Securities regulator confirms Bre-X probe<\/p>\n
TORONTO (Agencies): Canada's top securities regulator said on
\nThursday it is probing whether Bre-X Minerals Ltd, mired in
\ncontroversy over its Busang gold find in Indonesia, breached
\ninsider trading and disclosure laws.<\/p>\n
The Ontario Securities Commission said the Calgary-based gold
\nprospector has been under investigation since the end of 1996.
\nBut it did not reveal details of the probe until today.<\/p>\n
"The OSC can confirm that the investigation relates to whether
\nthere has been a breach of continuous disclosure requirements or
\ninsider trading provisions," the regulator said in a statement.<\/p>\n
The OSC said it has not determined whether there is enough
\ninformation to begin formal proceedings against Bre-X, but the
\ninvestigation is focusing on whether there were breaches of
\nOntario's Securities Act.<\/p>\n
The regulator's announcement was among several fresh twists in
\nthe Bre-X Minerals saga.<\/p>\n
A group of Canadian Bre-X shareholders launched a class action
\nlawsuit on Thursday, adding to the five court actions the company
\nalready faces in the United States.<\/p>\n
Frantic trading in Bre-X shares handcuffed the Toronto Stock
\nExchange once again on Thursday -- the third time this week that
\nthe TSE has stopped Bre-X due to heavy order volumes and a creaky
\ncomputer system.<\/p>\n
A much-anticipated report on Bre-X's assay program at Busang
\nconfirmed the company's original findings on Thursday. But
\nanalysts said the highly technical report by Kilborn SNC Lavalin
\nInc also raised new questions about the controversial gold
\nproject.<\/p>\n
Bre-X has been under seige since last week when its partner in
\nIndonesia, Freeport-McMoRan Copper & Gold Inc. revealed that
\nearly drilling samples performed during its due diligence process
\non the Busang gold property in the rain forests of Borneo turned
\nup only tiny amounts of gold.<\/p>\n
Panic selling lopped nearly C$3 billion off the company's
\nmarket value last Thursday and the stock has since played havoc
\nwith the TSE's old computer trading system.<\/p>\n
Bre-X climbed C23 cents to C$3.34 on brisk turnover of 5.02
\nmillion shares before the Toronto exchange was forced to stop
\ntrading at 1243 EST\/1743 GMT on Thursday.<\/p>\n
The TSE again cited "systems problems caused by high levels of
\norder flow in (the) company's stock."<\/p>\n
The trading problems irritated investors and further
\nembarrassed the exchange, which has been the butt of jokes
\nrecently on the U.S. financial news television channel CNBC.<\/p>\n
Kilborn, a unit of engineering firm SNC-Lavalin Group Inc
\nperformed the original resource calculations on Busang showing it
\ncontained an estimated 70.95 million ounces of gold.<\/p>\n
The firm confirmed its findings on Thursday, based on assay
\nsamples provided to it by Bre-X.<\/p>\n
"The standard deviation and variance observed in the analysis
\nof the database is consistent with previous test work done on
\nBusang samples...," said the report, which was released by the
\nToronto Stock Exchange and the OSC.<\/p>\n
Bre-X chief executive officer David Walsh promised on Monday
\nthe report would shed light on Bre-X's testing methods. But Bre-X
\ntold the TSE and OSC on Thursday that the report contained no new
\nmaterial information.<\/p>\n
"Our view is investors should have as much information
\navailable to make their own decisions. We thought it should be
\nout there," OSC chairman Jack Geller told Reuters.<\/p>\n
Analysts said the Kilborn report does not resolve the
\ncontroversy over Busang, but did provide a few details not known
\nbefore.<\/p>\n
The hammer mill process used by Bre-X "can produce a non-
\nreliable sample in the preparation process," a mining analyst
\nsaid. "If there is a problem here, it is in within the sample
\npreparation. It is not in the assays, it's problem in the sample
\npreparation."<\/p>\n
Meanwhile, a group of Canadian investors has launched a class-
\naction suit against troubled mining company Bre-X Minerals over
\nthe Busang gold debacle.<\/p>\n
The claim, for unspecified damages, was filed Thursday by a
\nWindsor, Ontario law firm, Gignac, Sutts.<\/p>\n
It named geological firm Kilborn SNC Lavalin, a subsidiary of
\nthe Montreal-based conglomerate SNC Lavalin, as a co-defendant.<\/p>\n
The suit is believed to be the first filed in Canada against
\nBre-X and the first to name Kilborn SNC Lavalin as a defendant.
\nThere have been five reported class action suits filed against
\nBre-X in the United States.<\/p>\n
All the claims allege Bre-X executives deceived investors with
\nbloated projections of the gold find in the Busang area of
\nBorneo.<\/p>\n
The Canadian claim filed Thursday also blames Kilborn SNC
\nLavalin geologists for having confirmed Bre-X's initial claims of
\na huge gold find.<\/p>\n
Bre-X has hired an mining consultant, Strathcona Mineral
\nServices Ltd, to conduct an independent drilling program and
\naudit of the Busang site. Strathcona is expected to deliver its
\nreport by early May.<\/p>\n
"What everyone is waiting for is the actual independent
\ndrilling by Strathcona," said John Ing, president of Maison
\nPlacements Canada Inc.<\/p>",
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