A Book Review of "Gold Today, Gone Tommorrow"
(BRE-X Gold Scam)

Anatomy of the Bussang Swindle
by Vivian Danielson and James Whyte
The Northern Miner: 304 pp., CAN $28.95

Review By Dr. Ralph E. Pray
Bre-X, the story of scoundrels at work, a litany of unchecked larceny, is laid wide open in this fast-paced presentation of history's biggest gold con. Authored by editor Vivian Danielson and geologist James Whyte of The Northern Miner in Toronto, this sad tale of mining fraud in the jungles of Indonesia lies like an open wound on the body of mineral exploration.

The book chronicles the lives of the major players and the shocking death by bizarre suicide of the chief geologist. The authors not only knew the principals but visited the remote jungle site of the purported "largest gold mine in the world."

The agreeably attractive Busang geology hosted sulfides within a silica-impoverished carbonate. The deposit had 18 drill holes in 1987, was examined by the majors, and sat unwanted until 1992. Renowned geologist (discovered Ok-Tedi) John Felderhof sent well-trained geologist Michael de Guzman to Busang to "find something to sell." De Guzman returned with six hand samples and estimated there were 60 million tons of 0.11 opt Au. Since the ground was known, there were no takers. David Walsh, whose home in Canada had recently been visited by a bankruptcy court bailiff, borrowed funds to go to Jakarta to visit Felderhof and find a target for Bre-X. A deal was signed. Money was raised and Bre-X's third hole at Busang hit gold, later found to be copper-gold alloy shavings. Hole #4 assayed good and Bre-X was on its way. The cores were shipped to a first-class commercial assayer, but only after a metallurgical technician (previously defrocked in the Philippines) on the Bre-X payroll crushed almost the entire core in a little- known Bre-X lab.

The book is so packed with facts it is difficult to get a grip on the total lack of investigative skills among the onlookers. The frenzy in the mining stock rooms and press helped drive the salting factory from a 1.3 million ounce reserve in October, 1994, near the front cover, to a 71 million ounce bonanza in February, 1997, near the back.

Bre-X hired honest technical help, aside from its crew at Busang, and a top professional in charge of the upper echelon in Canada. But there seemed to be lights out everywhere. The reader may ask questions until they are rubbed raw, "How did Bre-X get away with it year after year? How did 48,000 samples get salted and assayed to result in Bre-X hiring the J.P. Morgan firm as financial advisor and Republic National Bank of New York as corporate advisor? Who told 14,000 fund managers and investors to buy Bre-X? How could a deposit with no gold in it be evaluated by a well- known, independent consulting firm at US$24.8 billion?

It helps to learn that Felderhof ended up with some $30 million. De Guzman,before he jumped into the jungle from his chopper at around 240 meters altitude, was worth about $30 million. Before then de Guzman had a good reputation, although, to everyone's surprise, he left four wives. More understanding arrives with the knowledge that the exploration managers had stock options and ended up with millions in cash.

Bre-X stock went from $0.45 to hundreds of dollars and then to three cents. Walsh, the stock promoter and Bre-X president, is described again and again as innocent and is made to look so helpless the reader tends to excuse him. He is like the kid who throws a rock aimlessly, but breaks a window.

There is nothing technical in this book an experienced engineer or geologist doesn't know. But there is a lesson here. Even the authors, who played an active part in the Bre-X press adulation through the pages of The Northern Miner, censure themselves for going along with the crowd, for not paying more attention to early "red flags."

Quickly written and converted into print, the book never-the-less confronts the reader with one detailed chain of events after another. The scope goes from temper tantrum cameo shots to Canada looking at itself. The three dozen photographic reproductions dotting the pages have a jungle-like quality not intended --miasmatic, steamy, blurred.

It is not enough to know the things in this book. Deeply honest Canadians in often corrupt Indonesia, good people anywhere, must be made aware by experienced practitioners, by authors, professors, and managers that we don't all see the same thing when we look at it. Gold is not only "where you find it." It's sometimes here today, gone tomorrow.
Published in Mining Engineering Magazine, 1998.
Reprinted with permission of the author.
Dr. Ralph Pray, Mining & Metallurgy
805 S Shamrock Ave
Monrovia, CA 91016
Telephone: 626-357-6511
Fax: 626-358-8386