Canadian firms aims to reveal Busang gold

Canadian firms aims to reveal Busang gold

TORONTO (Reuter): While the Busang gold controversy panics investors and crashes trading computers, a tiny Canadian consulting firm is quietly working to answer a crucial question -- Is the gold there?

Strathcona Mineral Services Ltd. is maintaining a strict silence as it performs a critical audit of Bre-X Minerals Ltd's gold project in the jungles of Indonesia.

The company is shunning interview requests, but analysts and industry rivals said Strathcona had a solid reputation and was expected to provide at least some answers that may help resolve some of the confusion around Busang.

"We wouldn't touch it (Bre-X) until we have more information from Strathcona. Strathcona are the referee here. We would want to see something from Strathcona before we change our opinion," Yorkton Securities analyst Doug Leishman told Reuters on Tuesday.

Bre-X hired Strathcona two weeks ago as rumors swirled around the Busang discovery, heralded as the richest gold find of the century.

The story broke on March 26 when Bre-X said it was advised by Strathcona that "there appears to be a strong possibility that the potential gold resources on the Busang project...have been overstated because of invalid samples and assaying of those samples."

Strathcona is currently performing a detailed audit of drilling, sampling and assaying of the Busang project, which is expected to take four weeks.

"Their engineers are very conservative and in our opinion ...they will determine the accurate gold content of the samples that they find. They have a very good reputation within the industry," Leishman said.

Privately owned Strathcona was founded by President Graham Farquharson, a veteran mining engineer who is currently in Indonesia. The company's six employees work out of a small office on a side street in Toronto's financial district.

Aside from consulting, Strathcona has managed mining projects, including a zinc/silver project on Canada's Baffin Island in the Northwest Territories.

"They are tough, but fair competitors. I know Farquharson reasonably well," said Stan Bharti, president of William Resources Inc [WIM.TO], which owns a competing mining consulting company, BLM Service Group.

Meanwhile, Bre-X said on Tuesday it needed more time to study a detailed report from engineering firm Kilborn SNC Lavalin on a check assay program at the Busang site.

"This report is an extensive document which requires a more thorough review by Bre-X's technical team than initially anticipated," Bre-X said in a statement.

The Canadian exploration firm said it intended to conduct a detailed analysis of this report and correlate the relevant data" with Strathcona's findings. It did not say when the Kilborn report would be released to the public.

Kilborn has said its latest resources calculations showed the Busang project contained 70.95 million ounces of gold. But its conclusions depended on the validity of samples and assays provided to the company by Bre-X.

Bre-X has denied any tampering with the samples and said that its claims for Busang would be vindicated.