Carpathian Gold (T.CPN) stumbles 27% on continuing loss of RDM operating authority

Carpathian Gold, a Toronto-based exploration and development firm engaged in the exploration of gold with properties in Romania and Brazil, announced today that the company's 100% owned subsidiary, Mineração Riacho dos Machados (“MRDM”), updated progress on the January 8, 2104 temporary Autorização Provisória de Operação ("APO") suspension for their Brazilian RDM Gold Project by the state environmental agency, SUPRAM.

According to the news release, officials from both MRDM and SUPRAM have sat down to go over the remedial work required in order to restart operations at RDM.

It was agreed that heavy rains in December and early January had eroded run-off areas in various places, therefore new retention dykes would have to be installed, plant site drainage systems would have to be reinstated and finished along with an earthworks project to shore up the damaged run-off areas.

Water levels would also have to be reduced at the tailing impoundment as they currently are above the impervious plastic liner and the CIL leach area containment bund would require material removal.

The company feels that barring any further heavy rains in the region, the required remedial work should be finished by the end of February 2014. At which point, SUPRAM will make an inspection to ensure that all conditions for operation at RMD are met and if they are fully satisfied with the work, they have assured Carpathian that the APO suspension at RMD will be removed in a timely fashion.

Costs for the work are estimated reach between US$500,000 and US$700,000.

SUPRAM has allowed the company to process in-circuit material as of the date of suspension as the remedial work progresses. Carpathian estimates that they will be able to produce 1000 gold ounces from this material.

Production losses from SUPRAM's APO suspension order amounted to approximately 7,000 to 9,000 ounces gold per month, showing a US$8.75 million to US$11.25 million drop in monthly revenue at current gold prices. It is expected that the overall impact will total between US$26.0 million and US$34.0 million if gold production isn't given the go ahead until March 31, 2014.

The company also experienced a director shift its COO, Mr. Daniel Kivari, stepped down to be replaced by Mr. Vito Hugo Belo.

In the wake of negotiating with Macquarie Bank for a further forbearance on financing, the company CEO, Mr. Dino Titaro, also stepped down to be replaced by Mr. Guy Charette. Mr. Titaro will stay on as a non-executive director of the firm.

A chief restructuring officer, Mr. Andrew Bantock, will be signed on from FTI Consulting while the company continues to consider other strategic options with several parties in negotiations.

However, no formal offers have been received and a transaction is not guaranteed, so Carpathian is mulling over potential new equity capital raising programs.