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Busang stake free for Indon partners

Bloomberg - February 20, 1997

Jakarta – Bre-X Minerals Ltd will not receive any payment for the 30 per cent stake in the Busang gold deposit that it gave to its Indonesian partners, said Mohamad "Bob" Hasan, an Indonesian businessman who helped broker the agreement.

"It's very straightforward," Mr Hasan said.

Mr Hasan's statement confirms speculation by investors and analysts that Bre-X won't be compensated for giving its local partners a larger stake in the mine than agreed under a previous plan.

The plan, approved by the Indonesian government on Tuesday, gives a 45 per cent stake to Bre-X, down from 90 per cent. Freeport-McMoRan Copper & Gold Inc will have a 15 per cent stake while the Indonesian government gets 10 per cent interest. Two Indonesian companies controlled by Mr Hasan, a close adviser to President Suharto, hold the remaining 30 per cent.

The agreement replaces any previous plans for the mine's development, Mr Hasan said. Under the original agreement between the Hasan companies and Bre-X, Mr Hasan's companies would have been entitled to 10 per cent of the eventual mine. The additional 20 per cent they're getting now is free.

Bre-X discovered the deposit in 1994 and under its exploration contract with the government originally expected to be given full title to develop the mine. The government now takes 10 per cent.

Freeport will pay US$400 million (S$568 million) of the estimated building cost of the mine. – Bloomberg Business News