Reuters: Wednesday March 26 4:51 PM EST
Bre-X says Indonesia gold find may be overstated
By Darren Schuettler
TORONTO, March 26 (Reuter) - A Canadian exploration company's claim to have made the biggest gold find this century was cast
into doubt on Wednesday when its mining partner Freeport Mcmoran Copper & Gold Inc ) said tests of the Indonesian deposit
showed insignificant amounts of gold.
Calgary, Alberta-based Bre-X Minerals Ltd. BXM.TO admitted that the test samples of the deposit on the Busang gold property,
deep in the jungles of Borneo, may have been overstated.
Bre-X Chief Executive David Walsh, who has made millions from the discovery and now lives in the Bahamas, said in a statement
that "there appears to be a strong possibility that the potential gold resources on the Busang project in East Kalimantan, Indonesia
have been overstated because of invalid samples and assaying of those samples."
Freeport said in a statement that analyses of its own drilling results so far "indicate insignificant amounts of gold."
The news caused pandemonium on the Toronto Stock Exchange, where Bre-X has been the hottest story for months. Traders said
the share price, which was last quoted at C$15.50, could collapse to C$2. The stock was halted in Toronto until further notice, the
exchange said.
Bre-X had issued confirmed estimates that the Busang deposit held at least 71 million ounces of gold, worth about $20 billion at
current gold prices.
At that level Busang would be the most significant gold find since the discovery of the Witwatersrand goldfields in South Africa the
late 1800s.
Bre-X officials had even asserted that Busang deposit could contain as much as 200 million ounces.
Bre-X shares, which had traded at an all-time high of C$28.65 after a 10-for-1 stock split, sank last week after an Indonesian
newspaper report quoted unnamed sources as saying New Orleans-based Freeport, which holds 15 per cent of the Busang deposit,
had doubts about the size and viability of the deposit.
The rumors were fanned to a fever pitch by the mysterious death, billed as a suicide, of Bre-X's chief geologist Michael de Guzman,
who fell to his death from a helicopter en route to the Busang site last Wednesday.
Bre-X said De Guzman was depressed because he was suffering from a serious illness.
The Bre-X board assured shareholders on Monday that it had "absolute confidence in the integrity and accuracy of assay results
and resource calculations."
Traders have described the complex Bre-X saga as a "soap opera" and are wondering who or what to believe.
"I've concluded the only person who could ever make a movie out of this is Alfred Hitchcock. It's become so bizarre that people have
lost any tolerance for staying in," Goepel Shields analyst Rick Cohen said last week. |
