Krueng upbeat govt will not sign Bre-X contract

JAKARTA (JP): PT Krueng Gasui, a local partner of Canada's Bre-X Minerals Ltd in exploring the Busang gold mine in East Kalimantan, was certain yesterday the government would not sign a contract of work for the project before issues relating to the mine's ownership were cleared up.

Krueng Gasui's president, Jusuf Merukh, said the case was too messy for the government to sign a contract of work yet.

"I am positive the government will not sign the project's contract of work yet ... I heard the minister (of mines and energy) understands our claim and our stance in the case," he said.

Krueng Gasui holds 30 percent of PT Westralian Atan Minerals, the joint venture for the Busang project, while PT Sungai Atan Perdana, which has Merukh and businessman Syakerani as its main shareholders, holds 10 percent.

Bre-X holds the remaining 60 percent.

Jusuf said Krueng Gasui submitted its complaint to the ministry of mines and energy yesterday.

Jusuf was accompanied by Warren Beckwith, the chairman of Australia's Golden Valley Mines NL and Geoff Davis, Golden Valley's executive director.

Golden Valley has a financial and technical assistance agreement with Krueng Gasui on the Busang project.

Jusuf said he was optimistic Krueng Gasui would get a fair outcome for its stake in Busang.

Krueng Gasui was trying to reach a solution with the Ministry of Mines and Energy to have the entire Busang prospect area, including Busang II and Busang III, included in its original contract of work.

Beckwith said Bre-X had breached its partners' contract and conducted unfair business practices between 1993 and 1996, when Bre-X had managed WAM.

The government awarded WAM a contract of work for Busang in 1987.

"We naively trusted that Bre-X was acting in the best interest of all its joint venture partners but as we see Bre-X has only been acting for itself," Jusuf said.

Busang has become an international controversy since experts dismissed reports last month that it was the world's richest gold find -- a claim made by Bre-X.

Through its wholly-owned subsidiary Westralian Resource Project Limited, which it took over in 1993, Bre-X holds 60 percent of WAM.

Beckwith said Bre-X had denied its two Indonesian partners access to data and to the site since 1993.

It also failed to inform its partners of exploration developments at Busang, he said.

He said Bre-X had improperly obtained contracts of work for two areas around Busang where the extension of the Busang gold deposit was, taking in other Indonesian companies as partners instead of its existing two partners.

Bre-X has been under siege since March 26 when its partner in Indonesia, New Orleans-based Freeport-McMoRan Copper and Gold Inc, revealed that early drilling samples taken during its due diligence process at Busang turned up insignificant amounts of gold and visual differences between its gold samples and Bre-X's samples.

Bre-X has estimated Busang contains 70.95 million ounces of gold, possibly the biggest find of the century.

Freeport has a 15-percent stake in Busang and the right to mine the site. Bre-X has 45 percent and the rest belongs to the Indonesian government and two local companies, PT Amsya Lyna and PT Askatindo.

The majority stake in both local companies is owned by businessman Mohamad "Bob" Hasan, a close friend of President Soeharto. (pwn)