Bre-X Gold fever
It had all the elements of a great novel: a dramatic rags to riches story, a mysterious suicide (or was it murder?) and a scandalous international fraud. But the Bre-X saga wasn't fiction — much to the chagrin of the many who lost money in 1997. Thousands of investors were duped by the small Calgary-based mining company that falsely claimed to have struck gold in Indonesia.
It seems that St. Paul's wealth all began with a hot tip from an astute local banker who didn't mind spreading the word about this potentially lucrative stock. One woman interviewed admits she knows about five new millionaires in town. Other residents express regret that they didn't invest early on; one man even laments the fact that he used his money to buy a vehicle instead, calling it his "Bre-X truck."
• The "X" in Bre-X stands for "exploration." The "Bre" is derived from Bresea Resources Ltd., Bre-X's sister company, which had existed since 1984. The name Bresea was an amalgamation of Brett and Sean, the names of founder David Walsh's sons.
• Bre-X Minerals Ltd. was first incorporated and listed on the Alberta Stock Exchange in 1989. Shares of this junior mining stock opened at 30 cents a share and fluctuated between 10 and 30 cents for the next four years.
• Bre-X started out as a small exploration company run by former investment broker David Walsh out of his basement, with his wife Jeannette doing secretary duty. Financially, the company suffered for the first few years - Walsh opened his 1991 letter to Bre-X shareholders with, "Yes, we are still in business." By 1992, Walsh had declared personal bankruptcy, owing almost $60,000 to 15 different credit card companies.
• In 1993, Walsh contacted an old acquaintance, Dutch-born geologist John Felderhof, inquiring about land for possible exploration in Indonesia. At Felderhof's recommendation, Bre-X acquired the rights to part of Busang (in Kalimantan, Indonesia) for $80,100 US in May 1993.
• Felderhof soon joined the Bre-X team. He was responsible for the geological side of things, while Walsh took care of the business of stock promotion.
• The Busang exploration lands span approximately 850,000 acres (344,000 ha). Bre-X held the rights to 475,000 acres (190,000 ha) of that land. The region is a dense, elevated jungle.
• In 1994 it appeared that Felderhof, fellow geologist Mike de Guzman and the Bre-X team were starting to uncover gold deposits in Busang. Walsh vigorously worked on getting the word out, and investors began to take notice. By the end of 1994 Bre-X stock had risen to $2.84 a share.
• On Nov. 24, 1994, a Dow Jones story reported, "Bre-X Minerals Ltd. says recent drilling at its properties in Indonesia will soon lead to gold reserves of more than 2 million ounces." While two million ounces is considered impressive in gold mine terms, estimates grew to as high as 200 million ounces during the Bre-X heyday. If the latter estimates had been true, it would have been the largest single gold discovery in history.
• In 1995, well-respected stock advisors, analysts and financial journalists all started to jump on the Bre-X bandwagon. By October 1995 the stock jumped to $39.50 per share.
• Bre-X fever reached its peak in 1996. Bre-X was listed on the Toronto Stock Exchange (Canada's most prestigious stock market) on April 23, 1996, opening at a whopping $184 per share. By the end of the month it was up to $200. It hit its peak in September 1996 at $280.
• Bre-X was listed on the NASDAQ (the largest American stock exchange) in August 1996.
• In December 1996 Bre-X stock qualified for inclusion on the prestigious TSE 300 index - an index of 300 select stocks from the TSE chosen to represent the general behaviour of the market. Normally a stock had to be on the TSE for a year before qualifying, but because of Bre-X's incredible market strength, it was included on the index after only eight months.
Program: The National
Broadcast Date: March 11, 1996
Guest(s): Rick Moore, David Walsh
Host: Peter Mansbridge
Reporter: Kelly Crowe
Last updated: May 23, 2013
Page consulted on December 6, 2013
All Clips from this Topic
Australian miners knew something was awry. Venture investigates.
Residents of St. Paul, Alta., strike it rich with Bre-X investments.
Despite recent ownership questions, David Walsh insists Bre-X is poise...
Venture finds out what Canadians are thinking about Bre-X.
It was definitely fraud, says an independent auditing firm.
One Calgary man is protesting Bre-X corruption in his own unique way.
Pamela Wallin chats with three authors of Bre-X books about the whole ...
The founder and CEO of Bre-X passes away at the age of 52.
There's a new "action plan" to improve investor confidence.
A shocked journalist discusses the lack of criminal fraud charges for ...
The OSC trial of John Felderhof begins, even though he's still in the ...
Investors panic when scandal rocks the small Calgary-based mining comp...
It had all the elements of a great novel: a dramatic rags to riches st...