Bre-X: The Aftermath - April
April 1, 1997 Suits filed against Bre-X
April 1, 1997 Bre-X under Ontario Securities Commission review
April 2, 1997 Trading in Bre-X shares suspended again
April 3, 1997 Trading in Bre-X to resume?
April 4, 1997 Bre-X trading halted again
April 7, 1997 Indonesian mining chief replaced
April 7, 1997 Junior firms' role seen unhurt by Busang buzz
April 9, 1997 Bre-X stock sale in '96 was profitable
April 10, 1997 Bre-X clarification may be near
April 14, 1997 Canada mulls mining share oversight
April 17, 1997 Bre-X Minerals outlines assay procedures
April 24, 1997 Bre-X shares up on latest report
April 25, 1997 Freeport may leave Busang project
April 28, 1997 Bre-X expects results this week
April 29, 1997 Bre-X companies sign COWs
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April 1, 1997
Suits filed against Bre-X
Bre-X Minerals Ltd. of Canada was reported to have been the object of two class-action suits, wire services said. Citing the Canadian Press news agency, Reuters said one suit was filed in U.S. District Court in New York, alleging that the company made mis-statements about the Busang project and that it sold shares before damaging news emerged concerning the assay reports on the Indonesian gold property. Another class action was reported to have been filed in Texas by the law firm of Baker & Botts of Houston.
April 1, 1997
Bre-X under Ontario Securities Commission review
NEW YORK -- The Ontario Securities Commission said it has launched an investigation into Bre-X Minerals Ltd.
Bre-X stock plunged 82 percent in one day last week after new drilling results at its much ballyhooed Busang gold discovery turned up "insignificant" amounts of the precious metal. Trading in the stock was suspended.
The Bre-X situation is "a very big issue that a number of regulators will be looking into, including the OSC," said Larry Waite, director of the enforcement branch of the securities regulator.
The U.S. Securities and Exchange Commission, which has a policy of not commenting on such things, wouldn't say whether it, too, is investigating Bre-X, which trades on the Nasdaq stock market as well as the Toronto Stock Exchange.
April 2, 1997
Trading in Bre-X shares suspended again
Trading in embattled Bre-X Minerals Ltd. shares lasted only 24 minutes Tuesday, according to The Daily Telegraph, London. The Toronto Stock Exchange halted trading after more than 7.7 million shares were traded in the short period, overloading the exchange's computers. The gold content of the company's Busang property in Indonesia has been in question during the past week. Several class action suits have also been filed against Bre-X in the United States, accusing the company and its chairman, David Walsh, of violating U.S. securities law.
April 3, 1997
Trading in Bre-X to resume?
Trading in shares of Bre-X Minerals Ltd., the Canadian junior exploration company, was scheduled to resume Thursday morning on the Toronto Stock Exchange, according to Reuters. Trading in Bre-X shares was halted on Tuesday after heavy volume overloaded the exchange's computer, and again Wedesnday trading was halted due to heavy volume and technical problems. The company's stock plummeted in the past week on questions over the gold reserves at the Busang property in Indonesia.
Meanwhile, samples from independent drilling tests on the Busang property were likely to be flown to Australia for analysis by mid-April. Results possibly could be available by the end of the month, industry sources said, adding that a Canadian consulting firm was drilling six test holes to determine the amount of gold at Busang.
