Bre-X Minerals Ltd: Case Study

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In the year 1989, Mr. David Walsh founded the company Bre-X Minerals Ltd., a Canadian firm specializing in mineral exploration. Within the same decade as the founding, the firm would become involved in what became labeled as the ‘world’s biggest mining scam’ and caused shareholders to lose approximately three billion dollars. Four years after the company’s establishment, Walsh was purchased a plot of land in Indonesia bordering the Busang River based on information provided by John Felderhof, a geologist, of the potential profit that could be secured in the area. In 1994 core drilling of the property began and lab results agreed with the promise of gold mineralization; however, these results had been skewed by project manager Michael De Guzman The rounding of the gold particles found in samples were questioned about their authenticity because of the rounded edges observed, De Guzman would rebuttal with the “volcanic pool” theory as the cause for this property. Bre-X would lose their exploration permits in 1996 by the order of the Indonesian government as they felt that the company was not complying with their rules and regulations; in the following year a suspicious fire would eliminate a large portion of the sample records that had been collected from drilling in their Busang River property. An agreement was then established that would leave Bre-X with 45 percent of interest, while Indonesia would claim 40 percent and the remainder was given to Freeport McMoRan, a copper and gold mining. Freeport McMoRan drilled holes in the same area as Bre-X to confirm the findings of gold mineralization; instead they found minimal gold and solidified the illegitimacy of Bre-X’s claim to fortune. Shortly after, De Guzman was traveling to meet liaisons from Freeport McMoRan and would fall from the helicopter causing his death; according to investigation of the fall, this was an act of

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