ANNUAL INFORMATION FORM of GABRIEL RESOURCES LTD. FOR
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ANNUAL INFORMATION FORM of GABRIEL RESOURCES LTD. FOR THE YEAR ENDED DECEMBER 31, 2016 DATED AS OF MARCH 29, 2017 TABLE OF CONTENTS Page PRELIMINARY NOTES 1 Cautionary Note regarding Core Focus of the Gabriel Group 1 Cautionary Note regarding Forward-Looking Statements 1 Cautionary Note to United States Investors 2 Currency and Exchange Rates 3 Metric Equivalents 4 Date of Information 4 PART I - CORPORATE STRUCTURE 5 Name, Address and Incorporation 5 Inter-Corporate Relationships 5 PART II - GENERAL DESCRIPTION OF THE BUSINESS AND ITS DEVELOPMENT 6 Overview 6 Recent Activities 7 Overview of Mineral Properties 7 ICSID Arbitration 9 Financing Arrangements 12 Impairment of Project Assets 13 Long Lead-Time Equipment 14 Anticipated Activities for 2017 14 PART III- OVERVIEW OF ROMANIA 15 Introduction 15 Politics of Romania 15 Taxes and Mineral Ownership 16 PART IV - DESCRIPTION OF MINERAL PROPERTIES 19 Introduction 19 Technical Reports 19 The Roșia Montană Project 20 PART V – DESCRIPTION OF THE PERMITTING PROCESS AND LEGAL CHALLENGES 31 Permitting Process for the Project 31 Legal Challenges relating to the Project 39 PART VI- RISK FACTORS 44 PART VII – CAPITAL STRUCTURE, DIVIDENDS, MARKET FOR SECURITIES AND PRIOR SALES 52 Description of Capital Structure 52 Dividends 55 Market for Securities 55 PART VIII - DIRECTORS AND OFFICERS 56 Name, Occupation and Security Holding 56 Cease Trade Orders, Bankruptcies, Penalties and Sanctions 61 Conflicts of Interest 62 PART IX - AUDIT COMMITTEE 63 Audit Committee Charter 63 Membership and Experience 63 Audit Committee Policies and Procedures 64 PART X – ADDITIONAL INFORMATION 65 Legal Proceedings and Regulatory Actions 65 Interests of Management and Others in Material Transactions 65 Transfer Agents and Registrars 65 Material Contracts 65 Interests of Experts 65 Availability of Additional Information 66 PART XI - GLOSSARY OF MINING TERMS 67 SCHEDULE – AUDIT COMMITTEE CHARTER 71 PRELIMINARY NOTES In this Annual Information Form, the terms “Gabriel”, the “Company” and the “Gabriel Group” refer to Gabriel Resources Ltd. and its consolidated subsidiaries and affiliates, and “Management” refers to the executive officers of Gabriel, unless the context requires otherwise. Other capitalised terms used in this Annual Information Form are defined within the body of this document. Cautionary Note regarding the Core Focus of the Gabriel Group Whilst the Gabriel Group’s primary objective has always been the development of the Project to operational status, the ICSID Arbitration has become the core focus of the Company in light of the continued absence of any engagement by the Romanian State since the submission of the Arbitration Request, as described further below. In the context of the above, the information set out elsewhere in this Annual Information Form relating to the Roşia Montană Project, the License, the Gabriel Group’s exploration and development activities in Romania, the Project approval and permitting process and reported gold and silver resources and reserves 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 Roşia Montană Project. Cautionary Note regarding Forward-Looking Statements This Annual Information Form 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. In this Annual Information Form, 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 forward-looking 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 Gabriel Group, conditions or events impacting the Company’s ability to fund its operations 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, projections, objectives, assumptions or future events or performance (often, but not always, identified by words or phrases such as “expects”, “is expected”, “anticipates”, “believes”, “plans”, “projects”, “estimates”, “assumes”, “intends”, “strategy”, “goals”, “objectives”, “potential”, “possible” or variations thereof or stating that certain actions, events, conditions or results “may”, “could”, “would”, “should”, “might” or “will” be taken, occur or be achieved, or the negative of any of these terms and similar expressions) are not statements of fact and may be forward- looking statements. - 2 - Numerous factors could cause actual results to differ materially from those in the forward-looking statements, including without limitation: the duration, required disclosure, costs, process and outcome of the ICSID Arbitration against Romania; changes in the Gabriel Group’s liquidity and capital resources; equity dilution resulting from the conversion of the Convertible Notes in part or in whole to Common Shares; the ability of the Company to maintain a continued listing on the TSX or any regulated public market for trading securities; access to funding to support the Gabriel Group’s continued ICSID Arbitration and/or operating activities in the future; the impact on business strategy and its implementation in Romania of: unforeseen historic acts of corruption, uncertain legal enforcement both for and against the Gabriel Group and political and social instability; regulatory, political and economic risks associated with operating in a foreign jurisdiction including changes in laws, regulations, governments and legal and fiscal regimes; volatility of currency exchange rates, metal prices and metal production; the availability and continued participation in operational or other matters pertaining to the Gabriel Group of certain key employees and consultants; and risks normally incident to the exploration, development and operation of mining properties. This list is not exhaustive of the factors that may affect any of the Company’s forward-looking statements. Reference should also be made to the section entitled “Risk Factors” in Part VI for additional risk factors that could cause results to differ materially from forward-looking statements. Investors are cautioned not to put undue reliance on forward-looking statements, and investors should not infer that there has been no change in the Company’s affairs since the date of this report that would warrant any modification of any forward-looking statement made in this document, other documents periodically filed with or furnished to the relevant securities regulators or documents presented on the Company’s website. All subsequent written and oral forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by this notice. The Company disclaims any intent or obligation to update publicly or otherwise revise any forward-looking statements or the foregoing list of assumptions or factors, whether as a result of new information, future events or otherwise, subject to the Company’s disclosure obligations under applicable Canadian securities regulations. Investors are urged to read the Company’s filings with Canadian securities regulatory agencies, which can be viewed online at www.sedar.com. Cautionary Note to Investors regarding Estimates of Measured, Indicated and Inferred Mineral Resources This Annual Information Form uses the terms “Measured”, “Indicated” and “Inferred” Mineral Resources. Investors are advised that while such terms are recognised and required by Canadian securities regulations, the United States Securities and Exchange Commission does not recognise them. “Inferred Mineral Resources” have a greater amount of uncertainty as to their existence, and as to their economic and legal feasibility, than “Measured” or “Indicated” Resources. It cannot be assumed that all or any part of an - 3 - Inferred Mineral Resource will ever be upgraded to a higher category. Under applicable Canadian securities laws, estimates of Inferred Mineral Resources may not form the basis of feasibility or other economic studies. Investors are cautioned not to assume that all or any part of Measured or Indicated Mineral Resources that are not already classified as Mineral Reserves