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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