Nusamba, Freeport quit Busang gold project

Nusamba, Freeport quit Busang gold project

JAKARTA (JP): Indonesia's Nusamba Group and Freeport-McMoRan
Copper and Gold decided yesterday to quit the Busang gold project
after Bre-X Minerals Ltd.'s claim of a huge gold deposit in
Busang proved to be a hoax.

Nusamba's president Muhammad "Bob" Hasan said last night his
group had no reason now to remain in the Busang project. Nusamba
is controlled by President Soeharto chaired foundations.

Freeport McMoRan Copper and Gold announced separately last
night that it was withdrawing from the Busang project.

"Freeport has the right to participate as a 15 percent owner
of the Busang project, subject to the confirmation of the
existence of a commercially viable resource, which does not
appear to exist based on the information obtained by Freeport
during its due diligence review, as now confirmed by the results
of the Strathcona audit," Freeport's Chairman James R. Moffett
said in a statement.

The politically well-connected Bob talked Bre-X into accepting
Nusamba and Freeport as shareholders of the Busang gold property
in February after two of President Soeharto's children engaged in
a bidding battle to get a piece of the "huge gold deposit".

Nusamba and its Indonesian partners were given 30 percent,
Freeport 15 percent and the Indonesian government 10 percent.
Bre-X held the remaining 45 percent under an agreement concluded
mid-February.

Bob said his group, which had not yet spent anything on the
project, would not file a law suit against Bre-X's management.

"It is up to the Toronto and New York stock exchanges to file
suits against Bre-X," said Bob, President Soeharto's business
confidant.

But he said he foresaw tougher government rulings on gold
mining in Indonesia as a result of the hoax.

In a related development, Mines and Energy Minister I.B.
Sudjana promised yesterday to impose sanctions on the Canadian
exploration firm Bre-X Minerals Ltd. if it was proved to have
breached Indonesian law.

Sudjana said he had yet to receive an official report on the
audit results of the Busang gold field in East Kalimantan by the
Canadian mining consultant Stratchona Mineral Services Ltd.

"We will take strong action and impose sanctions, if it (Bre-
X) breached the (Indonesian) law. For the moment, we'd better
keep silent until we receive an official report (from Bre-X),"
Sudjana said after a ministers' meeting.

Meanwhile Jusuf Merukh, PT Krueng Gasui's president said he
still hoped the property contained some gold. Krueng Gasui
claims to be a minority partner in the Busang property.

"It happens in mining that one prospector finds gold in an
area where ten miners failed," said Jusuf.

Warrent Beckwith, chairman of Krueng's partner Golden Valley
Mines NL, said that despite Stratchona's analysis he still
believed Busang II and III held gold.

He said Krueng and Golden had found gold after drilling 19
holes in the area, including the Busang II and III zones, in
1989. (jsk/rid)