Bre-X expects to resolve Busang issues

Bre-X expects to resolve Busang issues

CALGARY, CANADA (Reuter): Bre-X Minerals Ltd said that it has been told by a law firm advising it that the claims of one of its Indonesian partners to a 10 percent participation in Busang II and Busang III are without merit.

This partner has a 10 percent stake in Busang I and believes it is entitled to a similar stake in Busang II and Busang III, the Toronto Globe and Mail reported over the weekend.

"This law firm has advised Bre-X that the assertion by the Indonesian partner is without substance. Bre-X has held discussions with senior Indonesian Government officials in relation to this matter," Bre-X said in a statement.

Bre-X representatives have also met with those from the Indonesian partner, but Bre-X said the partner failed to provide pertinent information and documents requested, all of which pre- dated Bre-X's acquisition of its stake in Busang I.

Bre-X said the Indonesian partner has requested that this issue be resolved by discussion and negotiation.

"Bre-X believes it will shortly resolve all outstanding issues relating to the Busang project and remains confident that the Indonesian government will proceed with the issuance of COWs (contracts of work) for Busang II and III," said David Walsh, president and chief executive in a statement.

Bre-X said the newspaper report added that Jean Anes, the vice-consul for investments with the Indonesian Consulate General in Toronto, said the Indonesian government was investigating a claim made by this partner in Busang I that BRE-X breached the COW relating to the property by failing to get the approval of the appropriate Indonesian government authorities when it acquired its 80 percent stake in PT WAM, the Indonesian company that holds the COW for Busang I.

Bre-X said although it was generally not company policy to comment on reports in the financial press, it felt compelled to make a statement about the Globe and Mail article.

The Busang Gold Project consists of the central zone, Busang I, the southeast zone Busang II and the northwest zone Busang III.

A COW was issued in relation to Busang I in 1987 to PT Westralian Atan Minerals (PT WAM), in which a stake was acquired by Bre-X. Bre-X became the project manager of Busang I in 1993.

Bre-X said the resource calculation of Busang I stood at about three million ounces of gold. The resource calculation to date for the entire Busang gold project is approximately 47 million ounces of gold.