'Bre-X consortium should hasten Busang approval'

'Bre-X consortium should hasten Busang approval'

TORONTO (Reuter): A signed deal between Bre-X Minerals Ltd and
Freeport-McMoRan Copper and Gold Inc should speed up approval for
the development of the huge Busang gold mine in Indonesia,
analysts said.

"This should expedite the issuance of the contracts of work,"
said gold analyst Chad Williams with Research Capital Corp in
Montreal.

Bre-X and Freeport announced on Thursday afternoon that they
had signed a binding agreement to develop Busang.

The details of the agreement were announced last week, but the
agreement was not binding until Thursday.

A signed agreement should put to rest any market speculation
that Freeport would back out of its deal with Bre-X at the last
minute, analysts said.

The arrangement will give Bre-X 45 percent of the deposit, 15
percent for Freeport and 40 percent for Indonesian companies and
the Indonesian government.

Bre-X has said it expects to receive its vital contracts of
work from the Indonesian government by the end of March. The
companies need the documents to proceed with development of the
property.

Freeport said it had completed its due diligence at Busang.

Under the deal, Freeport-McMoran is to be the sole operator of
the Busang II and Busang III properties.

In consideration for the transaction, Freeport-McMoran has
agreed to provide 25 percent of the total estimated cost of
delineating a proven reserve and constructing the initial Busang
mine complex, up to $400 million.

In addition, it has agreed to arrange, on behalf of the
Indonesian companies, a $1.2 billion project financing commitment
from Chase Manhattan Corp. for the remaining estimated costs of
the initial Busang mine complex.

"The interesting comment about that is that it didn't take
very long at all, which is a testimony to the quality of work
done by Bre-X," Williams said.

In a statement on Thursday, the companies said they hope to
start a feasibility study during the second quarter of 1997, with
plans to develop a mine and mill that will initially produce
100,000 to 150,000 metric tons of ore per day.

"This is going to be a very, very big mine," commented
Williams. A mill at a typical underground Canadian gold mine
produces at a rate of about 5,000 tons a day, he said.

In a conference call last week, Bre-X executives said they
hope to produce four million ounces of gold a year by the year
2002. The mine should start producing in 2000 at a rate of two
million ounces a year.