April 4, 1997
Bre-X trading halted yet again
Trading in shares of Bre-X Minerials Ltd., Calgary, Alberta, were halted again Thurday by the Toronto Stock Exchange, making it the third day in a row that trading in the Canadian junior exploration company's shares had been stopped due to technical problems stemming from huge volumes of trading activity, wire reports said. Bre-X has been under a cloud in recent weeks because of questions concerning the true value of its Indonesian gold property at Busang. Meanwhile, Canadian securities regulators Thursday hinted at the nature of their investigation of Bre-X, which has been ongoing since late 1996. The Ontario Securities Commission said it could confirm that the probe relates to "whether there has been a breach of continuous disclosure requirements or insider trading provisions." Another development in the saga on Thursday was the filing in Canada of a class action suit against Bre-X and SNC-Lavalin Group Inc., which did the resource calculations on the Busang deposit. Previously, five class action suits against the company have been filed in U.S. courts. Also on Thursday, SNC-Lavalin's subsidiary Kilborn SNC-Lavalin Inc. confirmed its original calculations that estimated the deposit contained nearly 71 million troy ounces of gold. Kilborn noted that its confirmation was based on assay samples provided by Bre-X.
April 7, 1997
Indonesian mining chief replaced
By decree signed with President Suharto, the top mining official in Indonesia was replaced Monday, according to Reuters. Kuntoro Mangkusubroto was replaced as director general for general mining by Adjat Sudradjat, who has been director general of geology and mining resources. It was unclear whether Mangkusubroto's dismissal was related to the furor surrounding the Busang gold property. Meanwhile, press reports over the weekend said that Normet Pty Ltd., an Australian metallurgical consulting firm, said in a 1996 report that the gold particles found in Busang samples were consistent with those found in streams and riverbed deposits rather than in an underground deposit as is the case at Busang.
Shares in Bre-X traded higher on the Toronto Stock Exchange at the open Friday in comparatively light volume, then pushed higher in active trading. Bre-X trade was stopped due to technical problems in Toronto Thursday after trading frenetically for just more than three hours. Trading volume in the stock has skyrocketed.
April 7, 1997
Junior firms' role seen unhurt by Busang buzz
By VICTOR OZOLS
NEW YORK -- Doubts about the size of Bre-X Minerals' Indonesian gold reserves underscore the importance of due diligence reviews but are not likely to discourage future mineral exploration by junior companies, according to two gold industry experts.
The trend of small exploration companies scouring the globe to discover valuable mineral deposits with the hope of making a deal with a major mining company is exemplified by the story of Bre-X Minerals, which attracted bids from some of the world's largest miners for the Busang deposit it touted as one of the largest in recent history.
"I don't think it will have an effect" on gold exploration, said Ted Kempf, senior research analyst with the CPM Group.
The concept of having small companies do the leg work for larger, capital-rich companies is "more efficient than having geologists (from major companies) comb rocks all over the world," he said, adding, "Why spend money on an area that someone else is developing?"
The current Bre-X situation will "make individuals take a second look at junior companies, but won't have much of an effect on exploration," he said.
New Orleans-based Freeport McMoRan Copper & Gold Co., Bre-X's joint-venture partner, was protected from major financial losses by its due diligence process, in which Freeport's initial test drilling revealed "insignificant" amounts of gold.
"This is an example of how companies have to be very careful about doing their due diligence," said John Lutley, president of the Washington, D.C.,-based Gold Institute.
"Nobody's out a great deal of money yet, because (Freeport) was waiting for due-diligence confirmation," he said, noting "the people who are most badly hit are those who bought stock in Bre-X."
Small companies are finding an easier time sourcing funds for exploration projects than a decade ago, a development which enables mineral exploration to become increasingly global (AMM, Dec. 23, 1996).
April 9, 1997
Bre-X stock sale in '96 was profitable
David Walsh, president of embattled Bre-X Minerals Ltd., Vancouver, British Columbia, and his wife, Jeannette Walsh, as well as John Federholf, vice president, sold shares in Bre-X and its parent company last year, which earned the three a $59-million profit, according to the Financial Times, London. The story goes on to note that the share sale in 1996 represented only about 3 percent of the Walshes holdings. Bre-X Minerals has come under a cloud of doubt in the past few weeks as questions concerning the value of the Indonesian gold property arose. The Financial Times noted that the Walshes and Felderhof conducted a number of trades in August 1996 when Indonesian authorities were withdrawing the company's exploration license.
