PT Nusamba will quit Busang if there is no gold

JAKARTA (JP): The minister of mines and energy, Ida Bagus Sudjana, said yesterday the government would wait for the results of an independent audit of the Busang gold site in East Kalimantan before deciding the next course of action.

Sudjana said after meeting President Soeharto yesterday that the results of the laboratory test on Busang samples, to be conducted in an Australian laboratory, would be ready in three to four weeks.

"We need to take decisions quickly to find the best way for us and the country," he said.

Business tycoon Muhammad "Bob" Hasan, who has a stake in Busang through PT Nusantara Ampera Bhakti (Nusamba), said he and his Indonesian partners would withdraw from the project if the property did not contain gold.

"If there is no gold we will pull out ... why should we remain if there is nothing inside, it is not feasible," he said.

He dismissed press reports that he intended to buy into Bre-X Minerals, the Canadian mining firm which made the Busang gold find.

"That is only newspaper talk, there is no such plan. Why should we buy when we are already shareholders (in the Busang project)," he said.

Nusamba holds 30 percent of Busang, the Indonesian government 10 percent, Bre-X 45 percent and the US mining giant Freeport- McMoRan 15 percent.

Bre-X shocked the mining community last month when it issued a statement saying there was a possibility that Busang's gold reserves had been overstated.

It had earlier put gold reserves at 71 million ounces, which would have been the biggest find of the century.

Bre-X has been weathering a storm since preliminary tests by Freeport indicated the property might contain "insignificant" amounts of gold.

The announcement caused investors to panic and dump Bre-X shares. Worried investors lopped almost C$3 billion (US$2.2 billion), or more than 80 percent, off the company's market value.

Bre-X has hired Canadian mining consultant Strathcona Mineral Services to carry out an independent audit on the Busang site to determine how much gold was there.

A spokeswoman for the Busang Indonesian Gold JV consortium, formed Feb. 17 to develop the Busang property, said Strathcona had completed four of its six test drillings at Busang.

She said the results of the four drillings were stored in a locked hangar in Balikpapan, East Kalimantan.

Strathcona is in the process of drilling the fifth hole.

When asked if Indonesia would suffer losses if Busang had less gold than first thought, Sudjana said "maybe the loss will be the Indonesia's name ... a little embarrassment."

He said the government would tighten mining laws, taking into consideration changes in the sector.

Commitment

Canadian gold firms Barrick Gold Corp and Placer Dome Inc -- two former bidders for the Busang gold deposit -- have reaffirmed their commitment to continue exploring for gold in Indonesia.

Executives of the two firms said they would continue exploration in Indonesia regardless of what happens with Busang.

They denied Canadian press reports that dozens of mining companies, including Barrick and Placer Dome, would halt mineral exploration in Indonesia until they got final approval.

The president of Placer Dome subsidiary PT Placer Emas Indonesia, John E. Loney, said the development in the Busang gold mine did not affect his company's Indonesian operations.

"We will continue our exploration here and will spend at least $2 million for exploration this year alone," Loney said.

He said Placer Emas had invested more than $4 million on gold exploration in Southeast Kalimantan since 1994 and planned to explore in Sulawesi and Sumatra this year.

"We take Indonesia as a very prospective place to be. I think Indonesia's geology is good for gold. Besides, Indonesia's contract of work is a very good legal basis for mine development," Loney said.

Barrick's vice president for communications, Vincent Borg, expressed similar optimism.

He said that since setting up its exploration office in Jakarta in mid-1994, Barrick had spent almost $15 million on exploration in Indonesia.

He said Barrick was exploring 10 properties in Indonesia in a series of joint ventures with local companies.

Five of the properties -- three in Irian Jaya (2.9 million hectares), one in Sumatra (143,000 hectares), and one in East Nusa Tenggara (1.2 million hectares) -- are subject to the sixth generation of contracts of works.

The other five -- four in Kalimantan (more than three million hectares), one in Sumatra -- are under the seventh generation of contracts of work. (rid)