Bre-X and Barrick get green light for Busang mine

Bre-X and Barrick get green light for Busang mine

JAKARTA (JP): The government has given two Canadian mining
companies, Barrick Gold Corp. and Bre-X Minerals Ltd., the go
ahead to start exploiting the huge Busang gold deposit in East
Kalimantan, according to a statement from Barrick.

The statement, made available to The Jakarta Post yesterday,
said the government had confirmed an ownership split for the new
company to exploit Busang: Barrick and its local partners will
own 67.5 percent of the company, Bre-X and its partners will own
22.5 percent and the government will own 10 percent.

But the statement adds that Barrick intends to continue its
discussion with Bre-X to conclude agreements within the one-month
timeframe, ending Feb. 17, set by the government.

According to the statement, the government wants Bre-X and
Barrick to form a company and submit new contract of work
applications for Busang II and Busang III.

The government also requested the companies to conclude
agreements with Bre-X's local partners, while offering to help
facilitate discussions. The local partners, PT Askatindo Karya
Mineral and PT Amsya Lyna, hold up to 10 percent interests in the
existing contract of work applications for Busang II and III
respectively.

"We believe that Bre-X/Barrick joint venture can satisfy
Indonesia's most important objective: the immediate development
of Busang in an environmentally responsible manner with economic
and social benefits for all concerned," Peter Munk, the chairman
of Barrick, said in the statement.

Minister of Mines and Energy I.B. Sudjana told reporters last
night that the government had given Bre-X and Barrick another
month to agree on their shareholdings in the Busang mine.

Speaking at a fast-breaking ceremony, he said: "They haven't
yet reported to us on their agreement over share ownership in
Busang. We will wait until Feb. 17."

He said that if the two Canadian companies failed to reach an
agreement the government would find new investors to develop the
Busang deposit, which is estimated to contain about 57 million
ounces of gold.

Asked whether the government would arrange an open tender for
the Busang mine, Sudjana said: "We'll have to decide that after
the deadline."

He confirmed that there was still a possibility of Placer Dome
Inc., another Canadian gold miner, getting a share in the
development of Busang.

Last Tuesday, Placer Dome offered to merge with Bre-X, which
found the Busang gold deposit, to expedite the development of the
gold reserves.

Sudjana said that he would study Placer Dome's proposal which
promised 40 percent Indonesian ownership.

The Busang gold project caused controversy last October after
Bre-X teamed up with President Soeharto's eldest son Sigit
Hardjoyudanto and Barrick teamed up with his sister Siti
Hardianti Rukmana to speed up approvals to develop the mine.

Last week, Syakerani of PT Askatindo made a surprise move by
selling 50 percent of its shares to timber tycoon Muhammad (Bob)
Hasan, a politically-well-connected businessman.

Sudjana said in Kisaran, North Sumatra, last week that the
government wanted to see local companies have big stakes in the
Busang gold mine.

"We encourage businesspeople such as Bob Hasan to join the
battle for ownership of the Busang gold project," he said. (bnt)