Freeport still says little gold at Busang

Freeport still says little gold at Busang

TORONTO (Reuter): Several days before a key report on the Busang gold controversy, a major partner confirmed on Thursday it had still not found significant gold at the site deep in the jungles of Indonesia.

Since it reported finding "insignificant amounts" of gold from preliminary tests of Busang last month, New Orleans-based Freeport McMoRan Copper & Gold Inc. has continued testing its original seven drill cores taken from the site.

"We have continued analysis of those same cores and our previously announced findings are unchanged. We have not done any additional drilling beyond those core holes," Freeport spokesman Kristin Lemkau told Reuters in a telephone interview.

Freeport mentioned the continued testing of the drill cores in its first-quarter results released on Tuesday, but gave no further details.

Meanwhile in Jakarta an economic newspaper said on Friday that Freeport may pull out of the controversial Busang gold project.

Harian Ekonomi Neraca newspaper said Freeport was planning to withdraw officially before results of an independent audit to determine the gold content in Busang are announced.

"At best, this way Freeport can avoid any possible (legal) suit that may arise," the Neraca newspaper quoted an anonymous source as saying. "And this (suit) is quite possible."

Bre-X has a 45-percent stake in Busang, Freeport has 15 percent, the Indonesian government 10 percent and local companies the remaining 30 percent.

The Neraca newspaper quoted a spokeswoman for the Busang Indonesian Gold JV consortium of all Busang partners as denying Freeport would withdraw from the project.

"The rumors are not true. The share ownership composition has not changed," Nia Sarinastiti was quoted as saying.

The newspaper reported that there was talk that Freeport's plans to pull out were apparently linked to the results of the independent audit by Strathcona.

Neraca, the first newspaper to publish evidence in March suggesting the Busang gold fields were not as substantial as first claimed, quoted another anonymous source as saying there was a possibility the results had been leaked.

Freeport's announcement on March 26 prompted panic selling of shares in Bre-X which discovered the Busang site and heralded it as the century's biggest gold find.

Since losing almost C$3 billion ($2.2 billion) of its stock market value last month, Bre-X shares have traded on the wildest of rumors while investors await an audit from Toronto-based Strathcona Mineral Services Ltd.

Bre-X stock slipped C2 cents to C$3.60 in heavy turnover of 10.3 million shares on the Toronto Stock Exchange on Thursday.

The stock jumped to a high of C$5.75 on Wednesday amid incorrect rumors that Freeport Chief Executive Jim "Bob" Moffett resigned and that Freeport received preliminary results from Strathcona's audit of the Busang site.

The reports were quickly rejected by Bre-X and Freeport officials. Lemkau also declined comment on reports that Moffett was in Indonesia and had held meetings with President Soeharto, saying that Freeport did not release the specific travel plans of its officials.

Analysts said Wednesday's rumors started on the Internet and quickly jolted Bre-X's stock out of its recent slumber.

"It amazes me that everyone is calling for higher forms of regulation and then everybody is relying on rumors and Internet chat lines. It's ridiculous," said John Ing, president of Toronto-based brokerage Maison Placements Canada.

Analysts expected more frenzied trading ahead of Freeport's annual shareholders meeting in New Orleans next Tuesday, April 29. Freeport has warned media that company officials would be reluctant to answer questions on the "Bre-X matter".

"Everybody is hoping that we'll have some information out around the Freeport annual meeting," another analyst said.

Some reports have suggested April 29 was also the date that Bre-X would receive Strathcona's report. But Bre-X has said it may not get the report until early May.

Whenever the Strathcona audit is released, analysts expect Freeport to follow quickly with a statement on its plans regarding the Busang project.

Meanwhile, officials with Barrick Gold Corp. and Placer Dome Inc. declined comment on reports that they were released from confidentiality agreements with Bre-X.

Some analysts have said Barrick and Placer -- once rival bidders for a share of the Busang site -- have information that could shed light on the mystery.

"We're not going to comment at all. All we can say is we would cooperate with any authorities investigating the matter," said Barrick spokesman Vince Borg.