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Gabriel Resources Ltd., a miner trying to develop a troubled gold project in southeastern Europe, widened its second-quarter loss Thursday on one-time charges linked to an income tax reassessment in Romania.

The Toronto-based miner, struggling to develop the Rosia Montana gold mine in Romania, said Thursday it lost $16.2-million or six cents a share for the three months ended June 30.

That compared with a loss of $6-million or two cents per share last year. The company has no metal revenues as it develops its mining projects.

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The latest quarter's bottom line included a provision for income taxes of $10.7-million related to a reassessment by Romanian tax authorities for Gabriel's 2003 and 2004 fiscal years.

The company said it received a $9.7-million tax assessment from the Romanian government in June after a tax audit completed this spring.

"While the company has fully provided for these assessments in the financial statements and paid all of the tax related to the assessments, based on the advice of its professional tax advisers, the company believes that the tax authorities have misapplied the legislation," Gabriel said.

"As a result, the company plans to vigorously contest the state's position in court."

The process, Gabriel added, is expected to take about 18 months.

Gabriel has spent millions trying to develop Rosia Montana, a redevelopment of a Communist-era mine in the impoverished Transylvanian mountains. The previous mining left environmental damage and suspicion that Gabriel's mine could cause poisonous spills, uproot a village and damage archeological sites.

The Romanian government owns 19 per cent of the development, but the Environment Ministry suspended its environmental impact review in September, in what the company contends was an arbitrary decision.

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Gabriel said it has budgeted to spend $65-million this year for the Rosia Montana project, with most activities being placed on hold until the environmental permit is approved.

"We now have in place the strongest team we have ever had, both in Toronto and in Romania," said Alan Hill president and CEO.

"All of our energy is focused on getting the Rosia Montana Project back on track — laying the groundwork now so that when the project review begins again, we can move forward quickly."

Gabriel said a total of $10.5-million was spent on its development projects during the quarter, increasing the year-to-date amount to $24.3-million.

Cash, cash equivalents and restricted cash at June 30 totalled $116.5-million.

On the TSX Thursday, Gabriel shares traded down five cents at $2.65.

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