Busang report says irregularities in gold samples
Busang report says irregularities in gold samples
TORONTO (Reuter): A report by an Australian mining consultant for Canadian gold prospector Bre-X Minerals Ltd. pointed to abnormalities in gold taken from the Busang gold discovery in Indonesia, Canadian newspapers reported on Saturday.
Normet Pty Ltd., an Australian metallurgical consultant, said in a July, 1996 report commissioned by Bre-X that the gold particles in its Busang samples were rounded, the Northern Miner weekly newspaper said.
"(The) gold particle shapes were mostly rounded with beaded outlines," the Northern Miner article said, quoting from the Normet report.
The Northern Miner said the rounded shapes are consistent with placer gold found in streams or riverbeds.
Some Canadian mining analysts have said the Normet report raises more questions about possible tampering because placer gold would not normally be found at Busang which is bedrock.
Bre-X has been under siege since March 26 when its partner in Indonesia, New Orleans-based Freeport-McMoRan Copper & Gold Inc. , revealed that early drilling samples performed during its due diligence process on the Busang gold property turned up only tiny amounts of gold and "visual differences" between its gold samples and Bre-X's samples.
The Freeport announcement sparked panic selling of Bre-X shares, wiping nearly C$3 billion (US$2.15 billion) from the company's stock market value.
Bre-X chief executive officer David Walsh has said independent tests will confirm the size of the Busang deposit deep in the jungles of Borneo. Those test results are expected in about four weeks.
Bre-X has estimated Busang contains 70.95 million ounces of gold, possibly the biggest find of the century.
"I'm 120 percent confident that the gold is there and this has been a colossal screw-up," Walsh said in a interview published in the Toronto Star newspaper on Saturday.
Walsh said tampering was physically impossible because of the large number of samples taken from Busang.
He also said the controversy swirling around Busang will not jeopardize Bre-X's 45 percent stake in the deposit.
Under an agreement brokered earlier this year by Indonesian businessman Muhammad "Bob" Hasan, Freeport received 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 stake, and the rest to the Indonesian government and two Indonesian companies.
"We have mining agreements signed between Bre-X, Freeport and Mr. Hasan. I believe that agreement will be honored," Walsh told the Toronto Star.
The Ontario Securities Commission, Canada's top securities regulator, confirmed last Thursday that it has launched a probe into whether Bre-X and its top officials violated insider trading and disclosure laws.
Walsh, his wife and other company officials added more than C$37 million (US$26.6 million) to their bank accounts after they sold Bre-X stock at prices ranging from C$24.40 (US$17.57) to C$28.40 (US$20.45) between August and October last year.
The sales were controversial because they occurred shortly after Bre-X learned that its preliminary license had been canceled by the Indonesian government, a development the company did not reveal publicly until last October.
Walsh told the Star he did not consider the canceled license material information because Bre-X's underlying claim to Busang was still in good standing.
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