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)