Friday, May 2, 1997
Barrick haunted by Busang
The latest Bre-X news and analysis
By DAVID THOMAS
The Financial Post
Barrick Gold Corp. and its chairman Peter Munk are still smarting from losing
their grip on Busang, even though the Indonesian gold project may turn out to
be a dud.
Coming up with nothing after chasing an ownership stake so intently took its
toll, Munk told shareholders at Barrick's annual meeting yesterday.
"It's [meant] a high level of personal loss [and] a high level of personal
embarrassment," he said.
Barrick was slated earlier this year to be the major partner in developing
Busang, which has been touted by its discoverer, Bre-X Minerals Ltd., as the
world's richest gold find.
But after the Indonesian government sliced itself a big piece of the pie, "we had
no hesitation walking away," Munk said.
Within a few days, investors will learn if Busang is the world's biggest mining
scam or if it has the potential to be the world's largest gold mine.
Munk said the fallout from the "Bre-X-Busang imbroglio" has cast both the Canadian mining
establishment and Indonesia in an unfair light.
Referring to Bre-X, he said "no single deviant member" could stain the leading reputation of the
Canadian mining industry. "Our mining industry is second to none." Without revealing his company's
personal assessment of Busang's viability, Munk also called Bre-X a "rogue operator."
He later backtracked and said his comments were based on the "impressions of shareholders" and
were not his own conclusions.
Munk echoed sentiments of Placer Dome Inc. president John Willson by saying investor skepticism
about junior mining companies would result in a "flight to quality" that will benefit major producers.
Looking forward, Barrick chief financial officer Randall Oliphant said gold production would rise in the
second of 1997.
Much of that increase is due to come from two mines at the Goldstrike property in Nevada. Total
production this year will be "over three million ounces," Oliphant said.
While net income declined last year for the first time in at least 10 years, the picture is expected to be
brighter in 1997, he said.
"Earnings will be higher than last year and cash flow will rise to approximately US$500 million."
In the first quarter ended March 31, earnings were US$55 million (15«), down from US$72 million
(20«) in the same period a year ago. |
