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Warning to TSE; TSE response
Bre-X Minerals Ltd BXM
Shares issued 219,103,330 Mar 27 close $2.75
Mon 31 Mar 97 News Release
Also Bresea Resources Ltd (BSR)
Mr David Walsh reports
Bre-X Minerals wishes to advise that the accompanying letter addressed to
Mr Rowland Fleming, president and CEO of the TSE has been faxed March 31.
Bre-X management thought it appropriate to share the contents with its
shareholders.
In addition John Felderhof and the entire technical team at Busang as well
as the Canadian management of Bre-X, has initiated a thorough review of all
recent statements and actions by persons, parties and publications
responsible for the proliferation of misinformation that has served to
tarnish personal reputations and the integrity of the Busang project, with
the intent to take legal action where warranted.
Dear Mr Fleming,
During our conversation of March 27, I implored you not to open Bre-X for
trading, my reason being that there was only an hour of trading remaining
in the day on your exchange and that, given the dynamics and fluidity of
recent events, we could likely have additional pertinent information to
provide shareholders by Monday.
I found your response to my request "that the subject was not open to
debate," shocking.
I pleaded with you that the shareholders, in my opinion, would suffer
enormously and unnecessarily due to incomplete data available to them at
the time. I also re-iterated that we stood by our reserve estimates for the
deposit and that time was needed for our independent consultant to complete
a drill and sampling audit. I further explained that this was a complex
orebody with an equally complicated assay process, all to no avail.
In order to illustrate the definitive process by which core at the Busang
deposit must be assayed the following detailed historical background was
provided to me, over the weekend, by our chief metallurgicalist under the
direction of John Felderhof both of whom are currently at the Busang site.
"At the early exploration stage, prior to the acquisition by Bre-X Minerals
Ltd of the Busang property, the problem of sampling and assaying of the
Busang ore had already been identified. Reproducibility in fire assaying
had been a major constraint. Gold assay results could fluctuate +/- 100% or
in short, ore could be waste and waste could be ore.
With this problem, the Bre-X technical team decided to use a two-metre
full-core sample instead of split core for better assay accuracy.
Initially, the fire assay technique was used with the statistical average
of the repeat assays as the final figure. Intensive and extensive studies
were conducted to determine the most effective and efficient laboratory
process.
Results of the study were as follows:
1. In a screen-fire test, 80% of the gold was found to be in the +150
mesh (106 micron), and the size fraction was 5% of the original sample
volume.
2. Metallurgical tests showed that most of the gold is in the +106 micron
to -400 micron-size range.
3. Panning tests from the diamond saw core cuttings showed visible gold.
4. Test samples sent to various laboratories showed wide variances.
The Kelian mine, which has similar geology to Busang, had the same assaying
problem. Ultimately, Kelian adopted the cyanide leach technique.
After a thorough review, the Bre-X of the Busang team also adopted the
cyanide leach technique.
In evaluating the Busang deposit proper orientation and full understanding
of the Busang geology is a must."
Bre-X director Dr Paul Kavanagh recently commented that "After observing
the uniform appearance of long intervals of the mineralized core in SE zone
holes during a visit to the Busang property in the fall of 1995, and after
being told of a considerable backlog of the 2-metre samples waiting to be
essayed at the Indo Assay laboratory in Balikpapan, he suggested to John
Felderhof that the individual sample length be extended to 3 metres from 2
metres, thereby reducing the number of samples by 1/3. John Felderhof would
not accept that suggestion, arguing that it would reduce the accuracy of
the assay results of the gold grade of the mineralization. When queried by
Kavanagh at the time, a highly-experienced Canadian gold exploration
geologist supported Felderhof's opinion."
In light of the above and
1. A statement by Freeport McMoRan Copper and Gold Inc (FCX) in a letter
dated March 26 to Bre-X that states "our findings are preliminary and
incomplete";
2. A detailed report on an assay procedure check program by PT Kilborn
Pakar Rekayasa is expected by mid day March 31 and to which we will
release its findings in a further release.
I strongly suggest that the stock remain halted until FCX has had the
opportunity to complete its due diligence and that Strathcona complete
their audit.
Ms Jane Wong of the TSE reports
Bre-X Minerals Ltd has suggested in its press release of March 31 1997,
that the TSE re-opened the company's stock for trading on Thursday, March
27 despite the company's request for an extended trading halt and its
statement that additional pertinent information could likely be available
by Monday.
The TSE's decision to re-open trading at 3 pm Thursday was based on the
fact that all material information then available had been released by both
Bre-X and Freeport McMoRan Copper and Gold Inc on March 26th and 27th.
During the morning of March 27th, Bre-X was asked by TSE regulators to
ensure that all currently available material information was released.
The TSE was not made aware that additional material information was to
become available as soon as March 31st. On the contrary, Bre-X's original
request was for the TSE to halt trading for several weeks, until the
results of the audit commissioned from Strathcona Mineral Services Limited
was available. This is noted in the Bre-X press release of March 27 1997.
At 9:27 am this morning, Bre-X asked for a halt in trading pending the
release of material news, and stated a draft news release would be
available within one hour. The exchange immediately halted trading of the
company's stock and notified the other exchanges on which the stock trades.
However, the release containing the expected MATERIAL news has not yet been
released. The company has undertaken to issue it prior to the opening of
trading tomorrow.
As the TSE stated on March 27th, the exchange's role is to provide a
continuous market in securities and it is not appropriate to deprive
shareholders and investors of a market for lengthy periods of time. Our
policy has always been to halt trading only for the purpose of allowing
dissemination of all currently available material news to the market, and
only for such time as it takes for that dissemination to occur.
The TSE recognizes that Bre-X's management has had to manage their
disclosure obligations under extremely difficult and unpredictable
circumstances, and appreciates their ongoing cooperation to minimize
further market disruptions.
(c) Copyright 1997 Canjex Publishing Ltd. canada-stockwatch.com
Respectfully Submitted,
Kerry S. Nelson
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