New fortune for Busang seller

New fortune for Busang seller

MELBOURNE (Reuters): The British mining executive who sold the Busang gold property in Indonesia for US$6 million years before the site was proved a dud said yesterday his company may be sitting on a new bonanza.

William McLucas, managing director of Perseverance Corp Ltd, which produced about 32,000 ounces of gold last year from its Fosterville mine in the little-known gold fields of Victoria state, said exploration at the site has indicated a resource of one million ounces exists.

By the end of the year, the estimate is expected to increase to 1.3 million ounces, McLucas said.

"We think we're only at the top branches of the tree," McLucas told Reuters after addressing a mining conference.

Perseverance spent A$2.3 million on exploration at Fosterville this year and will spend A$3.4 million in 1998, McLucas said.

In 1999, once the company taps into a adjacent sulphide deposit, the annual yield from Fosterville should climb to around 90,000 ounces, McLucas said.

McLucas said it was of little consequence to overseas investors that Fosterville was located in Victoria, now better known for mining of brown coal than gold.

"To Europeans, Australia is Australia and that's all that matters," McLucas said.

In the 19th century, Victorian fields such as those at Bendigo and Ballarat, pioneered the Australian gold industry.

McLucas sold the Busang property in 1991 to Bre-X Minerals Ltd of Canada through another Australian miner, based on preliminary exploration work.

McLucas admitted he questioned his own judgment years later when major North American mining houses at one stage vied to pay US$5 billion to merge with Bre-X and gain development rights over Busang.

But such feelings disappeared after the East Kalimantan prospect was deemed worthless, he said.

Busang was once thought to contain at least 57 million ounces of gold, based on salted drilling samples, before additional testing showed so little actual gold existed it was uneconomical to mine.