Elko – Barrick Gold Corporation, the gold mine company from Canada, affirmed not to change the offer of 10 percent of shares in the Busang gold mine for the Indonesian government, although its competitor, Placer Dome Inc - which associates with entrepreneur Mohamad (Bob) Hasan and plans a merger with Bre-X - offers 40 percent shares for Indonesia.

This largest mining company in the world outside South Africa also said it is optimistic it will prevail in the competition to exploit Busang. The figure of 10 percent is already fixed, and the opportunity (to win Busang) very excellent, as was disclosed by Vincent Borg, Barrick's Vice President Corporate Communications to Indonesian journalists, including Kompas journalist Sri Hartati Samhadi in Elko, Nevada (USA) on Friday (31/1), or Saturday (1/2) West Indonesia time.

But as was the case with Placer Dome which is also from Canada, Barrick rejects the possibility of cooperating with Placer Dome. No way. For a mine that big, a party is needed who is capable of making decisions and who has experience managing mining with lowest risk. And that is Barrick. It is like a house not needing two bosses. If Placer Dome wants to enter, Barrick wants no part in that discussion. If Placer Dome wants to talk facts and figures, come on, he said.

From the aspect of performance, according to him there is a contrast between the two. Last year, for instance, the debt equity ratio of Barrick was 19 percent while that of Placer Dome was 52 percent, annual cash flow of Barrick was 500 million US dollars, that of Placer Dome 139 million US dollars. Barrick's profit was 1.4 billion US dollars, that of Placer Dome 400 million US dollars.

Similarly from the aspect of production capability, Barrick's production is now 3 million ounces (gold), that of Placer Dome 2 million ounces. According to him, currently Barrick is the only world gold mining company capable of developing mines with capacities over 3 million ounces. By comparison, Placer Dome only 800,000 ounces.

According to him, it is not fair to compare Barrick's 10 percent offer with the maximum 40 percent offer from Placer Dome. What is more important is the whole picture. What economic benefit Indonesia derives in the form of royalties, taxes, infrastructure construction and public facilities, he said.

Concerning the possibility that the government might decide that Barrick, Bre-X and Placer Dome must cooperate if no agreement is reached up to the time limit set by the government, he did not want to talk speculation. He did not think the government would do that. They would leave it up to the government if no agreement is reached, he said.

From the aspect of performance, according to Borg, Bob Hasan should derive more profit from cooperation with Barrick compared to Placer Dome, which during the last 10 years, according to him, has recorded a market capitalization gain of not more than 1 percent, namely from 6.7 billion dollars in 1987 becoming 6.8 billion dollars last year, far below Barrick's 10 percent. He thinks that Mr Bob Hasan is not a dumb person. He knows business, he said.

Selling shares

Concerning the figure of up to 40 percent offered by Placer Dome itself, Borg said that that figure is still subject to negotiation. In the sense that up to 40 percent can well be just 10 percent or whatever. According to current rumor, the 40 percent offered for Indonesia also includes 20 percent shares to be issued in the capital market of Indonesia.

Placer Dome itself is suspected not to be capable of furnishing funds amounting to about 1.5 billion US dollars, needed for initial development of Busang, from its own capital. Possibly, the funds will be obtained through borrowing in the money market. On the other hand, for Barrick, according to Borg, there is no problem, because the figure of 1.5 billion dollars is approximately equal to Barrick's annual cash flow.

Up to this moment there is no certainty who will finally exploit Busang. Through the Minister of Mining and Energy, IB Sudjana, on 15 January last the government issued a new decree (following the previous deadline on 4 December last) that Barrick and Bre-X should finalize negotiations latest 17 February, with composition of shares ownership expected to be 67 percent for Barrick and 23 percent for Bre-X. The remainder of 10 percent to be for the government.

But although this kind of directive has been issued, it is difficult to estimate who will finally get Busang, because the government also wants Bre-X and Barrick to be able to finalize negotiations with their local partners, with entrepreneur Mohamad (Bob) Hasan indirectly being designated. It was not clarified what share was expected for the local partner besides the government.

Bob Hasan, through PT Nusamba (Nusa Ampera Bakti, 10 percent of its shares owned by Hasan, 10 percent by Sigit Harjojudanto and the remaining 80 percent by foundations chaired by President Soeharto) in the beginning of this year acquired the shares of PT Askatindo Karya Mineral, a company owned by East Kalimantan entrepreneur H Sjakareni who controls 10 percent of two among the three Busang mines.