Bre-X does not show systemic flaw: Regulators

Bre-X does not show systemic flaw: Regulators

TORONTO (Reuter): Canadian securities regulators said on Thursday the saga of Bre-X Minerals Ltd and its worthless Busang gold find does not indicate "any systemic flaw" in Canada's regulatory system.

Canadian regulators and stock exchanges have come under fire since a report last week that said there was virtually no gold worth mining at Bre-X's Indonesian gold site. It described Busang as a massive fraud.

Bre-X stock -- once worth over C$6 billion -- sank to pennies a share before it was delisted from the Toronto Stock Exchange.

"The Bre-X situation does not indicate that there is any systemic flaw to the Canadian regulatory and self regulatory system," Canadian securities regulators said in a joint statement on Thursday.

"However, it was agreed that a review of the mining finance regulatory process is appropriate and that all interested sectors should review all circumstances relating to their areas of responsibility to correct problems that may be identified," the statement said.

Aside from officials from the Ontario, Quebec, British Columbia and Alberta securities commissions, the meeting also included representatives from the Toronto Stock Exchange, mining associations, government officials and the Investment Dealers Association, the brokerage industry's self-regulatory body.

Australian observers have criticized Canada's lax mineral reporting standards and predicted the Bre-X scandal will pressure Canada to adopt a tighter reporting code.

Meanwhile, Bre-X said in Jakarta yesterday it was winding down Indonesian operations, ending a tumultuous chapter that began with its 1993 purchase of the now-worthless Busang property.

"We are winding down all our activities, that include gold and copper exploration activities in Aceh and North Sulawesi," Bre-X financial officer Bernhard Leode said.

He said exploration in Aceh, on northern Sumatra island, and on northern Sulawesi island had been carried out by Bre-X affiliates Bresea Resources Ltd and Bro-X Minerals

Bresea, which owns 22.7 percent of Bro-X and 22.3 percent of Bre-X, and Bro-X were awarded contracts of work last month by the government to explore for and develop mines.