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Gold/Mining/Energy : BRE-X, Indonesia, Ashanti Goldfields, Strong Companies. -- Ignore unavailable to you. Want to Upgrade?

To: alan holman who wrote (27692)	1/29/1998 8:32:00 AM
From: alan holman	Read Replies (1) \| Respond to of 28369

Thursday, January 29, 1998 Nesbitt head gets Bre-X summons By SANDRA RUBIN The Financial Post Lawyers behind a Bre-X Minerals Ltd. class action suit in Ontario have served the president of Nesbitt Burns Inc. with a summons to force him to produce tapes of conference calls the brokerage held with clients before the gold find was exposed as a hoax. The summons requires John MacNaughton to hand over all memos and research reports on Bre-X, along with all travel and expense records of Nesbitt employees who went to Indonesia. He must also produce tape recordings of conference calls conducted by star mining analyst Egizio Bianchini, one of Bre-X's biggest boosters. Copies of two such conversations filed with the court yesterday show Bianchini was telling investors as late as March 24 the idea of a hoax was "preposterous" - days after the suspicious death of geologist Michael de Guzman and in the face of Indonesian newspaper reports saying independent drilling at Busang had turned up little gold. "To those of you out there speculating that, you know, the core was salted or that somehow the samples were salted or somehow that the numbers were jigged, I mean it's so preposterous ... I'm not even going to address the possibility," Bianchini said. "It's infinitesimal." He speculated different assaying methods were most likely responsible for any discrepancy. "The gold is there," he reassured Nesbitt's brokers and clients. "There's no question about it. "Our target price remains $29 and at $15, the stock is obviously still a buy." Two days later, Bre-X's development partner, Freeport-MacMoRan Copper & Gold Inc., stunned the investment world with the revelation its test drilling had uncovered "little or no gold." Bre-X shares had been trading at $15.50. The stock plunged to $2.50 when trading reopened after the news, vaporizing almost $3 billion of investors' money. Bianchini also reassured listeners several times on March 24 that Kilborn Engineering, a subsidiary of Montreal-based SNC-Lavalin Inc., had done an independent reserve estimate. "Kilborn, to my knowledge, has audited the process from drill casing all the way down to getting the final assay number," he said. "They were supplied with core from Bre-X, that's the case, but they have gone through the process. So Kilborn's reputation stands behind the process. "It stands behind the numbers." Kilborn has been named in class action suits in both Ontario and Texas. Harvey Strosberg, the Windsor, Ont.-based lawyer leading the Ontario suit, said he wants to get his hands on the tapes to counter Nesbitt's motion to dismiss the case for lack of evidence. "They're saying we don't have enough evidence, but it's in their hands," Strosberg said. "We'd like to hear the representations they were making about Bre-X on those audiotapes." The issue of the summons served on MacNaughton was adjourned to be dealt with at a later stage in the proceedings. In another Ontario filing, former Bre-X chief geologist John Felderhof demanded that investors provide particulars on why they say in their suit that there is no gold at Busang. He said he needs that information to plead to the statement of claim. In Texas, lawyers leading the massive U.S. class action said yesterday a certification hearing will be held Feb. 13. The hearing is expected to include arguments on whether Canadian investors should be included in the U.S. class action.