NewsAlert: Does anyone have an extra set of steel nerves?
Headlines Next Story
FOCUS-Bre-X stock plummets amid new Busang twists
Reuters Story - March 21, 1997 17:45
FINANCIAL MET CA US GDM GOL ID AU MRG GB RESF CORA BXM FCX ABX V%REUTER P%RTR
Jump to first matched term
By Darren Schuettler
TORONTO, March 21 (Reuter) - The saga of Bre-X Minerals
Ltd. and its rich Indonesian gold discovery took
another twist on Friday as doubts about the Busang deposit and
the mysterious death of its chief geologist pushed investors to
dump the stock.
Shares in the Calgary, Alberta-based prospector were
initially halted on the Toronto Stock Exchange after an
Indonesian newspaper said a review by Busang partner
Freeport-McMoRan Copper & Gold Inc. ) showed the deposit
was smaller than Bre-X's estimate of 71 million ounces.
New Orleans-based Freeport said on Friday its due diligence
of the site was not finished. But that failed to appease
skittish investors when the stock resumed trading.
Bre-X shares sank to a 52-week low of C$14.25 in frenzied
afternoon trading. It closed down C$2.25 at C$15.20 on 9
million shares, the most active trader in Toronto.
On Nasdaq, Bre-X fell $1.625 to $11 on 1.6 million shares
after earlier hitting a low of $10.25.
Freeport shares fell $1 to $30.375 on the New York Stock
Exchange.
"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 in a telephone interview.
Adding to the uncertainty was the death of Bre-X chief
geologist Michael de Guzman, a co-discoverer of the Busang gold
deposit.
De Guzman, who fell out of a helicopter on Wednesday while
flying to the gold site in Indonesia's East Kalamantan
province, was ill and may have committed suicide, Indonesian
officials said. De Guzman's body has not been found.
"Obviously, one of the reasons the stock has been under a
lot of pressure is because of this mystery of the man's death.
He was their chief on-site exploration guy...which cast some
doubt on the stock," said PaineWebber analyst Marc Cohen.
Analysts predicted rumors would swirl around Busang until
Freeport issued a statement after completing its review.
Citing unnamed sources, Indonesia's Harian Ekonomi Neraca
newspaper reported on Friday that Freeport's test results did
not match Bre-X's estimates.
"It is possible that the deposit is not as big as it has
been mentioned before. It could be that it is not viable to
mine this deposit," the newspaper said, quoting the source.
But a Freeport official said on Friday the company would
not comment until its review was finished.
This week's intrigue added to an already suspenseful tale
surrounding the fabulous gold deposit deep in the rain forest
of Indonesia's Borneo island.
Several months ago, the Busang deposit was the subject of a
bidding war in which several mining companies wooed the
Indonesian government for control of what has been called the
biggest gold find of the century.
Toronto-based Barrick Gold Corp. , armed with a
high-powered advisory board led by former U.S. President George
Bush and former Canadian Prime Minister Brian Mulroney,
initially dominated the negotiations for control of Busang.
But Barrick's inside track ended when the government of
President Suharto brought in Indonesian businessman Muhammad
"Bob" Hasan in January.
Hasan brokered a deal that gave Freeport, a veteran mining
player in Indonesia, 15 percent of Busang and the right to mine
the project.
The arrangement left Bre-X with 45 percent, down from an
original 90 percent, and the rest to the Indonesian government
and two Indonesian companies.
Headlines Next Story
Copyright 1997 Reuters Limited. All rights reserved. Republication or redistribution of Reuters content is
expressly prohibited without the prior written consent of Reuters. Reuters shall not be liable for any errors or
delays in the content, or for any actions taken in reliance thereon.
Search for:
News:
Search News | Your Personal News
Personal News Manager | News by Industry
Quotes (free):
Quick Quote | Mutual Funds | Money Market Funds | Corp Info
What's Hot/What's Not | Market at a Glance | ADR Search
Portfolio:
Your Portfolio | Corp Info
Research Corner:
BRIDGE Market Summaries | ADR Search
User Info:
Register | View Balance | Update Account Info | Mail | Other
About News Alert:
Info | Pricing | What's New | Sources
Copyright c 1997 News Alert Inc. All rights reserved. |
