Busang gold dispute may be settled in courts

Busang gold dispute may be settled in courts

SYDNEY (Reuter): Indonesian parties in the Busang gold
discovery dispute hope to resolve matters through administrative
action in Indonesia but are prepared to take legal action in
Canada if necessary, Warren Beckwith, managing director of
Australia's Golden Valley Mines NL, said yesterday.

The Indonesian interests of businessman Jusuf Merukh, which
have signed a technical assistance agreement with Golden Valley
for the big Busang gold find in Kalimantan, would pursue legal
action against Canada's Bre-X Minerals Ltd if needed, he said on
his return to Australia from talks in Indonesia.

"The Indonesian parties are hoping that it will be resolved by
discussion and by Indonesian government administrative action,"
Beckwith said.

"But (they) feel that there's been very little willingness on
the part of Bre-X so far to address the concerns, and legal
action may be the result," he said.

The root of the complicated dispute is options on ownership of
equity stakes in the Busang gold discovery, which according to
majority owner Bre-X contains a gold resource of 622 million
tons of ore at an average grade of 2.34 grams per ton for 46.92
million ounces of contained gold.

Merukh's PT Krueng Gasui owns an undisputed 10 percent
interest in the Muara Atan Contract of Work, which contains part
of the Busang deposit. Another of his interests, PT Sungai Atan
Perdana, owns another 10 percent, Merukh says.

Merukh also claims to hold an option for a further total of 20
percent in Busang.

Golden Valley's technical assistance and financial agreement
with Merukh's interests entitled the Australian company to fees
and royalties, based on future cash flows from Busang, Beckwith
said. "It's not an equity stake," he in telephone interview.

With the payments to be based on cash-flow from Busang, it was
difficult to say what the payments would be until the cash flow
emerged, he said.

Beckwith would not disclose the formula on which the cash flow
would be based. "There's many a slip betwixt cup and lip in the
mining game," he said.

"It would be a bit rash of me to speculate on the numbers
until the operators ... if it remains Bre-X ... are further
advanced in their pit design and mineable reserves calculations,"
he said. But he said cash-flow to Golden Valley from Busang would
be significant.

Bre-X this week described statements that Golden Valley was
entitled to part of the big Busang gold discovery as "false and
misleading".

Beckwith said yesterday Golden Valley had teamed up with Jusuf
Merukh for the whole of the Indonesian's Busang interests.

"Essentially our position is that if the call option is
exercised, that would give Jusuf Merukh -- and therefore would
flow through to the benefit of our interests -- an extra 20
percent," Beckwith said.

There was no question about Golden Valley's agreement with PT
Krueng Gasui, with its 10 percent of Busang.

There was probably no question about Golden Valley's agreement
in principal with PT Sungai, with its 10 percent of Busang,
Beckwith said.

Beckwith said there was no question of Merukh's rights through
his options over the remaining 20 percent of Busang.

"But until such time as the shares are in his name, you've got
to ... exercise a bit of caution," he said.

Golden Valley was anxious to clear the matter up as soon as
possible, but most pressure was on Bre-X and the Indonesian
government, he said.

"We're assisting the Indonesian government to try to clean it
up as soon as possible," he said.