Walsh says gold hoax was a 'horrendous blow'

Walsh says gold hoax was a 'horrendous blow'

MONTREAL (AFP): Bre-X Minerals chief David Walsh said Friday
that a police investigation into the Busang gold strike hoax in
Indonesia was "moving rapidly."

In an interview with Canadian Press, Walsh also said he had
hoped right up to the last minute that an independent audit
conducted by Strathcona Minerals Ltd. of Toronto of the claim
would produce a "positive report."

Strathcona's announcement last Sunday that the goldfield in
Borneo was a bust came as a "horrendous blow," said Walsh, chief
executive officer of Bre-X.

When Bre-X officials got the news, "we contacted the
authorities and had already started an investigative process on
our own," Walsh said.

Walsh has filed a formal complaint with the Royal Canadian
Mounted Police alleging his company was the victim of a massive
fraud.

On Thursday, Walsh announced that Bre-X and two related
companies, Bresea Resources Ltd and Bro-X Minerals Ltd, had filed
for protection from its creditors.

Walsh also said that Bre-X chief geologist and vice president
John Felderhof, currently in the Cayman Islands, had been fired.

Felderhof was instrumental in the earlier claims that Busang
was the world's biggest gold find.

Prices

Bre-X share prices tumbled from more than US$2 to just a few
cents, pulling down the share prices of other Canadian mining
companies. Firms doing business in Indonesia lost one-third of
their value on Monday alone.

The company was de-listed Wednesday by the Toronto Stock
Exchange while the Alberta and Montreal exchanges continued to
suspend trading in Bre-X.

A day after Bre-X Minerals Ltd. filed for bankruptcy, its
ousted chief of exploration said on Friday he was unaware of any
fraud at the now worthless Busang gold project.

In a statement released through his lawyers in Toronto and
Houston, Felderhof said he has reviewing the "startling new
material" on Busang, but added more facts were needed.

"Again, let me state without reservation that I was not aware
of any fraud at Busang, Loa Duri, or Bre-X," the 56-year-old
Canadian geologist, now living in the Cayman Islands, said.

Felderhof, 56, was named Canada's Prospector of the Year in
March for his work in finding the Busang gold deposit in
Indonesia, once touted as the century's biggest gold discovery.

Bre-X's last official estimate for Busang was 71 million
ounces of gold, while Felderhof had said it could hold up to 200
million ounces of gold.

But in a devastating report on Sunday, a consultant hired by
Bre-X concluded that Busang was falsified on a scale "without
precedent in the history of mining."

Bre-X's storage warehouse near the Borneo town of Samarinda,
where core samples were kept for long periods, was the most
likely spot for any tampering, the report said.

Felderhof said in his statement he was cooperating with
authorities probing the biggest mining scandal in history.

"I can't disclose who he has been contacted by, but I can tell
you he has been cooperating with the people that have been
calling him," Joseph Groia, Felderhof's lawyer, said in a phone
interview on Friday.

Felderhof also has retained the Houston law firm of Jenkens &
Gilchrist. Felderhof and other Bre-X officials have been named in
several class action lawsuits filed in the United States and
Canada.