorial and Jurisdictional Challenge;

• On February 28, 2019, the Claimants and the Respondent filed comments on an amicus curiae submission to the Tribunal made by certain non-governmental organizations (or ‘nondisputing parties’) who have opposed the Project for many years;

• On May 24, 2019, the Respondent filed its response to the Reply (“ Rejoinder ”) and its reply on the Jurisdictional Challenge, the Respondent’s final substantive submission;

• On June 28, 2019, the Claimants filed a surrejoinder on the Jurisdictional Challenge, responding to the reply thereon from the Respondent;

• An oral hearing on the merits of the claim was held in Washington D.C. between December 2 and December 13, 2019 (“ Hearing ”) to address the evidentiary record in the case, issues on liability and jurisdiction and to hear testimony from certain of the parties’ fact and expert witnesses;

• On March 10, 2020, the Tribunal issued a list of further questions arising from the evidence presented during the Hearing (“ Tribunal Questions ”);

• On April 10, 2020, the Claimants and the Respondent filed their comments on a written submission to the Tribunal by the European Commission as a ‘non-disputing party’ in the ICSID Arbitration;

• On May 11, 2020, the Claimants provided their answers to the Tribunal Questions;

• On July 13, 2020, the Respondent provided its answers to the Tribunal Questions;

• A second oral hearing on the merits of the claim was held virtually from September 28 to October 4, 2020 (“ Second Hearing ”) which focused on the technical and feasibility-related aspects of the Project and the Bucium Projects and the quantum of the damages claimed, including testimony from certain of the parties’ fact and expert witnesses; and

• On February 18, 2021 and April 23, 2021 the Claimants and Respondent each filed further simultaneous written submissions in order to comment in conclusion on the evidentiary record (“ Post-Hearing Briefs ”).

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Unless the Tribunal poses further questions, as was the case following the Hearing, or introduces additional procedural requirements, the Post-Hearing Briefs are expected to be the final substantive submissions by the parties in the ICSID Arbitration. In the absence of any further questions from the Tribunal, or other procedural interventions, it is anticipated that the Tribunal will now focus on its deliberations and preparation of its final decision (“ Award ”). There is no specified timeframe in the ICSID Rules in which an Award is to be made by the Tribunal. The Company is informed that it is typical for tribunals in this type of arbitration to require twelve to eighteen months to finalize and issue an Award after Post-Hearing Briefs are submitted. Furthermore, that Award may be subject to a request for annulment (albeit such request can only be submitted on very limited grounds) and there can be no assurances that the ICSID Arbitration will advance in a customary or predictable manner or be completed or settled within any specific or reasonable period of time.

A summary of the procedural aspects of the ICSID Arbitration, together with copies of the procedural orders of the Tribunal and the principal submissions, including the Memorial, the Counter-Memorial, the Reply, the Rejoinder, redacted versions of the transcript of the Hearing and Second Hearing and redacted versions of the Post-Hearing Briefs are available on ICSID's website.

UNESCO World Heritage

On January 31, 2020, the Ministry of Culture submitted a letter to the United Nations Educational, Scientific and Cultural Organization (“ UNESCO ”) requesting the ‘reactivation’ of its nomination of the ‘Roşia Montană Mining Landscape’ as a UNESCO World Heritage site. Such nomination file was considered by UNESCO at the deferred 44th session of the World Heritage Committee, held in a virtual online format from Fuzhou, China between July 16 and July 31, 2021.

On July 27, 2021 the Roşia Montană Mining Cultural Landscape, an area covering the footprint of the Project, was inscribed by UNESCO on its World Heritage List (“ Inscription ”) and added to its List of World Heritage in Danger.

The UNESCO application was strongly opposed by the local communities in and around Roşia Montană, a fact that has been publicly acknowledged by Romanian government ministers. Moreover, the Inscription is fundamentally incompatible with the rights the Gabriel group acquired to develop the Project and the continued existence of an exploitation mining license for the Project area. These acts, promoted by the Romanian government, ignore the existing and valid decisions of Romania’s Ministry of Culture, including archaeological discharge certificates removing the vast majority of the Project area’s status as a protected archaeological site and clearing the area for mining activities. Furthermore, most of the cultural heritage for which protection is sought through the Inscription and which was identified by the extensive archaeological research programs funded by Gabriel, would have been protected in any event by the Project irrespective thereof.

The Inscription materially undermines the possibility of an amicable resolution of the dispute with Romania that would allow for the development of the Project.

Romania’s application to UNESCO in relation to Roşia Montană and the subsequent Inscription are fundamentally at odds with Romania's obligations under its investment treaties in relation to Gabriel's investments and these acts, together with other measures taken by Romania, further evidence Romania's political repudiation of the Project and its joint venture with Gabriel.

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Liquidity

Cash and cash equivalents at June 30, 2021 were $7.0 million.

The Company’s average monthly cash usage during Q2 2021 was $1.0 million (Q1 2021: $1.3 million), the decrease primarily reflecting the reduction in payments related to ICSID Arbitration costs compared to the prior quarter where significant costs had accrued for payment following the Second Hearing.

At the end of Q2 2021, accruals for costs in respect of the ICSID Arbitration amounted to $3.4 million (Q1 2021: $3.0 million), the increase primarily reflecting completion of Post-Hearing Briefs in the period and the continuation of a fee agreement in respect of the deferred payment of certain ICSID Arbitration costs until an Award is issued.

The Group had sufficient funds as at June 30, 2021 to settle all then current and existing long-term liabilities, after taking into account the deferred fee agreement noted above. Management continues to review the Company’s activities in order to identify areas to rationalize expenditures.

Capital Resources

Private Placement

On June 10, 2021, the Company announced that it had completed a non-brokered private placement (the “ 2021 Private Placement ”) of 30,444,800 common shares of the Company (“ Common Shares ”) at a price of $0.245 each for gross proceeds of US$6.0 million (approximately $7.5 million). The Company intends to use the proceeds from the 2021 Private Placement to finance the ongoing costs of the ICSID Arbitration and for general working capital requirements.

Repayment of Convertible Notes

On June 30, 2021, the Company exercised its option (“ Common Share Repayment Right ”) to repay all of the principal amount of the outstanding $90,862,000 convertible unsecured notes (“ Notes ”) through the issue of Common Shares to holders of the Notes (“ Noteholders ”). In aggregate, 313,587,558 Common Shares were issued pursuant to the Common Share Repayment Right, calculated on the basis of the ‘Current Market Price’ of $0.28975, being the price equal to 95% of the volume weighted average trading price of a Common Share over a 20 trading day period to June 23, 2021 (“ Note Repayment Price ”).