April 10, 1997
Bre-X clarification may be near
Analysts late Wednesday were faxed copies of a report by Bre-X Minerals Ltd. that they hope will shed light on the controversy and confusion surrounding the Busang gold property, wire services said. The report is said to include a discription of Bre-X Minerals sampling and assay procedures. The company had been critized for not being more forthcoming about it practices and procedures. While Bre-X has estimated the Busang deposit in Indonesia contains at least 71 million ounces of gold, Freeport-McMoRan Copper & Gold Inc. said that its preliminary tests as part of a due diligence found "insignificant" amounts of gold.
April 14, 1997
Canada mulls mining share oversight
The Ontario Securities Commission and the Toronto Stock Exchange said late Friday that they would jointly set up a special task force to look at new standards for companies doing exploration work and for them to report on results, wire services said. The creation of the Mining Standards Task Force, which is to make its report public this autumn, is in response to much criticism arising from the controversy around Bre-X Minerals Ltd. and its Busang gold property in Indonesia. Bre-X said that the property contains at least 71 million troy ounces of gold. But Freeport-McMoRan Copper & Gold Inc. in preliminary tests on the property said the deposit contains "insignificant" amounts of gold.
April 17, 1997
Bre-X Minerals outlines assay procedures
NEW YORK -- Canadian gold prospector Bre-X Minerals Ltd. has released a report analysts said may shed light on the mystery swirling around the Busang gold discovery in Indonesia. The report outlined Bre-X's sampling and assay procedures at Busang, which has been embroiled in controversy since doubts about the project surfaced last month. Bre-X has been under pressure since tests by its partner, New Orleans-based Freeport-McMoRan Copper & Gold Inc., on the Busang gold property indicated the deposit may contain "insignificant" amounts of gold. The announcement prompted panic selling of Bre-X shares last month.
April 24, 1997
Bre-X shares up on latest report
Shares in Bre-X Minerals Ltd. rose more than 50 percent on the Toronto Stock Exchange Wednesday after the company announced geological test results from samples taken before doubts were cast on the claim that the Busang deposit in Indonesia contained 71 million troy ounces of gold, the Financial Times reported. The shares closed at Canadian $3.62 ($2.60). Trading volume was reported to be 17 million shares.
April 25, 1997
Freeport may leave Busang project
Freeport-McMoRan Copper & Gold Inc., New Orleans, was reportedly planning to withdraw from the Busang gold project even before audit results are released, an Indonesian newspaper reported, according to wire service reports. Currently drilling and core testing is under way on the Indonesian deposit, which was touted as the largest in the world outside of South Africa by the Canadian junior exploration company Bre-X Minerals Ltd. In recent week, the project has been under an immense cloud as to its true gold reserves. On Thursday, Freeport confirmed that its tests of its original core samples continued to find "insignificant amounts" of gold.
April 28, 1997
Bre-X expects results this week
Canada's Bre-X Minerals Ltd. said Sunday the company independently testing drilling results from the company's Busang property would release results to Bre-X by the end of this week. Bre-X contracted for the study after Freeport-McMoran Copper & Gold Inc. found "insignificant" amounts of gold in its test of the Indonesian property.
April 29, 1997
Bre-X companies sign COWs
Two companies in the Calgary, Alberta,-based Bre-X Minerals Ltd. group have signed contracts of work (COWs) with the Indonesian government even as the controversy over Bre-X's Busang gold deposit continues to swirl, according to wire service reports. Bresea Resources Ltd. and Bro-X Minerals Ltd. have signed contracts of work for the Sangihe Project, which will be held 60 percent by Bro-X, 30 percent by Bresea and 10 percent by an Indonesian partner. The Sable Project is to be owned 80 percent by Bro-X and 20 percent by an Indonesian partner. An independent audit of the Busang project is to be released late this week. Bre-X's potential partner in the Busang project triggered the controversy when it disclosed last month that its preliminary tests found only "insignificant" amounts of gold.
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