Securities regulator confirms Bre-X probe

Securities regulator confirms Bre-X probe

TORONTO (Agencies): Canada's top securities regulator said on
Thursday it is probing whether Bre-X Minerals Ltd, mired in
controversy over its Busang gold find in Indonesia, breached
insider trading and disclosure laws.

The Ontario Securities Commission said the Calgary-based gold
prospector has been under investigation since the end of 1996.
But it did not reveal details of the probe until today.

"The OSC can confirm that the investigation relates to whether
there has been a breach of continuous disclosure requirements or
insider trading provisions," the regulator said in a statement.

The OSC said it has not determined whether there is enough
information to begin formal proceedings against Bre-X, but the
investigation is focusing on whether there were breaches of
Ontario's Securities Act.

The regulator's announcement was among several fresh twists in
the Bre-X Minerals saga.

A group of Canadian Bre-X shareholders launched a class action
lawsuit on Thursday, adding to the five court actions the company
already faces in the United States.

Frantic trading in Bre-X shares handcuffed the Toronto Stock
Exchange once again on Thursday -- the third time this week that
the TSE has stopped Bre-X due to heavy order volumes and a creaky
computer system.

A much-anticipated report on Bre-X's assay program at Busang
confirmed the company's original findings on Thursday. But
analysts said the highly technical report by Kilborn SNC Lavalin
Inc also raised new questions about the controversial gold
project.

Bre-X has been under seige since last week when its partner in
Indonesia, Freeport-McMoRan Copper & Gold Inc. revealed that
early drilling samples performed during its due diligence process
on the Busang gold property in the rain forests of Borneo turned
up only tiny amounts of gold.

Panic selling lopped nearly C$3 billion off the company's
market value last Thursday and the stock has since played havoc
with the TSE's old computer trading system.

Bre-X climbed C23 cents to C$3.34 on brisk turnover of 5.02
million shares before the Toronto exchange was forced to stop
trading at 1243 EST/1743 GMT on Thursday.

The TSE again cited "systems problems caused by high levels of
order flow in (the) company's stock."

The trading problems irritated investors and further
embarrassed the exchange, which has been the butt of jokes
recently on the U.S. financial news television channel CNBC.

Kilborn, a unit of engineering firm SNC-Lavalin Group Inc
performed the original resource calculations on Busang showing it
contained an estimated 70.95 million ounces of gold.

The firm confirmed its findings on Thursday, based on assay
samples provided to it by Bre-X.

"The standard deviation and variance observed in the analysis
of the database is consistent with previous test work done on
Busang samples...," said the report, which was released by the
Toronto Stock Exchange and the OSC.

Bre-X chief executive officer David Walsh promised on Monday
the report would shed light on Bre-X's testing methods. But Bre-X
told the TSE and OSC on Thursday that the report contained no new
material information.

"Our view is investors should have as much information
available to make their own decisions. We thought it should be
out there," OSC chairman Jack Geller told Reuters.

Analysts said the Kilborn report does not resolve the
controversy over Busang, but did provide a few details not known
before.

The hammer mill process used by Bre-X "can produce a non-
reliable sample in the preparation process," a mining analyst
said. "If there is a problem here, it is in within the sample
preparation. It is not in the assays, it's problem in the sample
preparation."

Meanwhile, a group of Canadian investors has launched a class-
action suit against troubled mining company Bre-X Minerals over
the Busang gold debacle.

The claim, for unspecified damages, was filed Thursday by a
Windsor, Ontario law firm, Gignac, Sutts.

It named geological firm Kilborn SNC Lavalin, a subsidiary of
the Montreal-based conglomerate SNC Lavalin, as a co-defendant.

The suit is believed to be the first filed in Canada against
Bre-X and the first to name Kilborn SNC Lavalin as a defendant.
There have been five reported class action suits filed against
Bre-X in the United States.

All the claims allege Bre-X executives deceived investors with
bloated projections of the gold find in the Busang area of
Borneo.

The Canadian claim filed Thursday also blames Kilborn SNC
Lavalin geologists for having confirmed Bre-X's initial claims of
a huge gold find.

Bre-X has hired an mining consultant, Strathcona Mineral
Services Ltd, to conduct an independent drilling program and
audit of the Busang site. Strathcona is expected to deliver its
report by early May.

"What everyone is waiting for is the actual independent
drilling by Strathcona," said John Ing, president of Maison
Placements Canada Inc.