Case Notes (Gabriel Resources, Lansdowne, New Stratus, Eurohold)

A signpost to look further (writeups to come)

Hey guys,

I was looking at some cases this morning and thought I’d share my notes. Zero opportunity cost and may be helpful to you guys.

I will of course do more research on these names, and if I like them, you’ll see an equity research report on them, possibly in collaboration with the company itself.

Anyway…

Euromax (TSXV: EOX)

2005-2012: Ilovica copper/gold project in southeast Macedonia: exploration + feasibility studies

Feasibility study (Jan 2016):

• 83k oz gold p.a.

• 16k tons copper p.a.

• $1bn NPV estimate

2017-2018: 30 year exploration concessions (Ilovica 6 + 11) X two

2019-2023: Dispute: Euromax requests merger of 6 and 11, which was approved as all legal conditions were satisfied, and the approval was backed by court rulings. Come mid 2019 environmental protests get worse, opposition to mine by locals and NGOs (’healthy valley’) due to those environmental concerns.

• By late 2019 - 2023 political shift after SDSM party getes power, and the new ministry of economy reconsiders merging 6 and 11.

• On the 12th July the ministry of economy issue rejection resolution, and withdraws the approval issued by the previous gov while citing ‘new environmental considerations’, without disputing that the merger met the legal requirements for approval.

• September 30 2019: Euromax isn’t happy with the rejection, obviously, so they appeal, which is rejected, hence the dispute

• October/November 2019 = Euromax consider going beyond domestic courts, AKA to international arbitration

2020-2023 = case goes through Macedonian court system, but international arb threat still there

• July 28 2023 = Euromax file formal notice of dispute under Swiss-Macedonia BIT, announcing intention to go ICSID

• August-December = amicable resolution failed as Macedonia still refuses to allow the merger

• March 26 2024 = Macedonia court rejects Euromax’s appeal, still not disputing the legal conditions are met, but the case is referred to the Higher Administrative Court

• March 27 2024 (the day following the appeal rejection) = statement saying disappointed, and international arbitration only choice if the rejection continues

• April 2024 = Euromax appeal the rejection to the Higher Administrative Court, where the case was taken, but there’s not been a decision yet

• May - December 2024 = prepares formal RFA with ICSID, and engages international arbitration counsel, estimating claim at 300mn euros based on sunk costs / opportunity cost / project NPV destruction

2024 / 2025 = Media says Euromax doing both ICSID and ICC (’dual arbitration strategy’), but the 300mn consolidated figure remains, like with Zenith sort of in that there’s multiple forums

Now: still preparing for arbitration - no case number, formal request for arbitration not filed, Higher Administrative Court appeal still pending

Timeline expectations: ICSID filing post higher court ruling, or if they abandon a domestic track

2027 = jurisdictional phase + memorial on merits

2028 = counter memorial, hearing on merits

2029/2030 = tribunal decision

Eyeball calculation

• Claim = 347mn usd (300mn eur)

• MC = 23mn usd

• Likely payout = 173.5

• Upside = 173.5 / 23 -1 = 654%

Simplicity: no operations, still raising capital, had a cease trade order lifted may 2024

Lansdowne (AIM: LOGP)

2000-2010: acquiring interest in offshore licenses - Barryroe oil field (standard exploration license 2/04), which they had a 20% working interest in, which got larger through farm-ins (when you reimburse costs from the other party to acquire the working interest)

2011-2012: Barryroe well appraisal programme, confirmed oil discovery, estimated 346mn barrells of oil-in-place recoverable, and so Lansdowne were ready for development approval

2013-2016: regulatory approval process begins, and Lansdowne apply for production lease conversion (going from leasing to owning) and conducted environmental impact assessments

2016: Ireland shift their climate policy, signing the Paris Climate Agreement, and that sentimient grows as the Green Party gains influence and environmental grups pressure for offshore drilling ban

May 2019: Ireland publishes the Climate Action Plan 2019, and the government announces there is no new licenses for oil and gas exploration, but existing ones are fine. Seen this before.