Prior to maturity, the Notes were convertible at the option of the Noteholders into Common Shares at a price of $0.3105 per share (“ Conversion Price ”). As the Note Repayment Price was lower than the Conversion Price, approximately 21m more Common Shares have been issued than would have been the case upon conversion by Noteholders at the Conversion Price.

The repayment of the Notes through exercise of the Common Share Repayment Right has received the final approval of the TSX Venture Exchange (“ Exchange ”). The Common Shares have been issued in reliance on applicable prospectus and registration exemptions and are (subject to compliance with applicable securities laws) freely tradeable on the Exchange and are not subject to any statutory hold period.

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Expiry of Warrants

Further to private placements of the Company completed in 2014 and 2016, units including the Notes and 111,536,250 Common Share purchase warrants (“ Warrants ”) were issued, each such Warrant entitling the holder to acquire one Common Share at an exercise price of $0.46, at any time prior to June 30, 2021.

As previously disclosed, in June 2020 7,668,430 Warrants were exercised. No Warrants have been exercised prior to or since that date and all 103,867,820 remaining Warrants have therefore expired.

Future Financing Requirements

The Company believes that it has sufficient cash to enable the Group to fund general working capital requirements together with the material estimated costs associated with the Company advancing the ICSID Arbitration through to January 2022. There can be no assurances that the ICSID Arbitration will advance in a customary or predictable manner or within any specific or reasonable period of time. Accordingly, Gabriel believes that it will need to raise additional financing in 2021 in order to preserve its remaining assets, including its License and associated rights and permits, post January 2022 while it awaits an Award from the Tribunal.

Thereafter, the Group will require further funding for general working capital purposes, and to pursue the long-term activities required to see the ICSID Arbitration through to its conclusion, which may include, as appropriate, costs of any potential annulment proceedings and/or costs of enforcement of any Award. Notwithstanding the Company’s recent and historic funding, there is a risk that sufficient additional financing may not be available to the Company on acceptable terms, or at all.

Other Recent Developments

Impact of Coronavirus

With respect to the outbreak of the novel coronavirus (COVID‐19), Gabriel continues to consider carefully the impact, noting the widespread disruption to normal activities and the uncertainty over the duration of this disruption. The highest priority of Gabriel’s board of directors (the “ Board ”) and Management is the health, safety and welfare of the Group’s employees and contractors.

Gabriel recognizes that the situation is extremely fluid and is monitoring the relevant recommendations and restrictions on work practices and travel. At this time, these recommendations and restrictions do not significantly impact Gabriel’s ability to continue the ICSID Arbitration process or conduct the limited operations in Romania, nor has there been a significant impact on the Group’s results or operations through 2020 and into the first half of 2021.

As noted above in “Future Financing Requirement”, the Group will require further new investment and the Group is also looking to sell its remaining long lead-time equipment. The market and timing for each initiative may be adversely affected by the effects of COVID-19. As a result, Gabriel will react to circumstances as they arise and will make the necessary adjustments to the work processes required and, should any material disruption from COVID-19 affect the Group for an extended duration, Gabriel will review certain planned activities in Romania and take remedial actions, if it is determined to be necessary or prudent to do so.

Management’s Discussion & Analysis Second Quarter 2021

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RMGC - Government Audits and Investigations

Romanian National Agency for Fiscal Administration (“ ANAF ”) Investigations

Since the filing of the ICSID Arbitration, RMGC has been subjected to several audits and investigations by ANAF, a Romanian Government agency operating under the Ministry of Public Finance, a Romanian Government department, which is also charged with organizing and overseeing Romania’s defense of the ICSID Arbitration. For over five years as of the date of this MD&A, a directorate of ANAF has continued to pursue an ad hoc investigation covering a broad range of operational activities and transactions of RMGC, and a number of its suppliers, consultants and advisors, covering an extensive period spanning 1997 to 2016, then subsequently extended to September 2019 (the “ ANAF Investigation ”). RMGC is co-operating in good faith with ANAF, however as at the date of this MD&A Gabriel and RMGC still awaits formal indication of the grounds for the ANAF Investigation and neither has received any feedback on its status.

Prosecutor Office Investigation

As previously disclosed, in November 2013, RMGC was informed of an investigation by the Ploiesti Public Prosecutor's Office into the principals/key shareholder(s) of a group of companies including Kadok Interprest LLC (“ Kadok Group ”). In March 2020, RMGC was informed that the authorities had closed the file in relation to the commercial relationship between RMGC and the Kadok Group but the Alba Public Prosecutor’s Office is continuing its investigation of the commercial relations between RMGC and a list of service providers.

Long Lead-Time Equipment

Long lead-time equipment (“ LLTE ”) consisting of crushing and milling equipment was originally procured by the Group between 2007 and 2009 for the operational phase of the Project. The prospect of the LLTE being used in the future for the purpose for which it was purchased is considered remote.

Since 2015, the Group has sold a majority of the LLTE, and the Company continues, through its agents, to procure the sale of the remaining LLTE, comprising predominantly a SAG mill together with a gearless motor drive, ball mill motors and SAG mill/ball mill spares. During the quarter ended June 30, 2021, the carrying amount of the remaining LLTE was assessed for indicators of impairment and no such indicators were noted.

Outlook

Notwithstanding the ongoing ICSID Arbitration, the Company remains open to engagement with the Romanian authorities in order to achieve an amicable resolution of the dispute or a settlement enabling the Group to develop the Project and the Bucium Projects. In the meantime, the Company’s current plans for the ensuing year are as follows:

• the advancement of the final procedural stages of the ICSID Arbitration prior to the issuance of an Award;

• securing additional funding during 2021;

• carefully managing its cash resources (including the disposition of the remaining LLTE); and

• 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).

