Barrick says it is close to deal with Bre-X

Barrick says it is close to deal with Bre-X

By Benget Simbolon Tnb.

LOS ANGELES (JP): Barrick Gold Corp. indicated here yesterday
it would conclude agreements with Bre-X Minerals Ltd. and
Indonesian local partners before the Feb. 15 deadline and secure
the contract to develop the Busang Gold mine in East Kalimantan.

"Barrick is currently working to conclude arrangements with
Bre-X and Indonesian partners, Askatindo and Amsjalima, within
the time frame," said the company's vice president for
Communications, Vincent Borg.

Borg said his company was looking forward to sharing its mine
development, operating expertise and financial resources in
developing the Busang gold mine.

"We are committed to protecting the environment with the
people of Indonesia. We're certain this will bring substantial
economic, social and community benefits to all of the people of
Indonesia," he said.

But Borg refused to elaborate on the latest negotiations
between Barrick, Bre-X and its local partners in Jakarta.

"I don't know the latest development. They are there in
Jakarta continuing their discussions. We'll know that right after
the Feb. 15 deadline. But we'll apply our best mining system in
Goldstrike to the Busang gold development'" he said.

The Indonesian government sent letters to the two Canadian
companies -- Barrick and Bre-X -- saying that if they could not
reach an agreement before Feb. 15 it would take over the project
and find other investors to develop the huge mine.

Barrick is competing with another Canadian firm, Placer Dome,
to become Bre-X's partner. Bre-X found the estimated 57 million
ounces of gold in Busang.

But Placer Dome, with a debt equity ratio of 50 percent, was
reportedly having financial problems, causing it to delay a
mining operation in South America.

Barrick, which is the only gold mining company in North
America with an "A" credit rating, has cash flow of over US$500
million a year and $1 billion revolving stand-by credit line. Its
retained earnings last year were expected to remain at more than
$900 million.

With total reserves of 43.3 million ounces (including other
operations in North and South America), Barrick produces 3.2
million ounces of gold a year, mostly from its North American
operations.

Financial strength

Borg said that with his company's financial strength the
unconditional US$1.5 billion financial commitment needed for the
Busang development could start immediately without question.

"We won't seek loans for developing the Busang gold mine. We
have enough equity," he said, adding that globally Barrick spent
about $110 million on exploration.

"Barrick has consistently demonstrated superior operating
results due to its combination of high quality mining operations
and above average management skills," Borg quoted a Merrill Lynch
report as saying.

Borg was accompanied by Greg Fauquier, the head of Barrick's
U.S. operations, to the company's Goldstrike gold mine in Elko,
Nevada, where Borg was speaking from.

The Goldstrike property covers 7,000 acres and has about 2,000
workers or about 10 percent of Elko's 20,000 people. It has two
gold mines: Betze-Post and Meikle mines.

Betze-Post has a proven and probable reserve of 29.9 million
ounces and is the world's largest open pit mine. With an average
grade of 0.203 ounces of gold a ton, Betze-Post produces about
two million ounces a year.

Meikle gold mine, about 1.5 kilometers north of Betze-Post,
has a proven and probable reserve of 6.6 million ounces of gold
with an average grade of 0.68 ounces of gold a ton. On average it
produces about 400,000 ounces a year.

Barrick, which saw its net profits up by about 40 percent to
almost $1.3 billion and total assets up to $3.56 billion in 1995
is exploring 10 properties in Indonesia in a series of joint
ventures with local companies. The joint ventures are at varying
stages of exploration and development.

Four of the properties are in Irian Jaya, four are in
Kalimantan, one is in East Nusa Tenggara, and one is in Sumatra.

Since setting up an exploration office in Jakarta in mid-1994,
Barrick, which earned several prestigious awards for its
environmental leadership and community development programs from
the government and international bodies -- including the most
coveted environmental one from the 1992 Rio summit on the
environment -- has established a land position of 8.8 million
hectares, the largest in Indonesia.

Its exploration spending rose from $1 million in 1994 to $5
million in 1995 to $8 million last year.