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Up the Mahakam river
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April 28, 1997: 12:53 p.m. ET
Busang mining site is a place of mystery and anxiety for Bre-X
From Correspondent Bill Dorman
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EAST KALIMANTAN, Indonesia (CNNfn) -- It is either the gold find of the century or the biggest scam in the history of mining.
The Busang gold deposit in Indonesia has been making headlines and driving markets ever since Bre-X Minerals Ltd. of Canada announced it contained more than 100 million ounces of gold.
The troubles began when further testing failed to confirm those optimistic claims. Another round of tests is underway and results may come as soon as this week.
In the meantime, the Busang site on the Indonesian island of Borneo is the scene of waiting and wondering.
Mystery lingers in the mists of East Kalimantan. The biggest mystery is whether, in the jungles up the Mahakam river, gold exists in vast amounts at the Busang deposit.
The Busang site is about seven or eight hours upriver by speedboat and an 1-1/2 hours over land by Jeep from Bre-X's regional office in the provincial capital of Samarinda.
The tiny village of Long Tesak is a classic company town, and the company is Bre-X. The town is the river stop on the way to Busang and people there are hoping the gold deposit is not a hoax.
Locals believe there is a lot of gold in the area. Dayak tribesmen have been panning gold here for generations using traditional wooden pans.
However, those using more modern methods are not convinced. Freeport-McMoRan Copper & Gold operates the biggest gold mine in the world, which is also in Indonesia on the eastern island of Irian Jaya. Freeport's preliminary tests at Busang last month found "insignificant amounts" of gold.
Security is a sensitive issue at Busang because of the uncertainty of the Bre-X claims.
 
Security is tight at the Busang mining area.
1.4M QuickTime movie)
It's also a sensitive issue for the government, all the way up to Indonesian President Suharto. Rachman Wiriosudarmo, a former senior official in the Ministry of Mines and Energy said the Bre-X case poses problems for badly-needed overseas investment.
"It's a crossroads," said Wiriosudarmo, who is currently president of Transconsult Nusantaratama. "If the government doesn't handle it correctly, then we are heading to a bad situation for investment."
Some companies are pushing ahead in Indonesia. Twin Gold Corp. is exploring eight sites in Indonesia, half of them in East Kalimantan.
Hermann Derbuch, chairman of Twin Gold, said that his company's deep pockets have allowed his firm to look at the controversy differently.
"It provides opportunities that we otherwise possibly wouldn't have had -- to get into ventures, to get at properties that may have been out of our reach at some other time. The (gold) market will turn." Derbuch said.
For the smaller exploration companies working in the jungle, the gold market may not turn fast enough.
Working capital has dried up, at least until the latest core samples from Busang are analyzed. That analysis will begin to answer some of the questions surrounding the mysteries of Busang.
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