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Death and mystery surround 'gold find of the century'

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April 2, 1997
Web posted at: 11:50 p.m. EST (0450 GMT)

JAKARTA, Indonesia (CNN) -- The death of a mining company geologist who fell from a helicopter has added further drama to a controversy surrounding what may or may not be the biggest gold find in this century.

Michael de Guzman was the chief geologist for Canadian mining firm Bre-X, which announced early this year that it had found a site containing up to 71 million ounces of gold worth over $24 billion. It was, everyone agreed, the find of the century, and Bre-X became a darling of the stock markets.

But two weeks ago, de Guzman fell from a company helicopter on the way to the Busang gold find he helped discover in Indonesia's East Kalimantan province on the island of Borneo.

Authorities say they found a suicide note claiming that de Guzman was dying of the deadly Hepatitis B.

His family bitterly disputes the claim, and there are other circumstances around the gold find and his death which lend an air of mystery and intrigue to the matter.

Last week, just seven days after de Guzman's death, Bre-X announced that an independent consultant had found that its testing was "invalid" and that the potential gold resources may "have been overstated."

'...Insignificant amounts of gold'

Bre-X's potential partner, U.S.-based Freeport McMoran Copper and Gold, reported on the same day that it, too, had run tests at the Busang site and didn't find much gold.

Freeport's findings, which were based on standard tests called fire assays, read in part, "These fire assays have indicated insignificant amounts of gold...."

Freeport also noticed that there were visual differences between the gold particles in the samples it drilled and those drilled by Bre-X. Mining executives in Jakarta say "visual differences" is a euphemism for "salting" - sprinkling gold on top of the assay to give the appearance of more gold.

The announcements sent Bre-X stock into a steep dive. It dropped 80 percent on the Toronto stock exchange, a loss, on paper, of $2 billion.

There were also charges of fraud, and some investors have filed a class-action lawsuit in New York accusing company officials of selling their shares at a huge profit before questions were raised about the Busang find.

Bre-X has defended itself vigorously. The company chairman said it was "physically impossible" that the samples had been tampered with and swore that the company would be exonerated.

Busang site swarming with experts

Indonesia's minister of mines added his voice to the clamor Wednesday, saying that Bre-X had not broken any laws with what now appear to be its exaggerated claims. But he did not rule out the possibility of such a finding later.

"If they have violated the law, then we will bring the case to court," Minister of Mines and Energy I.B. Sudjana said. "But up 'til now, they have not violated any laws."

At the moment, experts from the Indonesia government, Bre-X and Freeport McMoran are investigating the Busang site, and Sudjana says it may take two months before the findings are complete.

Bre-X is a small company based in Calgary, Alberta. It originally won a controlling 45 percent stake in the Busang field after a year-long tussle with two big Canadian companies. Freeport was awarded a 15 percent interest and the rest is controlled by Indonesians. But Freeport recently won the right to be the mine's sole operator.

Bre-X is not yet ready to concede, however. It has hired an independent drilling consultant, Strathcona Mineral Services Ltd., another Canadian firm, to do more tests. According to Reuters, the samples will be flown to Australia by the middle of April and results should be back by the end of the month.

Family still doubts suicide ruling

Industry sources say that all parties associated with Busang are represented at the site, and that it is being kept under "very heavy security guard."

Meanwhile, Michael de Guzman is to be buried in the Philippines Friday, and his family is still not at peace with his death.

His brother Simplicio told Reuters that his brother had survived 14 bouts with malaria, and that his liver might have been weak. He denied, however, that his brother had Hepatitis B "or at least not in the alarming state as it was first reported."

He added, "For somebody who was on top of the world, for somebody who's got a great family, who's got six beautiful kids whom he adored so much, and for somebody whose world is under his palm, I don't see any reason, not a single reason, not a single bit, that he would commit suicide."

Correspondent Maria Ressa and Reuters contributed to this report.


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