Management’s Discussion & Analysis Second Quarter 2021

Results of Operations

The results of operations are summarized in the following tables. The amounts are derived from the Financial Statements prepared under IFRS.

in thousands of Canadian dollars, except per share amounts	2021Q2	2021Q1	2020Q4	2020Q3
Income Statement
Loss - attributable to owners of parent	6,060	8,600	7,381	11,742
Loss per share-basic and diluted	0.01	0.01	0.01	0.02
Statement of Financial Position
Working capital	1,695	(90,566)	(82,134)	1,162
Total assets	11,534	7,281	11,007	12,844
Statement of Cash Flows
Cash flows from financing activities	7,350	-	6,469	-

in thousands of Canadian dollars, except per share amounts	2020Q2	2020Q1	2019Q4	2019Q3
Income Statement
Loss - attributable to owners of parent	8,820	6,756	18,263	11,128
Loss per share-basic and diluted	0.02	0.01	0.03	0.02
Statement of Financial Position
Working capital	9,936	11,981	15,146	27,242
Total assets	19,362	21,629	31,183	42,791
Statement of Cash Flows
Cash flowsfrom financing activities	3,710	-	401	26,228

Review of Financial Results

Review of Financial Results
	3	months ended	6	months ended
		June 30		June 30
in thousands of Canadian dollars, except per share amounts	2021	2020	2021	2020
Operating loss for the period	3,306	5,876	9,319	11,716
Loss for the period
- attributable to owners of parent(1)	6,060	8,820	14,660	15,576
Lossper share - basic and diluted	0.01	0.02	0.02	0.03

(1) The transfer by the Company of equity in RMGC to Minvest RM during Q1 2014 resulted in the presentation of a non-controlling interest, as set out in the Financial Statements.

Operating loss for the three-month period ended June 30, 2021 of $3.3 million was $2.6 million lower when compared to the corresponding 2020 period ($5.9 million) primarily reflecting $1.8 million lower costs related to the ongoing ICSID Arbitration, $0.5 million of lower costs related to payroll, each as explained in the Corporate, General and Administrative costs analysis below, and $0.2 million lower share based payments, as explained in the share based compensation analysis below.

Management’s Discussion & Analysis Second Quarter 2021

Loss for the three-month period ended June 30, 2021 was $6.1 million, approximately $2.8 million higher than the operating loss in that period. This result compares to an overall loss of $8.8 million for the same period in the prior year, which was $2.9 million higher than the 2020 first quarter operating loss. Principal reasons for the $0.1 million decrease in non-operating expenses between the corresponding periods include (i) a $0.5 million foreign exchange loss in 2020 compared to a 2021 loss of $0.1 million offset by (ii) $0.2 million higher finance costs in 2021.

Expenses

Corporate, General and Administrative

Corporate, General and Administrative
	3	months ended	6	months ended
		June 30		June 30
in thousands of Canadian dollars	2021	2020	2021	2020
ICSID Arbitration related	858	2,780	3,823	4,453
Payroll	954	1,454	1,992	2,675
Finance	283	190	550	404
Property and exploration taxes	171	176	365	353
Community relations	176	187	353	378
Office rental and utilities	125	112	274	243
Legal	56	175	144	233
Long lead-time equipment storage costs	114	116	230	237
Travel and transportation	76	99	159	299
Information technology	74	80	151	193
External communications	20	19	106	90
Other	292	207	588	539
Corporate, general and administrative expense	3,199	5,595	8,735	10,097

All operating expenditures incurred by the Group are included in corporate, general and administrative expenses.

ICSID Arbitration related expenses are for legal and other advisory services provided to the Company in respect of the ICSID Arbitration - summary details of the substantial written submissions and the oral merits hearings which required these services and were principal drivers of related costs in the first and second quarter of 2020 and 2021 are set out in “Status of the ICSID Arbitration and Recent Developments” above. For the three-month period ended June 30, 2021, such costs were approximately $0.9 million, reflecting finalization of the Post-Hearing Briefs. ICSID Arbitration related expenses in the corresponding quarter of 2020 of $2.8 million, primarily reflected more intensive activity, including preparing answers to the Tribunal Questions following the Hearing and a response to the amicus curiae submission to the Tribunal by the European Commission.

Payroll is the total of salaries and relevant taxes for all Group employees. Payroll costs in the threemonth period ended June 30, 2021 include $0.4 million related to RMGC employees (2020: $0.6 million), and are $0.5 million lower than in the prior year primarily reflecting reduced employee numbers.

Finance costs include professional advisory costs including audit and audit related fees, and have increased in the three-month period to June 30, 2021 when compared to prior year primarily due to ad-hoc taxation reviews.

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Legal expenses include ongoing corporate legal advice within the Group, in particular with regard to matters such as the ANAF investigations.

Travel and transportation costs are lower in the three-month period ended June 30, 2021 due to the ongoing reduced mobility of personnel resulting from the COVID-19 restrictions and precautions taken.

Share-Based Compensation

		3	months ended	months ended		6	months ended	months ended
				June 30				June 30
		2021		2020		2021		2020
Share option compensation
Number of share options granted		160,392		122,908		1,016,568		6,075,612
Average value ascribed to each option granted	$	0.23	$	0.46	$	0.23	$	0.46
Number of share options exercised		-		520,339		-		525,339
Average value ascribed to each option exercised	$	-	$	0.40	$	-	$	0.35
Number of share options expired/cancelled		-		105,667		-		2,081,827
Average value ascribed to each option expired/cancelled	$	-	$	0.56	$	-	$	0.56
DSU compensation
Number of DSUs issued		100,264		95,127		638,501		211,071
Average value ascribed to each DSU issued	$	0.24	$	0.49	$	0.24	$	0.49
RSU compensation
Number of RSUs redeemed		-		-		400,820		-
Average value ascribed to each RSU redeemed	$	-	$	-	$	0.23	$	-
Number of RSUs cancelled		-		-		138,180		-
Average value ascribed to each RSU cancelled	$	-	$	-	$	0.23	$	-

	3	months ended	6	months ended
		June 30		June 30
in thousands of Canadian dollars	2021	2020	2021	2020
DSUs - expense	49	(62)	372	59
Share option-expense	49	335	195	1,539
Share based compensation	98	273	567	1,598

The estimated fair value of incentive share options (“ Options ”) issued by the Company is calculated using the Black-Scholes method as at the date of grant and amortized over the period during which the Options vest.

With effect from July 1, 2016, non-executive directors receive at least fifty per cent. of their directors’ fees payable in deferred share units (“ DSUs ”) or, at their election, Options in lieu of cash. Certain non-executive directors have elected to receive all of their directors’ fees payable in DSUs or Options.

A total of 160,392 Options (all of which vest immediately) and 100,264 DSUs were granted to certain non-executive directors during the three-month period ended June 30, 2021 in lieu of cash fees for services provided during Q1 2021.

