Bre-X Minerals stock set to resume trading in Canada
Bre-X Minerals stock set to resume trading in Canada
MONTREAL (AFP): Trading in Canadian mining company Bre-X Minerals shares, halted last week after an Indonesian gold deposit scare, was scheduled to resume Tuesday, the Toronto and Montreal stock markets said Monday.
Bre-X ran into trouble last Thursday when it announced less- than-expected results from a preliminary investigation of a gold deposit in Indonesia's East Kalimantan province.
Trading in its stock was suspended Thursday after investors panicked.
Meanwhile, Indonesia's Minister of Mines and Energy I.B. Sudjana told newsmen in the East Kalimantan capital of Samarinda yesterday that it was too early to judge whether Bre-X had manipulated the figures on its gold find in the Busang area.
"Due diligence work is still underway. Hence, let us wait for the final audit results. We should not allow ourselves to be misled by inconclusive reports," Sudjana told newsmen.
Sudjana, who was in the province yesterday to hand over project budget documents to the E. Kalimantan governor, added that neither Bre-X, nor Freeport had yet reported to the Indonesian government on their final audit results.
The Bre-X's market value, at six billion dollars (US$4.3 billion) several months ago, fell to roughly 600 million dollars (US$430 million) last week in frantic selling that caused a computer breakdown in the Toronto stock exchange.
In a related development, Bre-X was hit on Monday by two class action suits in the United States.
The Canadian Press (CP) news agency said one suit was filed in U.S. District Court in New York, and the other one in Texas, alleging Bre-X sold shares before damaging news emerged about its Busang project, and that material mis-statements were made.
Results rigged
As investigators tried to unravel what happened at Bre-X 's controversial Indonesian gold property, analysts outlined Monday a number of scenarios including the possibility that drill results from the Busang discovery were rigged on a massive scale. An audit of the project now under way will seek to determine exactly went awry.
Several analysts contended that the discrepancies uncovered so far were almost impossible to explain as the result of technical problems, mistakes or a fluke.
John Kaiser, a well-respected independent mining analyst in California, suspects Bre-X's rock samples were "salted" with gold to make them look richer than they were. "The only explanation is that the gold in the Bre-X samples came from somewhere else," he said.
Some defenders of the company even speculated that the whole episode was manufactured to depress Bre-X's share price so a bigger mining company could buy it on the cheap. Walsh himself referred vaguely to a belief that forces with a "hidden agenda" were at work.
While other analysts also considered the situation suspicious, they found it hard to believe that a hoax of such huge proportions could have been kept up for three years without word leaking out.
Analysts estimated that Bre-X drilled 250 holes at Busang, yielding roughly 100,000 samples that were tested.
"The numbers indicate a fraud has been performed, but it's mind-boggling to think they could have salted all those thousands and thousands of samples. There has never been anything on this scale in the history of mining if it is proven to be a hoax," said one Canadian mining analyst who did not want to be identified.
Busang had been heralded as the biggest gold find of the century, worth at least $20 billion.
Whether anything of value lies beneath the jungle mud of Busang is now the subject of intense debate. Freeport McMoRan sought to duplicate Bre-X's results, in part by drilling alongside the Calgary-based company's own test holes.
Those checks should have produced almost identical results. Instead, Freeport often found barely a trace of gold in spots where Bre-X had reported hitting rich veins.
Alarm bells also rang when Freeport said gold particles in its samples showed "visual differences" -- a phrase well known in the mining industry to indicate salting.
Analysts said Freeport's use of the phrase suggested gold dust had been introduced into the Bre-X samples because otherwise the gold particles would have looked the same.
In the hunt for answers, investigators must cut through a thicket of intrigue. Many of Bre-X's geological records were destroyed earlier this year in a mysterious fire in a hut where geological samples were kept at Busang. In addition, Bre-X did not hold half its drill core samples for safekeeping as is the usual mining practice.
The man who could have provided many answers is now dead, deepening the mystery. Michael de Guzman, chief geologist at Busang, plunged from a helicopter in the Indonesian jungle in an apparent suicide on March 19.
Meanwhile Barrick Gold Corp, the thwarted suitor of Bre-X, said Monday it did tests on hundreds of Busang gold samples supplied to it by Bre-X.
"We started our due diligence process and that included taking the samples provided to us and doing assays. But we never did our own drilling," Barrick spokesman Vince Borg said.
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