The Bre-X Saga:
Fortune or Folly?
Busang laden with gold, mining
report suggests
Friday 4 April 1997
MEL DUVALL, Calgary Herald
Bre-X Minerals
Ltd. released an
independent
mining report
Thursday which
confirms that its
Busang property
in Indonesia
appears to
contain large
quantities of
gold.
The report by P.T. Kilborn Pakar Rekayasa, a unit of
SNC-Lavalin Group Inc., said new tests using both the
fire assay and cyanide leach methods of testing
produced quantities of gold very similar to levels
reported in previous tests.
The report could be seen as a strong endorsement of
beleaguered Calgary-based Bre-X, but mining analysts
were quick to point out that the report is based on core
samples drilled and prepared by Bre-X.
"From day one, nobody has suspected there was a
problem with the assaying of the core samples," said
John Kaiser, a mining analyst in Oakland, Calif.
"The concern has always centred around how the
samples were collected and whether there might have
been some tampering in the preparation stages.
"This doesn't answer those concerns."
Investors seemed to gain confidence with the release
of the 71-page report. They pushed the company's
stock up 55 cents to $3.70 in heavy trading. Bre-X
shares were halted just before 1 p.m. EST on the
Toronto Stock Exchange over concerns the volume
would crash the TSE's computers again.
Just over five million shares were traded on the TSE
before trading was halted at $3.43, but Bre-X
continued to sell on the Alberta, Montreal and Nasdaq
exchanges, where they rose as high as $3.85 before
settling at $3.70.
Meanwhile, the Ontario Securities Commission said
that it is investigating Bre-X to see if it broke
disclosure requirements or insider trading provisions.
The commission said the investigation will determine
whether there's any evidence to prompt it to launch
proceedings against Bre-X.
Dorothy Atkinson, a mining analyst with Whelen
Beliveau Associates Inc. of Vancouver, said investors
will have to wait until Strathcona Mineral Services Ltd.
completes an independent audit of Busang before
more faith can be placed in the size of the gold find.
Toronto-based Strathcona is drilling six holes at
Busang and is expected to release its findings in early
May.
Atkinson said the Kilborn study does offer those who
believe in the rags-to-riches Bre-X story some
comfort.
"Every time you have a check like this, it makes it that
much more difficult to perpetrate a scam," she said.
Bre-X Share Trading
Close Prev. day High Low Volume
TSE* $3.43 $3.20 $3.52 $3.07 5,029,260
ASE $3.70 $3.15 $3.85 $3.10 1,522,820
*Shares were halted at 12:42 p.m. EST at the TSE due
to concern over a possible computer crash.
- The issue: Bre-X's efforts to prove its Indonesian
gold find.
- What's new: New report confirms gold is there.
- What's next: Analysts say independent drilling still
needed.
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