Bre-X was a major corporation in Canada and was known for mining minerals, metals and gold. Bre-X Minerals Ltd. was a major part of Bre-X Corporation based in Calgary, Alberta. It was found by David Walsh in 1988 and made it the subsidiary of Bre-X. A year later after Walsh found the subsidiary company, Bre-X went public on the Alberta Stock Exchange (ASE) at 30¢ per share. In 1993, Walsh contacted John Felderhof, a Canadian explorer and geologist, to help purchase the rights to some property in Indonesia. Felderhof was known for his involvement in the discovering of enormous copper and gold mine in Papua New Guinea. The two had previously met in 1983 in Indonesia, while Felderhof was working for an Australian company. (Waldie, 2009). The two
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With that being announced, Bre-X’s stock share went up to $59 per share. The following year, both Felderhof and De Guzman informed the Bex-X’s shareholders that they might have found up to 30 million ounces of gold, maybe even more. Because of that the Bre-X’s shares went up to $187 per share. Later in April of that year, Bre-X moved to the Toronto Stock Exchange (TSE) and has it shares split ten to one, giving its new share trade at $28.65 per share. (Waldie, 2009). In August, the Indonesian government revoked Bre-X’s license of ownership and to stop allowing exploration at the Busang property in Indonesia. The president of Indonesia, Suharto, turns down Bre-X’s application to renew their license due to some conflicts with a local businessman Yusuf Merukh. In October of 1996, Bre-X signed a 40-month strategic alliance contract with President Suharto’s oldest son, Sigit Harjojudanto, who owns a company in that involves banking, transportation, telecommunications, equipments, and other products. With this alliance contract, Harjojidanto’s company will supply the mine company with utilities, limestone, and petroleum products, in exchange for 10% stake of the property and $1 million USD per month. On November 1996, Bre-X made a deal with Barrick Gold Corporation to help develop the property. However, the deal fell apart …show more content…
Bre-X respond back saying that the estimates they have made may be a little too much. Investors began to panic and start selling off all their shares of the mining company, overloading the Toronto Stock Exchange’s (TSE) computers twice. The share price of Bre-X drop to $2.50 per share and investors around the globe began losing a large sum of their money, losing around $3 billion USD in total. (Grundhauser, 2015). Bre-X began hiring Strathcona Mineral Service Ltd. in May 1997 to investigate on this problem. Strathcona claims that this has to be the biggest fraud in mining history. As lawsuits start to go against Bre-X, David Walsh was found dead in his home in the Bahamas due to brain aneurysm. As of 1999, The Ontario Securities Commission (OSC) filed 8 counts of illegal inside trading against Felderhof, claiming that he had secretly stash about $84 million using non-disclosed information. His trail began in October 2000 and was carry on until July 2007 where the judge finalizes his decision. (Waldie, 2009). Bre-X Company got discontinue and Felderhof was the only Bre-X official to ever get charged in this case. Until today, the scandal of Bre-X is consider to be one of the largest mining fraud in world history, as well as the largest stock scandal in Canadian history. Since the discovery of gold back in 1997 in Indonesia was
With that being announced, Bre-X’s stock share went up to $59 per share. The following year, both Felderhof and De Guzman informed the Bex-X’s shareholders that they might have found up to 30 million ounces of gold, maybe even more. Because of that the Bre-X’s shares went up to $187 per share. Later in April of that year, Bre-X moved to the Toronto Stock Exchange (TSE) and has it shares split ten to one, giving its new share trade at $28.65 per share. (Waldie, 2009). In August, the Indonesian government revoked Bre-X’s license of ownership and to stop allowing exploration at the Busang property in Indonesia. The president of Indonesia, Suharto, turns down Bre-X’s application to renew their license due to some conflicts with a local businessman Yusuf Merukh. In October of 1996, Bre-X signed a 40-month strategic alliance contract with President Suharto’s oldest son, Sigit Harjojudanto, who owns a company in that involves banking, transportation, telecommunications, equipments, and other products. With this alliance contract, Harjojidanto’s company will supply the mine company with utilities, limestone, and petroleum products, in exchange for 10% stake of the property and $1 million USD per month. On November 1996, Bre-X made a deal with Barrick Gold Corporation to help develop the property. However, the deal fell apart …show more content…
Bre-X respond back saying that the estimates they have made may be a little too much. Investors began to panic and start selling off all their shares of the mining company, overloading the Toronto Stock Exchange’s (TSE) computers twice. The share price of Bre-X drop to $2.50 per share and investors around the globe began losing a large sum of their money, losing around $3 billion USD in total. (Grundhauser, 2015). Bre-X began hiring Strathcona Mineral Service Ltd. in May 1997 to investigate on this problem. Strathcona claims that this has to be the biggest fraud in mining history. As lawsuits start to go against Bre-X, David Walsh was found dead in his home in the Bahamas due to brain aneurysm. As of 1999, The Ontario Securities Commission (OSC) filed 8 counts of illegal inside trading against Felderhof, claiming that he had secretly stash about $84 million using non-disclosed information. His trail began in October 2000 and was carry on until July 2007 where the judge finalizes his decision. (Waldie, 2009). Bre-X Company got discontinue and Felderhof was the only Bre-X official to ever get charged in this case. Until today, the scandal of Bre-X is consider to be one of the largest mining fraud in world history, as well as the largest stock scandal in Canadian history. Since the discovery of gold back in 1997 in Indonesia was