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DSUs are revalued each period end based on the period end closing share price. The initial value of the DSUs on grant, and the effect on the valuation of DSUs of the period-on-period change in share price, is expensed. At June 30, 2021, the Company’s share price was $0.285 (March 31, 2021: $0.28), resulting in a DSU expense of less than $0.1 million for the three-month period ended June 30, 2021.

Finance Income

Finance Income
	3	months ended	6	months ended
		June 30		June 30
in thousands of Canadian dollars	2021	2020	2021	2020
Interest income	4	3	13	64

Interest income reflects the average holdings of cash and cash equivalents during the respective periods shown above. Interest income has reduced significantly since the start of the second quarter of 2020, in line with the significant reduction in available cash balances through the 2020 year and into the first half of 2021, together with reduced North American treasury yields in the period.

As at June 30, 2021, 50% and 22% of the Company’s cash and cash equivalents were invested in Canadian and US government guaranteed instruments respectively, with the majority of the balance held as cash deposits with major Canadian banks.

Finance Costs

Finance Costs
	3	months ended	6	months ended
		June 30		June 30
in thousands of Canadian dollars	2021	2020	2021	2020
Financing costs - convertible note accretion	2,656	2,482	5,234	4,892

Finance costs relate to the accretion of the debt components of the Notes issued in 2014 and 2016, which are measured at amortized cost using the effective interest rate method. As explained above, the Company repaid all remaining outstanding $90,862,000 of Notes at maturity on June 30, 2021.

Foreign Exchange

The Company has experienced an increase in foreign currency gains and losses as a result of increased exposure to the US dollar. All of the funds raised in the three private placements of equity and warrants since 2018 were received in US dollars and the Company retained these US dollars to fund its subsequent US dollar-denominated working capital expenses, principally costs related to the ICSID Arbitration.

Taxes

All tax assessments received prior to June 30, 2021 have been paid or provided for in the Financial Statements.

Management’s Discussion & Analysis Second Quarter 2021

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Investing Activities

The majority of Group expenditures over the years through December 31, 2015 were for identifying and defining the size of the four ore bodies, for engineering to design the size and scope of the Project, environmental assessment and permitting, social support to local communities, communications and public relations activities to support the permitting process, archeological and rehabilitation work to buildings, as well as surface rights and property acquisition and resettlement housing and infrastructure.

Since January 1, 2016, no significant expenditures apart from building maintenance have been incurred in these areas and any such expenditures are expensed in the income statement.

Purchase of Capital Assets

	3	months ended	6	months ended
		June 30		June 30
in thousands of Canadian dollars	2021	2020	2021	2020
Total investment in capital assets	-	-	-	5
Depreciation and disposal - expensed	9	8	17	21

The purchase of capital assets remains low, in line with the Company’s cost containment strategy.

Financing Activities

The Company has raised funds since 2014 through private placements of Notes, Common Shares and warrants (together “ Private Placements ”) amounting to gross aggregate proceeds of $162.2 million. The Company has used and is continuing to use the proceeds of the Private Placements to finance the costs of the ongoing ICSID Arbitration and for general working capital purposes. Further information on the Private Placements is provided in the Financial Statements.

Cash Flow Statement

Liquidity and Capital Resources

The main sources of liquidity are the Company’s cash and cash equivalents, and the equity and debt markets. At June 30, 2021, aggregate cash and cash equivalents were $7.0 million (December 31, 2020: $6.5 million).

Working Capital

At June 30, 2021, the Company had working capital, calculated as total current assets (excluding assets held for sale) less total current liabilities of $1.7 million (December 31, 2020: negative $82.1 million). The increase in working capital is primarily due to the repayment of the Notes through issue of Common Shares on June 30, 2021 and proceeds of the 2021 Private Placement, offset by ongoing operating costs of the Company.

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At June 30, 2021, the Company had current liabilities of $6.2 million (December 31, 2020, excluding the Notes: $3.7 million). This period-on-period increase is primarily due to the higher ICSID Arbitration cost accruals at June 30, 2021 reflecting work performed in finalizing the PostHearing Briefs and the deferred fee arrangement.

Resettlement Liabilities

RMGC had a program for purchasing homes in the Project area, which was suspended in February 2008 due to the suspension of the environmental review process in September 2007.

At June 30, 2021 the Company had accrued resettlement liabilities totaling $0.5 million (December 31, 2020: $0.6 million).

Contractual Obligations

A summary of the Company’s contractual capital and operating lease commitments as of June 30, 2021 is included within the Financial Statements.

The Company and its subsidiaries have a number of arm’s-length agreements with third parties who provide a wide range of goods and services. Typically, the service agreements are for a term of not more than one year and permit either party to terminate upon notice periods ranging from 15 to 90 days. At termination, the Company has to pay for services rendered, and costs incurred, to the date of termination.

Critical Accounting Estimates

The preparation of the Financial Statements in conformity with IFRS requires Management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the Financial Statements and the reported amount of expenses and other income during the reporting period.

Significant estimates and assumptions include those related to going concern, the recoverability or impairment of certain assets, benefits of future income tax assets, estimated useful lives of capital assets, valuation of share based compensation and other benefits, assumptions and determinations as to whether costs are expensed or capitalized, and the valuation and measurement of the components of the Private Placements.

While Management believes that these estimates and assumptions are reasonable, actual results could vary significantly therefrom. The critical accounting estimates are not significantly different from those reported in the Financial Statements as at, and for the year ended, December 31, 2020.

Going Concern

On the basis of the Company’s balance of cash and cash equivalents as at June 30, 2021, the Company believes that it has sufficient sources of funding to enable the Group to fund general working capital requirements together with the material estimated costs associated with the Company advancing the ICSID Arbitration through to January 2022. Accordingly, Gabriel believes that it will need to raise additional financing in 2021 in order to maintain its primary assets, including its License and associated rights and permits, post January 2022 while it awaits the Award of the Tribunal.

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As at June 30, 2021, the Group had no sources of operating cash flows. Gabriel does not have sufficient cash to fund the development of the Project and the Group will require further funding for general working capital purposes and to pursue the ICSID Arbitration as appropriate following the Tribunal’s Award, including any potential annulment proceeding and/or to enforce any Award. Notwithstanding the Company’s recent and historic funding, there is a risk that sufficient additional financing may not be available to the Company on acceptable terms, or at all.

