Marilyn Scales is a field editor for the Canadian Mining Journal, Canada’s first mining publication. She is one of Canada’s most senior mining commentators.
You don’t have to be an industry insider to remember the story of Bre-X – the 200 million oz of gold in the jungles of Borneo that disappeared overnight. The story of the company’s rollercoaster ride – propelled by enormous greed – made headlines all over the world and severely damaging the reputation of Canada’s stock exchanges and mining community.
The facts should be familiar. A junior explorer sets out in a remote part of Indonesia to make a gold mine. They drilled, and released promising results. Investors invested, driving up the Bre-X stock price, and the company suddenly had no shortage of investors. More drilling was done, and even better results were released. The analysts loved the project. Bre-X management made higher and higher contained gold estimates – 20 million, 30 million, 100 million, and finally 200 million oz of gold just waiting to make everyone rich.
Of course, promises of huge riches attracts huge appetites. Bigger companies considered buying out Bre-X and gaining control of the Busang gold. The head of the Indonesian government, Suharto, wanted the pot of gold enough to usurp Bre-X’s claim to the property and asked an American miner to develop the project.