Busang's impact on world gold will be slight<\/p>\n
SYDNEY (Reuter): Development of the giant Busang gold deposit
\non the island of Borneo into one of the all-time motherlodes
\nwould place Indonesia among the top six gold producing nations
\nworldwide.<\/p>\n
But the impact on world supplies would be slight, analysts
\nsaid on Tuesday.<\/p>\n
Estimated production of up to some 90 tons a year at Busang --
\ndoubling Indonesia output to about 170 tons -- in itself pales
\nagainst the 36,000 tons or so held by central banks and countless
\nmore hoarded by investors, they said.<\/p>\n
"Another 90 tons or whatever is not going to cause much
\ndamage," said Keith Goode, analyst for Bell Securities Ltd.<\/p>\n
From the perspective of strictly mine-supply-to-actual- demand
\nthe need for more gold to meet the requirements of jewelry makers
\nand other fabricators of the metal is apparent.<\/p>\n
Figures from the Australian Bureau of Agricultural and
\nResource Economics (ABARE) point to overall demand for 3,277 tons
\nof gold last year against production of 2,328 tons.<\/p>\n
"You're still getting a need for metal coming from the scrap
\nsector and from the financial interests to meet demand," said
\nGrant Craighead of Macquarie Equities Ltd.<\/p>\n
Moreover, even with Busang in full swing, Indonesia's
\nproduction would still lag behind South Africa, the United States
\nand Australia and the Commonwealth of Independent States,
\nCraighead said.<\/p>\n
Canada's Bre-X Minerals Ltd [BXM.TO] said on Monday it had
\nteamed up with U.S. giant Freeport McMoRan Copper and Gold Inc to
\ndevelop Busang in partnership with Indonesian interests.<\/p>\n
It also said further tests had lifted the calculated gold
\nreserves of Busang by 16.6 million ounces to 70.95 million
\nounces.<\/p>\n
The reserve base places Busang at or near the top of known
\ngold deposits in terms of size, said Simon Middleton, gold
\nanalyst for ABARE.<\/p>\n
"Most Australian projects are happy to operate with much less
\nreserves up their sleeves," Middleton said. "It's just off the
\nscale compared to Australia."<\/p>\n
Freeport-McMoran, already a strong presence in Indonesia
\nthrough its copper and gold mines in Irian Jaya, ousted Canada-
\nbased rivals Barrick Gold Corp and Placer Dome Inc for a stake in
\nBusang.<\/p>\n
Barrick has dropped out of the race for a controlling role in
\nBusang while Placer Dome said it is reevaluating its proposal.<\/p>\n
Placer<\/p>\n
Meanwhile, Gold miner Placer Dome Inc said in Vancouver Monday
\nit would study its US$5 billion offer to merge with Bre-X
\nMinerals Ltd in light of a deal between Bre-X and Freeport-
\nMcMoRan Copper and Gold Inc to develop Bre-X's Busang gold
\ndiscovery in Indonesia.<\/p>\n
"Naturally, we are disappointed by the news that we were not
\nselected as the developer and operator," said John Willson,
\nPlacer's chief executive officer. "In view of these developments,
\nwe will of course have to re-evaluate our offer to merge with
\nBre-X." Willson's statement echoed earlier comments from the
\ncompany's spokesman.<\/p>\n
Placer said it was still willing to assist development of
\nBusang with its financial resources and expertise.<\/p>\n
"Given the size, complexity and importance of Busang to
\nIndonesia, we remain prepared to contribute our financial
\nresources and unique mine development capabilities to this very
\nattractive project," Willson said.<\/p>\n
Investors have speculated that Bre-X, which would have 45
\npercent of the Busang project, could now become a takeover target
\nfor mining companies such as Placer or Barrick Gold Corp<\/p>\n
In Toronto, shares in Bre-X Minerals Ltd jumped on Monday
\nafter the Canadian gold miner signed a deal to co-develop the
\nmassive Busang gold deposit.<\/p>\n
Bre-X rose 1.05 to 25 in brisk late morning turnover of
\n600,000 shares on the Toronto Stock Exchange.<\/p>\n
Bre-X, Freeport-McMoRan Copper & Gold Inc and Indonesian
\ninterests have signed a Memorandum of Understanding for the
\ndevelopment of Busang, Bre-X said earlier.<\/p>\n
However, Toronto stocks closed flat in light trading on Monday
\nwith its upward bias kept in check by battered Barrick Gold Corp.
\nand the fact U.S. markets were closed for a holiday.<\/p>\n
"Barrick dragged down the gold index," said Maison Placements
\nCanada president John Ing.<\/p>",
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