Future Income Tax Assets

Income taxes are calculated using the asset and liability method of tax accounting. Under this method, current income taxes are recognized for the estimated income taxes payable for the current period. Future income tax assets and liabilities are determined based on differences between the financial reporting and tax bases of assets and liabilities, and are measured using the substantively enacted tax rates and laws that are expected to be in effect when the differences reverse. Income tax assets are recognized to the extent that the recoverability of future income tax assets is considered probable.

The Company has subsidiaries in countries that have differing tax laws and tax rates, primarily Romania and the United Kingdom. The provision for income taxes is based on a number of estimates and assumptions made by Management, including its understanding of domestic and international tax rules. Advice is also sought from local professional tax advisors in the respective countries where the Group operates.

Tax authorities in Romania have regularly initiated various tax audits to assess the appropriateness of RMGC’s tax filing positions. Regulators may interpret tax regulations differently from the Company and its subsidiaries, which may cause changes to the estimates made.

Valuation of the Private Placements

The units issued by the Company in the Private Placements in 2014 and 2016 consisted of Notes, warrants and arbitration value rights. As noted above, on June 30, 2021 the outstanding warrants issued in connection with the 2014 and 2016 Private Placements expired and the Notes have been repaid. A nil value was initially ascribed to the arbitration value rights and, given the current stage of the ICSID Arbitration process, a nil valuation remains applicable as at June 30, 2021.

The units issued by the Company in the 2018, 2019 and 2020 Private Placements consisted of Common Shares and warrants each of which entitles the holder to acquire one Common Share at an exercise price of $0.49, $0.645 and $0.39 respectively, at any time in the five years following issuance (in the case of the 2018 and 2019 Private Placements) and at any time in the three years following issuance (in the case of the 2020 Private Placement). The Company utilized the BlackScholes model to value the warrant component of the units and allocated the remainder of the value to the equity component. Any directly attributable transaction costs were allocated to the equity and warrant components in proportion to their initial carrying amounts.

The shares issued by the Company in the 2021 Private Placement were issued at market price and consequently there was no requirement to use a valuation model, the whole of the funds received being directly attributable to the share capital of the Company.

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Useful Lives of Capital Assets

The Company’s policy is to amortize capital assets over their useful lives once the assets are brought into production. Management assesses useful lives of assets to ensure that they reflect the intended use of those assets.

Valuation of Share-Based Compensation

The Company utilizes Options, DSUs and restricted share units (“RSUs”) as means of compensation. Equity settled RSUs and Options are valued using the Black-Scholes model, and are amortized over the expected vesting periods. Management reviews the assumptions used in the Black-Scholes valuation on an annual basis to ensure appropriateness.

DSUs are initially issued at the five-day weighted average market price of the Common Shares at the date of grant, and the value thereof is subsequently recalculated to fair value based on the quoted market value of the Common Shares at the end of each reporting period.

Financial Instruments and Management of Financial Risk

The recorded amounts for cash, cash equivalents, accounts receivable, accounts payable, accrued liabilities and other liabilities approximate fair values based on the nature of those instruments.

The Company’s objective is to safeguard its cash and cash equivalents in order to be able to fund ongoing expenditures. The Company manages its capital structure and makes adjustments to it based on the level of funds on hand and anticipated future expenditures. The long-term costs, including advisors’ fees of pursuing the ICSID Arbitration and general corporate working capital, have been material and are estimated to continue to be significant.

To safeguard cash the Company invests its surplus capital in liquid instruments at reputable financial institutions with acceptable credit standings.

The Group’s risk exposures and the impact on the Group’s financial instruments are summarized below:

Credit Risk

The Group’s credit risk is primarily attributable to cash and cash equivalents that are held in investment accounts with Canadian banks and invested in Canadian and United States sovereign debt. The Group has adopted an investment strategy to minimize its credit risk by investing in sovereign debt (primarily issued by Canada and the United States, subject to availability) with the balance of cash being invested on short-term overnight deposit with major Canadian banks.

The Group is exposed to the credit risk of domestic Romanian banks that hold and disburse cash on behalf of its Romanian subsidiaries. The Group manages its Romanian bank credit risk by centralizing custody, control and management of its surplus cash resources outside of Romania at the corporate office and only transferring money to its Romanian subsidiary based on near-term cash requirements, thereby mitigating exposure to domestic Romanian banks.

The Group holds cash balances in the United Kingdom to fund corporate office activities and is therefore exposed to the credit risks of these major UK banks.

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The Group’s credit risk is also attributable to value-added taxes receivable. Value-added taxes receivable are primarily receivables from the Romanian Government, which are not subject to challenge. As at June 30, 2021, overdue VAT receivable amounts claimed by RMGC total approximately $0.2 million.

Liquidity Risk

As of the date of this MD&A, the Group had no sources of operating cash flows and does not have sufficient cash to fund either the development of the Project or all the long-term activities required to see the ICSID Arbitration through to its conclusion, including any annulment process and enforcement. Taking account of the Group’s existing treasury balances, and subject to raising additional funding as described above, the Group expects to have sufficient funds to settle all other current and existing long-term contractual liabilities as they fall due.

Market Risk

(a) Interest rate risk

The Group has cash balances which are subject to interest rate changes. The Group maintains a short-term investment horizon, typically less than three months, for its cash and cash equivalents, and therefore minimizes the risk of interest rate volatility at investment maturity.

With a short-term investment horizon and the intent to hold all investments until maturity, the Group is only marginally exposed to capital erosion should interest rates rise and cause fixed-yield investments to devalue.

The Group’s primary objective with respect to cash and cash equivalents is to mitigate credit risk. The Group has elected to forego yield in favor of capital preservation.

(b) Foreign currency risk

The Group’s presentation currency is the Canadian dollar and its activities expose it to fluctuations in foreign exchange rates. The Group has monetary assets and liabilities which are denominated in Romanian Lei, US dollars, UK pounds and Euros and is, therefore, subject to exchange variations against both the functional currency of the entity and presentation currency of the Group.

The Group maintains cash and cash equivalents in various currencies and is therefore susceptible to market volatility as foreign cash balances are revalued to the functional currency of the entity and thereafter to the presentation currency of the Group. Therefore, the Group may report foreign exchange gains or losses during periods of significant economic and market volatility. At June 30, 2021, the Group held 56% and 35% of its cash and cash equivalents in Canadian dollars and US dollars, respectively.

The Company has not entered into any derivative hedging activities.

