MORE NEWS.......
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April 10, 1997
WALSH IN BUSANG STORM,
VOWS TESTS WILL PROVE
RICHES
TORONTO (Reuter) - David Walsh, the maverick chief executive of
beleaguered Canadian gold prospector Bre-X Minerals Ltd., said Thursday
Bre-X has the money to weather the storm over the Busang gold discovery and
vowed an audit will prove he made the century's richest gold strike.
Under siege since last month's stunning news that Busang may be a bust, a
plainly fatigued Walsh dismissed the conspiracy and tampering theories that have
dogged the Calgary, Alberta-based company. He rejected fresh reports about the
mysterious death of its chief geologist at Busang.
While Canadian regulators probe Bre-X and its top officials for possible
violation of insider trading and disclosure laws, lawyers in Canada and the
United States are forging ahead with at least eight class action lawsuits.
"The last two weeks have been an unprecedented bout of stress and workload.
I don't thing anyone in this company has been under the microscope like this,"
said Walsh, who needed occasional prompting from Bre-X officials during a
telephone interview with Reuters.
"We have more than sufficient resources to weather the storm," Walsh said.
Bre-X has been in the eye of the storm since preliminary tests by its partner
Freeport-McMoRan Copper & Gold Inc on the Busang gold property indicated
the deposit may contain "insignificant" amounts of gold.
The announcement prompted panic selling of Bre-X shares last month, lopping
almost C$3 billion ($2.2 billion), or more than 80 percent, from the company's
stock market value.
Bre-X firmed C40 cents to close at C$2.67 on the Toronto Stock Exchange
Thursday,
Walsh said an independent audit of the Busang project by Toronto-based
Strathcona Mineral Services Ltd. would confirm Bre-X's estimate of 71 million
ounces of gold, potentially the richest in the world.
"We're sticking by our numbers that we have announced so I don't really want
to speculate. What happens if they come in at 80 million (ounces of gold)? I'm
not really going to speculate on that," he said.
Walsh declined to confirm reports that the Busang partners would receive the
test results on April 29. "We're saying hopefully the first week of May. So we're
splitting hairs. I don't think one can be given an exact date because of the
procedure Strathcona is going to be utilizing."
The newly drilled core samples to be used in the audit are under tight security
and will transported to Perth, Australia by chartered jet, Walsh said. Three
independent labs will conduct tests of the core samples in three countries.
Strathcona was hired by Bre-X immediately after it received the preliminary
findings from Freeport.
Bre-X's chief Busang geologist, Michael de Guzman, was en route to a meeting
with Freeport officials on March 19 when he fell out of a helicopter in an
apparent suicide.
The death of a co-discoverer of Busang, coupled with leaked reports in the
Indonesian press about Freeport's findings, sparked a selloff in Bre-X shares the
following day.
The geologist's death has been the subject of wild rumors and media reports,
including an Indonesian newspaper article Thursday suggesting the corpse buried
at de Guzman's funeral last week in the Philippines was not de Guzman.
Walsh said he still believed de Guzman committed suicide. But he added: "We
have not received official autopsy reports and we have no comment on Mike's
tragic death."
Bre-X's head of exploration, John Felderhof, has assumed de Guzman's
responsibilities at Busang, but the company officials in Calgary have had trouble
communicating with him.
"We've had very little communication with him. For some reason our satellite
communication is not functioning properly and faxes that come out are garbled,"
Walsh said.
With billions of dollars in limbo and Strathcona's report weeks away, financial
markets have been awash with theories that tampering occurred with the Busang
drilling samples.
But Walsh said a step-by-step report of Bre-X's sampling and assay methods
released Wednesday would quash speculation that the samples were tampered
with at the site.
But some analysts said the focus was shifting toward the assay method used.
"That is highly unlikely considering the credibility of the lab (PT Indo Assay),
which has been in existence for a number of years and used by major mining
companies in the country," Walsh responded.
He declined to comment on increasing attention being paid to personal trades
by himself, his wife and other company officials, which netted them about C$77
million ($55 million).
The Ontario Securities Commission is probing Bre-X for possible violations of
insider trading and disclosure laws.
Some trades by Walsh and others in 1996 were controversial because they
occurred shortly after Bre-X learned that its preliminary license had been
canceled by Indonesia, something the company did not make public until last
October.
Walsh said he considered the revoked license "non-material information"
because Bre-X's claim to Busang was in good standing. "At no time was the
ground not legally held and the revocation was a non-material fact," he said.
The Indonesian military is closely watching the testing at Busang and the
government has announced plans to investigate.
Walsh said the controversy would not threaten Bre-X's 45 percent stake in the
project because it has a binding agreement with its partners. "We see absolutely
no reason for any further changes. What's going right now is not of our making
and there is no reason there would be any changes to the binding agreement," he
said.
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