Bre-X stock plummets amid new twists

Bre-X stock plummets amid new twists

TORONTO (Reuter): The saga of Bre-X Minerals Ltd. and its rich Indonesian gold discovery took another twist on Friday as doubts about the Busang deposit and the mysterious death of its chief geologist pushed investors to dump the stock.

Trading in shares in the Calgary, Alberta-based prospector was initially halted on the Toronto Stock Exchange after an Indonesian newspaper said a review by Busang partner Freeport- McMoRan Copper & Gold Inc. showed the deposit was smaller than Bre-X's estimate of 71 million ounces.

New Orleans-based Freeport said on Friday its review of the site was not finished. But that failed to appease skittish investors when the stock resumed trading.

Bre-X stock sank to a 52-week low of C$14.25 in frenzied afternoon trading. It closed down C$2.25 at C$15.20 on volume of nine million shares, the most active trader in Toronto.

On Nasdaq, Bre-X fell $1.625 to $11 on 1.6 million shares after earlier hitting a low of $10.25.

Freeport shares fell 75 cents to $30.625 in consolidated trading on the New York Stock Exchange.

"I've concluded the only person who could ever make a movie out of this is Alfred Hitchcock. It's become so bizarre that people have lost any tolerance for staying in," Goepel Shields analyst Rick Cohen said in a telephone interview.

Adding to the uncertainty was the death of Bre-X chief geologist Michael de Guzman, a co-discoverer of the Busang gold deposit.

De Guzman, who fell out of a helicopter on Wednesday while flying to the gold site in Indonesia's East Kalimantan province, was ill and may have committed suicide, Indonesian officials said. De Guzman's body has not been found.

"Obviously, one of the reasons the stock has been under a lot of pressure is because of this mystery of the man's death. He was their chief on-site exploration guy ... which cast some doubt on the stock," said PaineWebber analyst Marc Cohen.

Analysts predicted rumors would cling to Busang until Freeport issues a statement after completing its review.

Citing unnamed sources, Indonesia's Harian Ekonomi Neraca newspaper reported on Friday that Freeport's test results did not match Bre-X's estimates.

"It is possible that the deposit is not as big as it has been mentioned before. It could be that it is not viable to mine this deposit," the newspaper said, quoting the source.

But a Freeport official said on Friday the company would not comment until its review was finished.

This week's intrigue added to an already suspenseful tale surrounding the gold deposit deep in the rain forest of Indonesia's Borneo island.

Several months ago, the Busang deposit was the subject of a bidding war in which several mining companies wooed the Indonesian government for control of what has been called the biggest gold find of the century.

Toronto-based Barrick Gold Corp., armed with a high-powered advisory board led by former U.S. president George Bush and former Canadian prime minister Brian Mulroney, initially dominated the negotiations for control of Busang.

But Barrick's inside track ended when the government of President Soeharto brought in Indonesian businessman Muhammad "Bob" Hasan in January.

Hasan brokered a deal that gave Freeport, a veteran mining player in Indonesia, 15 percent of Busang and the right to mine the project.

The arrangement left Bre-X with 45 percent, down from an original 90 percent, and the rest to the Indonesian government and two Indonesian companies.