• Lansdowne’s production application approval was stalled, with no clarification from the government on when production may be approved

2019-2022: the government hadn’t rejected the application either, it was just in administrative limbo

• July 2021 = climate action and low carbon development (amendment) act 2021 - net zero by 2050 now a legal requirement, which further entrenches the anti-fossil-fuel policy

• 2021 - 2022 = Lansdowne now don’t have the economics to progress Barryroe to production, so their exploration portfolio is worthless

• Late 2022 = considering ECT arbitration (we assume an arbitration)

Claim

Estimated claim = 50mn sunk costs + 75mn opportunity cost = 125mn eur

• 2023: discussing with litigation funders, but no funding commitment announced, even though they went to Buford, Omni etc

• Early 2024 = couldn’t publish audited financial statements - can’t afford audit fees

• March 20 2024 = AIM trading suspended

• Primary activity left is preparing arbitration claim?

• Ireland UK not EU member states

New Stratus (TSXV: NSE)

Respondent: Ecuador

2021-2022: Stratus acquired Repsol’s 35% working interest in Ecuadorian oil blocks 16 and 67, both mature producing fields for $5mn (sold as a distressed asset) with 3-5k barrels per day

• Production sharing agreement with Ecuador, expiring 14 months later on the 31st December 2022

• Stratus’s goal was then to negotiate extending the permit

• Negotiations stall on back of political instability in Ecuador (President Guillermo Lasso and the opposition-controlled Congress), and come the 31st December 2022 the licenses expire without renewal, so production halts

• Stratus believe the PSC contained an automatic renewal provision / renewal right, and so Ecuador breached their contractual obligations, making it indirect expropriation

Filed for UNCITRAL December 2022, after having no renewal

Claim

Claim sum: $260mn

• $5mn acquisition cost

• $20mn sunk

• $235mn NPV

Timeline Continuation

No case details available (case number etc)

They are currently awaiting award Q2-Q4 this year

However, Ecuador announced bidding for another heavy oil field, Sacha Block PSC, for a 20 year production contract, with $1.5bn entry bonus, to increase the Sacha production by 30k barrels per day or more

Jan-Feb 2025: Stratus form consortium with Sinopec (china national petroleum), where Stratus own 40% working interest, and their bid was accepted on the 3rd March 2025

However, the consortium (including Stratus and Sinopec) missed the payment deadline, so the deal didn’t go through, and around then there was political change with oil policy under review

Arbitration more likely if Sacha doesn’t go through

Other assets in Mexico and Venezuela

Gabriel Resources (TSXV: GBU)

Respondent: Romania

1997: Gabriel acquires Rosia Montana Gold Corp, with one of EU’s largest gold-silver deposits (300+ tons gold, 1.5k+ tons silver), site of Roman-era gold mining (UNESCO heritage site)

1999-2006: extensive exploration - $500mn, feasibility study confirms world class project (big old pinch of salt), 16 year mine life, 400-500k oz gold annually

2000-2013: submits EIA, public consultations, but growing environmental opposition (Alburnus Maior NGO leads protests over concerns around cycanide spillage risk, and cultural heritage destruction).In 2002 over 100k people protested.

2007-2010: Romanian government supports project, and even provides a draft exploitation license, so Gabriel proceed with the final engineering

2011-2012: protests intensify after Finland and Romania have cyanide spills, so the EU parliament debates whether Romania should continue mining gold, along with UNESCO expressing concern over Roman Ruins at site.

