Placer Dome optimistic in battle for Busang mine<\/p>\n
JAKARTA (JP): Canadian mining giant Placer Dome Inc remains
\nupbeat about its chances of victory in the battle for the Busang
\ngold mine in East Kalimantan despite the fact that its main
\nrival, Barrick Gold Corp, is close to sealing a partnership deal
\nwith Bre-X Minerals.<\/p>\n
Placer Dome's Chief Executive Officer John Willson said here
\nSaturday that there was still an opportunity for his company to
\nform an alliance with Bre-X.<\/p>\n
\"Our offer of 40 percent share ownership for Indonesia and the
\nmerger of equals for Bre-X cannot be beaten by other competitors,
\nincluding Barrick,\" Willson said in an interview with The Jakarta
\nPost.<\/p>\n
Placer Dome was engaged in negotiations with Bre-X over the
\npossibility of jointly exploiting the huge Busang gold mine
\nbefore the government decided to allow Barrick into the project
\nlast October.<\/p>\n
The company, however, did not retreat. In a surprising move
\nearlier this month, it announced that it would give a 40 percent
\nstake to Indonesian parties if it is given the chance to work
\nwith Bre-X, the holder of the provisional contract for the Busang
\ngold mine. The offer is much more higher than the 10 percent
\nrequested by the government from Bre-X and Barrick.<\/p>\n
In addition, Placer Dome is also offering Bre-X a tax
\neffective, stock-for-stock merger-of-equals at a significant
\npremium to the current market price, accounted for as a pooling
\nof interests in which all of the outstanding shares of Bre-X
\ncommon stock would be exchanged for a fixed number of shares of
\nPlacer Dome common stock.<\/p>\n
The gold prospector is also contemplating building a facility
\nat Busang of up to four modules, each with a 50,000-tons-per-day
\ncapacity, over four years at an average cost of US$1.7 billion.<\/p>\n
Placer Dome, which has total assets of $2.5 billion, assured
\nBre-X that construction of the first module, estimated to cost
\n$600 million, would commence soon after the merger was completed,
\nand that gold production would start in 1999.<\/p>\n
Willson said the offer would only be realized if Barrick quits
\nfrom the joint venture for Busang. \"We're only interested in
\nsetting up a joint venture company with Bre-X and not with the
\nothers,\" he said.<\/p>\n
Bre-X Chairman David Walsh said in Vancouver last week that
\nBre-X's board of directors, financial advisors and legal counsel
\nwould consider the offer and would respond in due course.<\/p>\n
The Indonesian government has given Bre-X and Barrick one
\nmonth -- until Feb. 17 -- to reach an agreement over shares in
\nBusang. If none is reached the government will seek other foreign
\ninvestors.<\/p>\n
Last week Barrick reported that it had already secured
\napproval from the government to develop the gold mine.<\/p>\n
But Minister of Mines and Energy I.B. Sudjana said last week
\nthat there was still a possibility other foreign companies,
\nincluding Placer Dome, might get a share in the development of
\nthe gold mine.<\/p>\n
Willson pointed out that his company was currently engaging in
\nintensive negotiations with Bre-X and the Indonesian government
\nto win the contract for the Busang gold mine, which is estimated
\nto contain 57 million ounces of gold.<\/p>\n
He told The Post that his company was scheduled to have a
\nmeeting with Bre-X in Canada this week.<\/p>\n
He claimed that Bre-X needed Placer Dome as a qualified and
\nexperienced mining company to develop the gold mine properly. \"We
\nhave the funds and capability to develop the gold mine. We also
\nhave experience of exploiting for gold in tropical areas, like
\nBusang, in Papua New Guinea and Chile,\" he said.<\/p>\n
Mining analyst, Herman Afif Kusumo, who is also the chairman
\nof the Association of Indonesian Mining Experts, said over the
\nweekend that the government should award the contract for the
\nBusang gold mine to foreign mining firms with experience in
\ncommunity development and protecting the environment.<\/p>\n
He refused to say which of the three Canadian companies --
\nPlacer Dome, Barrick and Bre-X -- fitted these criteria the best.<\/p>\n
But he said that Placer Dome's proposal to give Indonesia a 40
\npercent share in Busang was not an offer that should be dismissed
\ntoo quickly.<\/p>\n
When asked whether he was optimistic that the government would
\naccept his company's offer, Willson said, \"I think if the
\ngovernment wants to give the most benefit to the country then our
\noffer is the right one to choose.\"<\/p>\n
A number of analysts in the country have been pressuring the
\ngovernment to increase local companies's share in the gold mine.
\nSeveral even suggested that the gold mine should be managed 100
\npercent by Indonesian companies. (bnt)<\/p>\n
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