Sensitivity

As of June 30, 2021, the carrying amount of the financial instruments equals fair market value. Based on Management’s knowledge and experience of the financial markets, in respect of the Company’s balance of cash and cash equivalents as at June 30, 2021, the Company believes the following market movements are “reasonably possible” over a twelve-month period and would have the stated effects on net income:

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• A plus or minus 1% change in earned interest rates; would affect net interest income by $0.1 million.

• A plus or minus 1% change in foreign exchange rates; would affect net income by $0.1 million.

Risks and Uncertainties

An investment in the Common Shares is subject to a number of risks and uncertainties. This section describes existing and future material risks to the business of the Group. The risks described below are not exhaustive. Additional risks and uncertainties not currently known to the Company, or those that it currently deems to be immaterial, may become material and adversely affect the Group’s business. The realization of any of these risks may materially and adversely affect the Group’s business, financial condition, results of operations and/or the market price of Gabriel’s securities.

The Outbreak of the Coronavirus (COVID‐19)

The Company faces risks related to health epidemics and other outbreaks of communicable diseases, which could significantly disrupt the Group’s operations, including, but not limited to, the advancement of the ICSID Arbitration, and the effects of the coronavirus or other epidemics may materially and adversely affect its business and financial conditions.

The extent to which the coronavirus impacts the Group’s business and operations, and the market for its securities, will depend on future developments, which are highly uncertain and cannot be predicted at this time, and include the duration, severity and scope of the outbreak and the actions taken to contain or treat the coronavirus outbreak.

In particular, the continued spread of the coronavirus and travel and other restrictions established to curb the spread of the coronavirus, could materially and adversely impact the Group’s business including, without limitation, the progress of the ICSID Arbitration (for example the availability of the Tribunal, legal counsel, industry experts and ICSID personnel), the Project work program, employee health, limitations on travel, and other factors that will depend on future developments beyond the Company’s control, which may have a material and adverse effect on the its business, financial condition and results of operations. There can be no assurance that the Group’s personnel will not be impacted by these pandemic diseases and ultimately the Group may see its workforce productivity reduced or incur increased medical costs or insurance premiums as a result of these health risks.

ICSID Arbitration

The resources necessary to pursue the ICSID Arbitration are substantial and the costs, fees and other expenses and commitments payable in connection with the ICSID Arbitration may differ materially from Management’s expectations. In view of the case-specific nature of arbitration, and the inherent uncertainty in the actions of the Respondent and in the process, timing and outcome of the ICSID Arbitration, there can be no assurances that the ICSID Arbitration will advance in a customary or predictable manner or be completed or settled within any specific or reasonable period of time.

There is no assurance that the Claimants will be successful in establishing Romania’s liability in the ICSID Arbitration or, if successful, that the Claimants will receive or collect an award of compensation from the Respondent in the amount requested, of significantly reduced value, or at all. Failure to prevail in the ICSID Arbitration, or to obtain adequate compensation for the loss in value of the Group’s investment, would materially adversely affect the Group.

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The pursuit by the Company of the ICSID Arbitration may lead to the commencement of further abusive fiscal and other investigations and assessments against RMGC or its staff or employees by the Romanian State.

UNESCO World Heritage List

As described above, on July 27, 2021 the “Roşia Montană Mining Cultural Landscape”, an area covering the footprint of the Project, was inscribed by UNESCO (the United Nations Educational, Scientific and Cultural Organization) on its World Heritage List and added to its List of World Heritage in Danger.

The inclusion of the ‘Roşia Montană Mining Landscape’ on the UNESCO World Heritage List materially undermines the possibility of an amicable resolution of the dispute with Romania that would allow for the development of the Project.

Sources of Additional Funding

Further funding will be required by the Company to pursue the ICSID Arbitration to its conclusion, including the enforcement of any award, and for general working capital requirements.

Historically, the Company has been financed through the issuance of its Common Shares, Notes and other equity-based securities. Although the Company has been successful in the past in obtaining financing, it has limited access to financial resources as a direct result of the dispute concerning the Project and the core focus of the Company upon the ICSID Arbitration. Notwithstanding the Company’s historic funding, there is a risk that sufficient additional financing may not be available to the Company on acceptable terms, or at all. In addition, the current outbreak of COVID-19 has had a negative impact on global economies and financial markets. The continued spread of COVID-19 and any future emergence and spread of similar pathogens could have an adverse impact on global economic conditions, which may adversely impact the Company’s ability to obtain financing.

While, as disclosed above, the Company is continuing a process to sell its remaining LLTE which would, if completed, provide the Company with a reduced cost base and additional working capital, there are no assurances regarding the success of such a sale process or that any proceeds may be realized from the sale of the remaining equipment. The timing of the receipt of any such sales proceeds is also uncertain.

Refinancing of Existing Securities

The Company may need or desire to refinance all or a portion of the warrants issued and outstanding pursuant to the Private Placements. There can be no assurance that the Company will be able to refinance any of its indebtedness or incur additional indebtedness.

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Potential Dilution to Existing Shareholders

The exercise of the Company’s outstanding warrants could result in the issuance of a significant number of Common Shares causing significant dilution to the ownership of existing shareholders.

As described above, the Company will require additional financing in order to pursue the ICSID Arbitration to its conclusion and for general working capital requirements. In order to raise such financing, the Company may sell additional equity or equity-related securities including, but not limited to, Common Shares, share purchase warrants or some form of convertible security. The additional issuances of equity securities, if made, will result in dilution to existing shareholders, which could be substantial.

Unless and until the Company successfully permits the Project or collects an arbitral award, if any, or acquires and/or develops other operating properties which provide positive cash flow, the Company’s ability to meet its obligations as they fall due will be limited to the Company’s cash on hand and/or its ability to issue additional equity or debt securities in the future. Such transactions could potentially cause substantial dilution to the shareholders at that time.

Political and Economic Uncertainty in Romania

Gabriel’s material operations, property rights and other interests are located in Romania. As such, the Company’s activities are subject to a number of country-specific risks and risks relating to the European Union (such as laws and policies which impact Romania) over which it has no control.

These risks may include social, political, economic, legal and fiscal instability and changes of Romanian or European Union laws and regulations affecting mining, foreign ownership, taxation, working conditions, rates of exchange, exchange control, exploration licensing, and export licensing and export duties.