2013: Romanian Parliament debates bill to allow Rosia Montana to be developed, and the bill was rejected by Parliament in September 2013

2014: the Romanian Government ceases the processing permits, although with no formal rejection issued, no permits granted, and a de facto expropriation (the facts say this happened, even if not by legal right)

2015: amicable resolution fails

• July 21 = dual ICSID claims (Canada-Romania BIT and Uk-Romania BIT (through subsidiary)), consolidated into one case ICSID ARB/15/31

• Tribunal appointed: Brigitte stern, stanimir Alexandrov, and J. Christopher Thomas KC

2016-2017: Romania challenge jurisdiction and admissibility, argues Gabriel’s claim is time barred so lacks standing necessary to be brought to arbitration

2018: tribunal rejects those jurisdictional objections

2020 - 2021: merits hearing, and July 2021 UNESCO designates Rosia Montana as a world heritage site, citing roman mining galleries, cultural significance, and a need for preservation, making the mining project impossible under international law

March 11 2024: Gabriel loses on all claims, with Brigitte Sterns dissenting

Post annulment proceedings

July 29 2024 = Application for Annulment filed under ICSID convention Article 52

Citing...

• Manifest excess of powers (Article 52 1 b), so tribunal exceeded their jurisdiction in issuing no award, and applied the wrong legal standard

• Serious departure from the fundamental rule of procedure (article 52 1 d), saying the tribunal failed to consider key evidence / procedural irregularities

• The Tribunal failed to state their reasons (article 52 1 e), and the award contains contradictory reasoning, with the tribunal finding an ECT breach but awarding no damages, while giving an insufficient explanation for why Brigitte Stern’s dissent was rejected (the decision wasn’t changed)

August - September 2024: Gabriel requests a provision stay of enforcement while the annulment application is being processed, which ICSID grants

October - November 2024: the ICSID Secretary General constitutes the Annulment Committee, one of whom died so that delayed proceedings

January 2026: the annulment hearing is scheduled, but delayed due to the new annulment committee member, Judge James Crawford, needing to catch up

February - March 2026: the committee is reviewing the case, and the parties may submit supplemental briefs (speculative - based on historical observations), so a hearing Q2-Q3 2026?

Claim

Claim sum: $6.7bn

• Direct investment $700mn

• $6bn NPV opportunity cost (16 year mine life at $1,200 gold price - gold now nearer 5000)

5-10% chance on average

No operation, so negative OCF

Extreme dilution via public placements ongoing

Eurohold Bulgaria (BUL: EUBG)

Responent: Romania

2011-2015: Eurohold enters Romanian reinsurance market, acquires Romanian motor insurance subsidiary, Euroins Romania focusing on mandatory third-party motor insurance (’RCA’ somehow)

2015 - 2020: top 3 RCA insurer in Romania, competitive pricing (competitors criticised them for being ‘below-cost’ just to steal loyalty)

2020 - 2022: 30% market share, 400-500mn eur premiums annually but with profitability and solvency concerns

2021-2022: Romanian financial supervisory authority (ASF) rasies concerns over Euroins Romania (subsidiary name) economics, including solvency, reserves adequacy, and related party reinsurance transactions with the Eurohold group (parent)

The Eurohold transactions = Euroins Romania ceding large portion of premiums to Eurohold Group Reinsurer (EIG Re), which critics saw as ‘capital stripping’ in the sense that it’s moving money out of Romania and to Bulgaria, but Eurohold argue this is standard reinsurance practice

Late 2022 - early 2023: ASF intensifies scrutiny, requesting additional capital injections into Romania, which Eurohold give in portion, but not wholly, so the subsidiaries solvency deficit is growing, which ASF said was 400mn eur at the time

March 17 2023 = ASF revoke their license, citing...

1. Solvency capital deficit exceeding 400mn

2. Failure to maintain minimum capital requirements (EU solvency II Directive)

3. Improper transfer of reserves to reinsurer

4. Systemic risk to policyholders (largest RCA insurer collapse would create coverage crisis)

Euroins Romania cease operations, existing insurance policies valid but new policies can’t be issued, market share taken

June 2023: Bucharest Tribunal opens the bankruptcy proceedings, and Euroins Romania is declared insolvent, so the liquidation process begins.

