Krueng to pursue stake in Busang

JAKARTA (JP): PT Krueng Gasui, a junior local mining company, will continue to pursue its rights as a minority partner in the Busang gold mine regardless of the amount of gold found, a company executive said over the weekend.

"Regardless of the amount of gold found the ownership issue is not resolved," Krueng's president Jusuf Merukh said Saturday. "The government must see that the ownership is not linked to the gold but to the forth generation contract of work which has been breached," he said.

Krueng Gasui is filing a lawsuit against Busang's largest shareholder, the Calgary-based Bre-X Mineral Ltd., and is seeking support from the Indonesian government to have its ownership rights recognized, he said.

Jusuf said the company had requested a further meeting with the Ministry of Mines and Energy and expected to meet with the new director general of mines and energy, Adjat Sudradjat, to settle the problem.

The company claimed that it and its partner PT Westralian Atan Minerals (WAM) were the rightful owners of Busang under the fourth generation contract of work.

PT Krueng Gasui was one of the minority shareholders in the contract of work granted to WAM in 1987. The contract and the associated agreements provided Krueng with a 10 percent share and a 20 percent option. Krueng's partners in WAM are Westralian Resource Projects Limited, a subsidiary of Bre-X and PT Sungai Atan Perdana, Jusuf said.

But the contract had been violated by Bre-X Minerals Ltd, now known as the majority owner of the Busang gold mine, he said.

Rumors have swirled around Busang since what has been called the century's biggest gold find was cast into doubt on March 26 when partner Freeport-McMoran Copper and Gold Inc. said its preliminary due diligence tests found "insignificant" amounts of gold.

Bre-X, the discoverer of Busang, had estimated the site contained about 71 million ounces of gold, potentially the largest in the world.

Last year, Bre-X was the target of an intense bidding war as several heavyweight mining firms battled for control of the gold discovery deep in the jungles of Kalimantan

Barrick initially dominated the negotiations, but it lost the inside track when noted businessman Muhammad "Bob" Hasan entered the fray.

Bob swiftly brokered a deal, giving New Orleans-based Freeport McMoran 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 two local companies and the government. (das)