In the event of a dispute arising in respect of the Company’s activities in Romania (other than the ICSID Arbitration and the Notice regarding UNESCO World Heritage), the Company may be subject to the exclusive jurisdiction of foreign courts or may not be successful in subjecting foreign persons to the jurisdiction of courts in Canada or elsewhere. Any adverse or arbitrary decision of a court, arbitrator or other governmental or regulatory body may have a material adverse impact on the Company’s business, assets, prospects, financial condition and results of operations and/or the market price of its securities.

Mineral Tenure Rights

RMGC is the titleholder of the License, which had an initial duration of 20 years and was due to expire on June 21, 2019. RMGC has the right to extend the term of the License for successive subsequent five-year periods as may be needed to ensure rational exploitation of the mineral resources and reserves identified and approved by the Romanian National Agency for Mineral Resources (“ NAMR ”). An addendum providing for the extension of the term of the License to June 20, 2024, and including a revised royalty rate to 6% on mineral production value, was concluded on June 18, 2019.

Although RMGC retains ‘nominal ownership’ of the License, the acts and omissions of the Romanian State have prevented RMGC from realizing any benefits of such ownership and thus have deprived the License entirely of its value.

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Pursuant to an exploration concession license issued by the Romanian State in May 1999 relating to the Bucium perimeter located in the vicinity of Roşia Montană, and following the completion of extensive exploration at Bucium which identified two feasible deposits, RMGC acquired a direct and exclusive legal right to obtain exploitation licenses for the Rodu-Frasin and Tarniţa deposits. However, in violation of RMGC’s legal rights and of Romania’s legal obligations, Romania has failed for the last 13 years to act on RMGC’s applications for exploitation licenses for Rodu-Frasin and Tarniţa.

Any adverse or arbitrary decision of NAMR may have a material adverse impact on the Company’s business, assets, prospects, financial condition and results of operations and/or the market price of its securities.

Legal Proceedings

As previously disclosed, Gabriel has been party (directly and through RMGC) to a number of legal challenges in Romania. In the course of its business, Gabriel may also from time to time become involved in the defense and initiation of legal claims, arbitration and other legal proceedings.

Due to the inherent uncertainties of the judicial process, the nature and results of any such legal proceedings cannot be predicted with any certainty. In addition, such claims, arbitration and other legal proceedings can be lengthy and involve the incurrence of substantial costs and resources by the Company. The initiation, pursuit and/or outcome of any particular claim, arbitration or legal proceeding could have a material adverse effect on the Company’s financial position and results of operations, and on the Company’s business, assets and prospects.

Dependence on Management and Key Personnel

The Group is dependent on a relatively small number of key directors, officers and employees. Loss of any one of those persons could have an adverse effect on it. Retaining qualified and experienced personnel is critical to the Company’s success. However, there can be no assurance that the Group will be successful in so doing.

Furthermore, the loss of key employees, in particular those who possess important historical knowledge related to the Project which could be relevant to the ICSID Arbitration, could have a material adverse effect on the outcome of the ICSID Arbitration and future operations of the Group.

Minvest RM Mine Closure Plan and Environmental Liabilities

In May 2006, Minvest RM’s predecessor permanently ceased all of its mining operations at Roșia Montană. As a result, a mine closure plan was developed, which, Gabriel understands, was approved by the Romanian Ministry of Economy and NAMR. The mine closure plan was developed to integrate into RMGC’s development plans for Roșia Montană in order to avoid any conflict between the Romanian State’s closure activities and RMGC’s development activities. A state-owned company under the coordination of the Ministry of Economy, S.C. CONVERSMIN S.A. (“CONVERSMIN”), has responsibility for the mine closure plan.

There can be no assurance that the activities contemplated by such mine closure plan will be implemented in a timely fashion, and no such action has been undertaken to date within the Roșia Montană license area.

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Until the mine closure plan has been fully implemented, there can be no assurance that such activities will not attract liability to RMGC, as the titleholder of the License, under the current or future laws, rules and regulations applicable to mining activities in Romania. Likewise, there can be no assurance that the legally binding assumption by the Romanian State-owned operator of all liabilities associated with its past mining operations or any indemnification of RMGC from such liabilities will be fulfilled by, or be enforceable against, such entity.

Mining exploration activities conducted by RMGC, as titleholder of the License, are also subject to potential environmental risks and liabilities. It is the Company’s belief that RMGC has met its obligations under the License and applicable Romanian laws to perform environmental rehabilitation within the areas of the tenement affected by its exploration activities. To the extent that RMGC becomes subject to material unforeseen and uninsured environmental liabilities, the payment of such costs would reduce funds otherwise available to the Company and could have a material adverse effect on the Company.

Continued Listing of the Common Shares

The continued listing of the Common Shares on the Exchange is conditional upon its ability to meet the applicable continued listing requirements of the Exchange. In the event that Gabriel is not able to maintain a listing of its Common Shares on the Exchange or any substitute exchange, it may be extremely difficult or impossible for shareholders to sell their Common Shares. If the Company is delisted from the Exchange but obtains a substitute listing for the Common Shares, the Common Shares may have less liquidity and more price volatility than experienced on the Exchange. Shareholders may not be able to sell their Common Shares on any such substitute exchange in the quantities, at the times, or at the prices that could potentially be available on a more liquid trading market.

As a result of these factors, if the Common Shares are delisted from the Exchange, the price of the Common Shares may decline and the Company's ability to obtain financing in the future could be materially impaired.

Compliance with Anti-Corruption Laws

Gabriel is subject to various anti-corruption laws and regulations including, but not limited to, the Canadian Corruption of Foreign Public Officials Act 1999 and the UK Bribery Act 2010. In general, these laws prohibit a company and its employees and intermediaries from bribing or making other prohibited payments to foreign officials or other persons to obtain or retain business or gain some other business advantage. Gabriel’s primary operations are located in Romania, a country which, according to Transparency International, is perceived as having fairly high levels of corruption relative to the rest of Europe (Romania ranks 69[th] out of 180 countries in terms of corruption, according to a 2020 index published in January 2021 by Transparency International). Gabriel cannot predict the nature, scope or effect of future anti-corruption regulatory requirements to which Gabriel’s operations might be subject or the manner in which existing laws might be administered or interpreted.

Failure to comply with the applicable legislation and other similar foreign laws could expose Gabriel and/or its senior management to civil and/or criminal penalties, other sanctions and remedial measures, legal expenses and reputational damage, all of which could materially and adversely affect Gabriel’s business, financial condition and results of operations. Likewise, any investigation of any potential violations of the applicable anti-corruption legislation by UK, Canadian or foreign authorities could also have an adverse impact on Gabriel’s ability to develop the Project or its business, financial condition and results of operations.