March-April 2023: Eurohold contest the ASF decision

• The claim solvency calculations were flawed, arguing that ASF discriminated against Euroins, the foreign-owned company, stating that national companies did not have the same sanctions, so stating that the license revocation amounts to discriminatory behaviour

April - December 2023: Eurohold pursues Romanian legal remedies by filing an appeal in Romanian courts, but they uphold the ASF’s decision, leaving Euroins with no further options

Q4 2023 - Q1 2024: Eurohold initiate consultations under Bulgaria-Romania BIT, so they play out the amicable resolution period, with Eurohold proposing a Reinstatement of license, a capital injection plan, and third party supervision.

Romania argue the license revocation was necessary and proportionate, and that Euroins Romania was insolvent, and so ASF was just protecting consumers / preserving financial stability, and so there was no discrimination

• By early 2024 no settlement, so Eurohold proceed to arbitration

May 22 2024: ICSID filing for case 1, claiming expropriation, FET, FPS, and Arbitrary/Discriminatory treatment

June-August 2024: Romania challenge jurisdiction under ICSID Rule 41 Motion

Rule 41 states that there can be a dismissal if the case has been submitted ‘manifestly without legal merit’, which only delays the merits phase

Romania argue the arbitration is inadmissible because both parties are EU members, and the 2018 CJEU Achmea decision ruled that intra-EU arbitrations violate EU law because the BIT arbitration clause is incompatible with EU treaties, so only EU courts have jurisdiction over intra-EU investment disputes

• They also argued that Euroins’s claim had no merits in that the license revocation was a lawful exercise of regulatory power, the solvency rules aren’t discriminatory, and because it was a regulatory action and so valid there was no expropriation

• They finally argued that Eurohold are to blame for their own losses

• Improperly stripped capital via related-party reinsurance, failing to maintain adequate reserves, and so Euroins can’t claim any monetary damages for self-inflicted losses

July-August 2024: tribunal constituted

September-October 2025: Romania’s challenge to jurisdiction was rejected, with the tribunal stating that their claims are not manifestly without legal merits (doesn’t mean they agree with either party on the merits, just that they think it should be heard), and so the case should move to the merits phase, and the tribunal doesn’t accept the Eu-member workaround, at least for now

• The tribunal say that Achmea (the EU member thing) doesn’t mean ICSID has no jurisdiction as ICSID is an autonomous international system with a convention that overrides EU law under this context but it is outside the EU legal order (ICSID is its own thing)

• Romania can still raise the intra-Eu achmea stuff again in the merits phase

November 2025: PO #1

Now: in the memorial phase, and the memorial should be submitted by May, and then counter-memorial from Romania by end of September

Q1-2 2028: tribunal decision, providing no disruptions

Claim

Claim: 280mn

• Sunk costs (2011-2023)

• 200mn NPV (5 yr business plan),

• reputational damage may top some up,

Minimum 500mn EUR. We’ll assume that.

Market Cap 139mn eur

Second ICSID Case (November 24th 2025)

Starcom as claimant, who own 52% or Eurohold, and lost 280mn of their own capital

• Other claimants Eurohold and individual executives

• Rationale for second case is expanding the claimant entities involved + capturing additional damages

As of March 2026 the case is registered at ICSID but the tribunal is not yet constituted

May be consolidated with the first case, or stayed pending the outcome of the first case

Issues with filing twice: overlapping facts, simultaneous proceedings is tricky as something happening in one affects the other, tribunal may see it as ‘forum shopping’

Romania may argue abuse of process

The benefits of having two cases is it puts more pressure on Romania, helps Starcom preserve their right to seek compensation without being entirely reliant on Eurohold, and there’s some margin of safety against one of the cases being thrown out on e.g. jurisdiction because the different claimant structures (including Starcom) may help them

Hearing likely Q2-3 2027, decision Q1-2 2023, and award issued Q2-3 2028

If Eurohold gets an award

• Romania will try annulment, challenge enforcement otherwise (Achmea probably), and the Rockhopper precedent makes this risk clear

• Enforcement in UK would be easier

End of Notes

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Five piles of legal documents cases, neatly aligned side by side, horizontally. five piles