4. SYNOPSIS
• Bre-X was a group of companies in Canada
founded by David Walsh.
• Bre-X Minerals Ltd., a major part of Bre-X based
in Calgary, was involved in a major gold mining
scandal.
• When it reported it was sitting on an enormous
gold deposit at Busang, Indonesia.
5. FORTUNEORFOLLY?
• David Walsh founded Bre-X Minerals Ltd. in 1989
as a subsidiary of Bresea Resources Ltd.
• The company did not make a significant profit
before 1993.
• Walsh bought a property in the middle of a
jungle near the Busang River, Indonesia.
• The first estimate of the site by its project
manager (Filipino geologist Michael de Guzman)
was approximately 2 million Troy ounces.
6. RISEOFTHEFRAUD
The estimate of the site's worth increased over
time:
• In 1995, it was 30 million (850 metric tons)
• In 1996, 60 million (1,700 metric tons)
• Finally, in 1997, 70 million ounces.
• At its peak it had a market capitalization equal to
US$4.4 billion, equivalent to US$6.6 billion in
2016.
7. INVOLVEMENTOFINDONESIANGOVERNMENT
• The Indonesian government of President Suharto
got involved.
• the Indonesians suggested that Bre-X share the
site with the large Canadian mining firm Barrick
Gold, in association with Suharto's daughter.
• Bre-X hired Suharto's son to handle their side of
the affair.
• Bob Hasan, another Suharto acquaintance,
negotiated a deal whereby Bre-X would have a
45% share.
9. FRAUDEXPOSED
• The fraud began to unravel rapidly on March 19,
1997, when Filipino Bre-X geologist Michael de
Guzman reportedly committed suicide by
jumping from a helicopter in Busang, Indonesia.
• His wife was receiving monetary payments from
somebody long after his supposed death.
• A week later, on March 26, 1997, the American
firm Freeport-McMoRan, announced that its
own due-diligence core samples, showed
"insignificant amounts of gold”.
10. Continued…
A third-party independent company, was brought
in to make its own analysis. They published their
results on May 4, 1997:
• The Busang ore samples had been salted with
gold dust.
• This gold also occurs in quantities that do not
support the actual original assays.
• Trading in Bre-X was soon suspended on the TSE
and NASDAQ, and the company filed for
bankruptcy protection.
12. AFTERMATH
• By May, Bre-X faced a number of lawsuits and
angry investors who had lost billions.
• Walsh moved to the Bahamas, still professing his
innocence.
• Two masked gunmen broke into his home in.
• The incident ended peacefully but three weeks
later, on June 4, 1998, Walsh died of a brain
aneurysm.
• Bre-X went bankrupt November 5, 1997.
