Wednesday, April 9, 1997
Consultant denies finding placer gold in
Bre-X samples
OSC under pressure to unlock Bre-X secrets
By PAUL BAGNELL
Mining Reporter The Financial Post
An Australian mineral consulting firm said yesterday its report to Bre-X Minerals Ltd. -- one that last
week raised fears of possible tampering at Bre-X's Indonesian gold find -- had been badly
misinterpreted.
But that didn't prevent Bre-X shares (BXM/TSE) from tumbling 23« to $2.29, in heavy volume of
more than 13.6 million, including 185 large blocks.
Brokers and analysts said they don't know what to tell clients seeking advice on Bre-X these days.
Most of those interviewed, though, said they see more downside than promise to Bre-X stock.
"I tell people that, if 80% of the gold is there and the Indonesians are nice to Bre-X, you might get a
bid of $8 to $10," said a broker at one of the country's biggest brokerages. "The downside is [a share
price of] zero."
The broker said most of his colleagues now believe Busang contains little or no gold, but added that he
is in the optimistic minority.
Bre-X shares have plunged from $15.50 since the size of the company's Busang gold discovery was
called into serious question on March 26.
Consultant Strathcona Mineral Services Ltd. is now drilling holes at Busang in an effort to get to the
bottom of the controversy.
Last week, parts of a report by Australian mineral consultants Normet Pty. Ltd. were divulged in the
Northern Miner newspaper.
The news that Normet found gold particles that were "mostly rounded with beaded outlines" set off
alarm bells among gold experts, including some who have earned their living in the gold assaying
business.
Several said rounded gold particles simply do not show up in rock samples, a fact that made them
suspect Bre-X's crushed rock samples may have been "salted" with gold. Rounded gold particles, they
said, usually come from rivers and are commonly known as "placer" gold.
Normet yesterday denied it had found placer gold in Bre-X's samples. The firm said it did not tell
Bre-X that it had found gold that did not belong in bedrock ore.
Experts contacted yesterday gave considerable weight to Normet's statements, but said questions
remain about the rounded particles that demand answers.
Dr. George Duncan, president of Accurassay Laboratories in Kirkland Lake, Ont., said the biggest
unanswered question now is whether Normet believes rounded gold particles have come from
underground rock samples.
He had earlier been among those who suspected tampering at Busang, but yesterday softened his
position after seeing a copy of the Normet report. "The question I have is: Did they confirm gold
particulates embedded in the rock?" Duncan said.
"It's important to know what proportion of gold particles they looked at were beaded," said Tim
Oriad, director of research at Casmyn Resource Development, a Vancouver-based gold producer.
Oriad has researched accusations of gold salting several times in his career, and twice established
fraud.
Oriad, who has reviewed the full Normet report, said the gold particles could have become rounded
when the ore sample was crushed prior to testing.
"It's plausible and it happens frequently," he said.
Brokers and analysts are in a quandary, meanwhile.
"We have no recommendation whatsoever" to clients, said Geordie Trussler, chief executive of First
Delta Securities Inc. in Toronto.
"We're telling clients that it has the potential to go to zero. It's the most volatile stock on the board. |
