The Financial Post.....By PAUL BAGNELL and BARBARA SHECTER
The Financial Post
A small Toronto firm hired to answer the critical question behind the Bre-X Minerals Ltd. saga has begun drilling at the
Busang gold property.
Experts said yesterday there is little doubt that Strathcona Mineral Services Ltd. will be able to answer the question that
now grips the investment community: Is Busang one of the world's greatest gold finds, or a world-class bust?
Strathcona has been hired by Bre-X to get to the bottom of the bombshell news that the amount of gold at Busang may
be been vastly overstated.
A Strathcona employee confirmed yesterday that the firm's president, Graham Farquharson, is at the Busang property.
"He won't be back until mid-April," the employee said.
Unnamed sources in Indonesia told Reuters that Strathcona has drilled several of six holes it plans at the site. Strathcona
will ship its drill cores to a laboratory in Perth, in mid-April, the sources said.
George Duncan, president of Accurassay Laboratories in Kirkland Lake, Ont., said Strathcona is almost certainly
conducting its review in an atmosphere of complete security, with no outsiders having any contact with drill cores or
samples.
Strathcona is likely drilling its six holes beside those already drilled by Bre-X and Freeport-McMoRan Copper & Gold
Inc., he said.
"You shouldn't be able to drill holes close to your other holes and find nothing," he said. In at least five cases, Freeport
has found no gold where Bre-X found extraordinarily high values. "You might get that once," Duncan said. "But when it
happens seven times, I'm starting to worry."
Strathcona is also likely to order both fire and cyanide-leach assay tests at a laboratory, he said.
"If the fire assays come out zero, and the cyanide leaching assays come out zero, there just isn't any gold there. The only
answer then is a salting. You can't avoid the obvious."
A veteran mining executive said yesterday he thinks Bre-X's drill holes at Busang are not close enough to one another
for any prediction of gold resources to have ever been made.
Bre-X has estimated Busang's size at 71 million ounces of gold.
"To be drilling holes 200 or 300 metres apart and assuming any kind of continuity between them is crazy," the executive
said.
He mocked the recent assertion by Bre-X president David Walsh that Busang's geology is "complex. Yes it's
complicated. It's complicated from the start -- they're just finding out how complicated it is."
In Jakarta yesterday, the Philippine embassy said it has demanded a copy of the autopsy report on Bre-X geologist
Michael de Guzman, who apparently committed suicide by jumping out of a helicopter on March 18.
Also yesterday, another Canadian mining executive said Vancouver is abuzz with a rumor that previously made the
rounds in Jakarta. It suggests Bre-X is the target of a smear campaign by the Indonesian government and Freeport, with
those two parties looking to split Busang between them.
The rumor, among several that swirl around Bre-X every day, has gained more acceptance than it might ordinarily
because some outlandish stories about Bre-X and the Busang discovery have turned out to be true, the executive said.
Two analysts who follow Freeport dismissed the story.
Marc Cohen of PaineWebber Inc. and Victor Lazarovici of Smith Barney, said it would be unthinkable for Freeport to
tamper with results or mislead investors with false statements.
-- with files from Reuter |