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As a consequence of these legal and regulatory requirements, Gabriel has instituted policies and procedures with regard to business ethics, which have been designed to ensure that Gabriel and its employees comply with applicable anti-corruption laws and regulations. However, there can be no assurance or guarantee that such efforts have been and will be completely effective in ensuring Gabriel’s compliance, and the compliance of its employees, consultants, contractors and other agents, with all applicable anti-corruption laws and regulations.

Insurance and Uninsurable Risks

Gabriel maintains insurance to protect itself against certain risks related to its operations in type and amounts that it believes are reasonable depending upon the circumstances surrounding each identified risk and the advice of its retained insurance advisor. There are also risks against which the Company cannot insure or against which it may elect not to insure for various reasons. The potential costs associated with any liabilities not covered by insurance, or in excess of insurance coverage, or compliance with applicable laws and regulations may cause substantial delays to its operations and require significant capital outlays, adversely affecting the future business, assets, prospects, financial condition and results of operations of the Company.

Global Economic and Financial Market Conditions

Global economic and financial conditions may impact the ability of the Company to obtain loans, financing and other credit facilities in the future and, if obtained, on terms favorable to the Company. As a consequence, global financial conditions could adversely impact the Company’s financial status and share price.

Currency Fluctuations

The Company’s reporting currency is the Canadian dollar, which is exposed to fluctuations against other currencies. The Company’s primary operations are located in Romania and many of its expenditures and obligations are denominated in Romanian Lei (“ RON ”). In addition, the Company has and/or will have expenditures and obligations denominated in other currencies including, but not limited to, Canadian dollars, US dollars, Euros and United Kingdom pounds sterling (“ GBP ”). The Company maintains active cash accounts in Canadian dollars, US dollars, GBP and RON and has either monetary assets and/or liabilities in currencies including US dollars, Canadian dollars, Euros, GBP and RON. As such, the Company’s results of operations are subject to foreign currency fluctuation risks and such fluctuations may adversely affect the financial position and operating results of the Company. The Company does not currently use any derivative products to actively manage or mitigate any foreign exchange exposure.

Market Price Volatility

Publicly quoted securities are subject to a relatively high degree of price volatility. It may be anticipated that the quoted market for the Common Shares will be subject to market trends generally and there may be significant fluctuations in the price of the Common Shares.

No History of Earnings or Dividends

The Company has no history of earnings and as such the Company has not paid dividends on its Common Shares since incorporation. The Company does not intend to declare or pay cash dividends at present.

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Accounting Policies and Internal Controls

Since January 1, 2011, the Company has prepared its financial reports in accordance with IFRS. In preparation of financial reports, Management of Gabriel may need to rely upon assumptions, make estimates or use their best judgment in determining the financial condition of the Company. Significant accounting policies are described in more detail in the Company’s audited Financial Statements.

In order to have a reasonable level of assurance that financial transactions are properly authorized, assets are safeguarded against unauthorized or improper use, and transactions are properly recorded and reported, the Company has implemented internal control systems for financial reporting. Although the Company believes its financial reporting and Financial Statements are prepared with reasonable safeguards to ensure reliability, the Company cannot provide absolute assurance.

Enforcement of Civil Liabilities

As substantially all of the assets of Gabriel and its subsidiaries are located outside of Canada, and certain of its directors and officers are resident outside of Canada, it may be difficult or impossible to enforce judgements granted by a court in Canada against the assets of Gabriel or its subsidiaries or its directors and officers residing outside of Canada.

Conflicts of Interest

Some of the directors and officers of the Company are, or may be, on the boards of other natural resource companies, or other providers of finance, from time-to-time resulting in conflicts of interests. Therefore, there is the potential for a conflict of interest between the Company and some of its directors and officers. Directors and officers of the Company with conflicts of interest will be subject to and will follow the procedures set out in applicable corporate and securities legislation, regulations, rules and policies.

CEO/CFO Certification

The Company’s Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”) have reviewed the interim financial statements and interim MD&A (the “Interim Filings”) for the threemonth period ended June 30, 2021.

The CEO and CFO certify that, as at June 30, 2021, based on their knowledge, having exercised reasonable diligence, the Interim Filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, for the period covered by the Interim Filings.

The CEO and CFO certify that, as at June 30, 2021, based on their knowledge, having exercised reasonable diligence, the interim financial statements for the period, together with the other financial information included in the Interim Filings, fairly present in all material respects the financial condition, financial performance and cash flows of the Company, as of June 30, 2021 and for the three month period to that date.

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Outstanding Share Data

The Company’s fully diluted share capital as at August 3, 2021 was:

	Outstanding
Common shares	967,540,188
Common stock options	32,320,087
Deferred share units - Common Shares	4,184,455
Warrants	200,819,566
Fully diluted share capital	1,204,864,296

Forward-Looking Statements

This MD&A 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 MD&A, 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 uncertainties associated with material factors or assumptions used to develop forwardlooking statements include, without limitation: the progress of the ICSID Arbitration, actions by the Romanian Government or affiliates thereof, the impact of current or future litigation against the Group, conditions or events impacting the Company’s ability to fund its operations (including but not limited to the completion of additional funding noted above) or service its debt, the ability to progress 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 above and 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, outlook, projections, objectives, assumptions or future events or performance (often, but not always, identified by words or phrases such as “expects”, “is expected”, “is of the view” “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.

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

• the outbreak of the coronavirus (COVID‐19) may affect the Company’s operations and/or the anticipated timeline for the ICSID Arbitration;

• the duration, costs, process and outcome of the ICSID Arbitration;

• Romania’s actions following inscription of the “Roşia Montană Mining Landscape” as a UNESCO World Heritage site;

• changes in the Group’s liquidity and capital resources;

• access to funding to support the Group’s continued ICSID Arbitration and/or operating activities in the future;

• equity dilution resulting from the exercise of warrants, in Common Shares;

• the ability of the Company to maintain a continued listing on the Exchange or any regulated public market for trading securities;

• the impact on business strategy and its implementation in Romania of: any allegations of historic acts of corruption, uncertain legal enforcement both for and against the 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 and fiscal regimes;

• global economic and financial market conditions;

• volatility of currency exchange rates; and

• the availability and continued participation in operational or other matters pertaining to the Group of certain key employees and consultants.

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 MD&A 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.

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