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Speculation about gold field knocks Bre-X's shares lower

Wall Street Journal - March 21, 1997

Toronto – Speculation that a gold field in Indonesia won't live up to expectations – coupled with the sudden and dramatic death of a mining company geologist – hurt the shares of Canadian gold-mining firm Bre-X Minerals Ltd.

Bre-X became partner with Freeport McMoRan Copper & Gold Inc., New Orleans, to develop part of the Busang gold field in the Kalimantan province of Indonesia.

An Indonesian newspaper recently published a report that questioned whether the gold deposits at Busang will reach the 70.9 million ounces predicted earlier. The newspaper quoted a source as saying he got his information from an internal report prepared by Freeport McMoRan. However, Freeport said Friday it is still doing due-diligence and drilling at the Busang gold deposit and has not commented on the project, contrary to the published report.

Meanwhile, trading in Bre-X shares on the Toronto Stock Exchange was halted for most of the day. When trading resumed, shares fell 2.25 Canadian dollars to end at C$15.20 on heavy volume of 1.4 million shares. Average daily volume is 229,760 shares.

In addition to questions about the gold field's quality, "There's a lot of speculation as a result of the helicopter incident," said Freeport's chief financial officer Richard Adkerson.

Michael de Guzman, the chief geologist for Bre-X, is presumed to have died in a fall from a Busang-bound helicopter on Tuesday. His body has not yet been recovered. Bre-X contended that Mr. de Guzman, who had battled malaria for years, committed suicide when he learned he was infected with hepatitis B. Bre-X said it received a copy of the suicide note Mr. de Guzman left in the helicopter. The note indicated Mr. de Guzman didn't want to suffer through another disease, and asked that his wife take care of their family.

"We have no reason to suspect foul play," a Bre-X official said.