Tuesday, May 6, 1997
November assays showed
problems with samples
By DAVID THOMAS
The Financial Post
Bre-X Minerals Ltd. management had several studies in its
possession indicating serious irregularities at its Busang gold
find, according to the report that confirmed the Indonesian
project was a hoax.
That disclosure may make it more difficult for the company's
senior executives to argue they had no doubts about Busang's
integrity, say mining experts.
The studies all found the gold from Bre-X's samples showed
characteristics that were very unusual or even unprecedented
for gold recovered from bedrock deposits.
Based on those findings, alarm bells should have gone off
and sent the company scrambling for answers a long time
ago, said George Duncan, president of Kirkland Lake,
Ont.-based Accurassay Laboratories.
"There's no excuse. It seems like no one even wanted to
look at the issue of salting."
The studies' findings are discussed in a report completed by
Strathcona Mineral Services Ltd. for Bre-X and obtained
yesterday by The Financial Post.
Together with interviews with Freeport-McMoRan Copper
& Gold Inc., the studies were sufficient to lead Strathcona to
conclude about six weeks ago that Bre-X's samples were
very likely tainted.
The studies are all contained in a November 1996 Busang
pre-feasibility study compiled by Kilborn SNC-Lavalin Inc.
Bre-X chief executive David Walsh has expressed shock at
Strathcona's verdict and vowed to "ferret out the
perpetrators."
Walsh did not return telephone calls from The Financial Post
yesterday.
Mining experts say Walsh, who is a promoter rather than a
mining expert, could conceivably have been unaware of the
significance of the studies.
However, vice-president John Felderhof and director Paul
Kavanagh have extensive expertise.
Kavanagh is a former senior vice-president of exploration at
Barrick Gold Corp., while Felderhof is the geologist credited
with discovering Busang.
Among the studies is a metallurgical investigation by Normet
Ltd. Pty of Perth, Australia.
Normet recovered more than 90% of the gold in Bre-X's
samples in a manner consistent with river gold deposits,
rather than bedrock.
"We were struck by [Normet's] statement," wrote Graham
Farquharson, the main author of the Strathcona report.
In addition, the gold was rounded and Normet also found
silver and other heavy minerals in the samples -- all consistent
with river, or placer, deposits.
"The Normet study was the red flag of all red flags," said
Doug Leishman, a mining analyst with Yorkton Securities Inc.
It's no excuse for Bre-X management to step back now and
say they didn't know, he said.
"What people know or didn't know has nothing to do with
responsibility."
Other studies that back up many of Normet's findings include
those by Hazen Research Inc. of Golden, Colo., and
PetraScience Consultants Inc. of Vancouver.
Although Bre-X has claimed its Calgary office was often out
of the loop with the technical work going on in Indonesia, the
Normet study and others that followed should have alerted
management, said John Kaiser, an independent mining analyst
based in San Francisco.
"The Normet should have been an immediate red flag to a
guy like John Felderhof," he said.
Kavanagh also has a lot to answer for, said a senior
executive of a major mining company who did not wished to
be named.
"He was the only board member who had the technical
knowledge to question it. So where was he?"
Kavanagh was not available for comment.
Kaiser said it is possible Walsh, Kavanagh and Felderhof
were all played as suckers by fraudsters in Indonesia.
Felderhof said in a statement Sunday night he believes the
deposit is still for real, despite Strathcona's findings. |
