Dozens of mining firms may halt exploration in RI

Dozens of mining firms may halt exploration in RI

TORONTO (AP): Dozens of mining companies including Vancouver-
based Placer Dome Inc. and Barrick Gold Corp. of Toronto will
likely halt their mineral exploration programs in Indonesia until
they get final approval, says an executive mining firm.

Graeme Currie of Canaccord in Vancouver said that the measure
would be made after the Indonesian government decided last week
not to grant any mining contracts to Bre-X until the size of its
Busang gold deposit is clearly determined.

Currie said junior companies like his now face a "credibility
chasm" in trying to attract investment.

"The one thing that's clearly going to come from this is a
higher level of assessment and due diligence."

Placer Dome's spokesman Hugh Leggatt said Bre-X Minerals's
troubles may have begun when it prematurely released information
on the find before final assays were completed,.

"This is an unprecedented occurrence at this scale," said
Leggatt over the weekend. "We've got this massive deposit and
suddenly it's been put in doubt. It's very unusual for this level
of doubt to be cast over a gold find."

Placer Dome, Canada's second-largest gold producer, escaped
the project just in time. The company bowed out of the Busang
project last month after Bre-X struck a deal with Freeport-
McMoRan Copper and Gold.

"It's a very complex procedure which requires a lot of time
and a lot of data," he said. "You need to do a lot of work - you
can't just announce things because the market is hungry for more
news."

Bre-X was surfing a wave of speculation and gold fever that
analysts say was almost bound to come crashing down on the
Calgary exploration firm.

The high-flying company suffered one of the most spectacular
wipeouts in Canadian business history last week with the
announcement that its Indonesian gold find may not be as rich as
first thought.

Bre-X stock has plunged to a tenth of its former value, its
mining rights have been thrown into doubt and preliminary testing
by its corporate partners has raised questions as to whether
there's any gold in the company's remote Busang claim.

The crash has left a lot of shareholders, market watchers and
many in the mining industry wondering how it could have gone so
wrong, so quickly.

Leggatt says there may turn out to be gold in the remote
Indonesian jungle, just not as much as first believed. "It's hard
to believe that it would go from 70 million to zero in one day."

Ron Meisels, president of P and C Holdings of Montreal, said
there were signs that Bre-X stock was overpriced months before
last week's collapse.

"This really was a dirigible full of hot air which suddenly
had lightning strike it," he said.

Meisels said warning bells went off for him when the company
began issuing more and more news releases touting the potential
size of the Indonesian find.

"They ran the stock up," he said. "You have a stock going from
50 cents to 280 dollars, hitting the headlines on and on ... and
you get everybody jumping on the Bre-X wagon.

"It was self-fulfilling and self-promoting."

When trading of the company's shares resumed Thursday, after a
one-day suspension on the Toronto Stock Exchange and the U.S.
Nasdaq market, they fell more than C$12 in a matter of minutes to
close at C$2.50, or US$1.81, wiping out C$2.8 billion (US$2.03
billion) from the company's value in one day.

The biggest casualty from the fall of Bre-X could be other
junior mining companies, who have already been hit as nervous
investors shy away from all mining stocks.