Canada's Bre-X looks for Busang gold partner
Canada's Bre-X looks for Busang gold partner
TORONTO (Reuter): Red hot Bre-X Minerals Ltd said Thursday it will start looking this summer for a joint venture partner for its spectacular Busang gold deposit in Indonesia, which it now believes holds more than 30 million ounces.
"People keep on asking how many million ounces do you think (is there) and I've stuck my foot in it a couple of times and fortunately I've been right so far, but I think it is 30 million plus, plus, plus," senior vice president John Felderhof told Bre- X shareholders at the company's annual meeting in Toronto.
Felderhof, who helped discover the OK Tedi mine in Papua New Guinea and three mines going into production in Indonesia, said there are strong signs that just one area of the Busang property holds 30 million ounces, and there are three separate areas at Busang that show gold mineralization.
Busang's gold resource of more than 30 million ounces, if confirmed, could qualify it as one of the largest gold finds outside South Africa and Nevada.
Bre-X's discovery of the site pushed shares in tiny Bre-X Minerals into the stratosphere, rising to a recent high of C$170 (US$124) from a low of C$1.825 ($1.33) less than one year ago.
Canada's hottest and most volatile gold stock closed C$7.75 ($5.66) weaker on Thursday at C$153.75 ($112.23).
Felderhof hopes to confirm a resource of at least 30 million ounces by the summer, at which point company president David Walsh said Bre-X will start negotiating with a partner.
"We intend in the second half of this year to commence negotiations with a company capable in size and stature of bringing the Busang deposit into production," Walsh told shareholders.
Cash payment
Up to 25 percent of the property would be made available for a cash payment by the joint venture partner, who would also be operator at the site, he said. Further bonus payments would follow confirmation of increased reserves.
Financial advisers will be hired within one month to assess the value of the property and help launch the discussions, Walsh said.
Bre-X wants a partner that has experience operating in Indonesia as well as the financial resources to fund its share of project financing, now estimated at about $800 million.
When pressed, Walsh mentioned the South African gold giants, Australia's Broken Hill Proprietary Company Ltd and RTZ Corp Plc as possible partners.
"There are only a few companies in the world that can deal with this size of deposit," Walsh said.
Canadian gold miner Barrick Gold Corp has little experience of Indonesia but Placer Dome Inc. owns part of the Porgera mine in Papua New Guinea, he added.
Alberta-listed Bre-X also hopes to end a plague of poor share liquidity next week by listing on the Nasdaq market, and said a Toronto Stock Exchange listing should be approved within a month.
However, it delayed for up to 60 days shareholder votes on a proposed 10-for-one stock split and a poison pill plan to resist a hostile takeover after receiving numerous requests for more information from shareholders.
"We want our shareholders to be comfortable with what we are asking them to ratify," Walsh said. "The proxies we have received have shown overwhelming support for all the special resolutions."