BRE X GOLD SCANDLE

Presented To: Dr. Namrata Sandhu

Presented By: Saryu Garg Tarun Chawla

Company Overview
Bre-X as a group of companies in Canada.
David Walsh founded Bre-X Minerals Ltd. in 1989 based in Calgary. The company was unsuccessful at finding any significant deposits and its stock, listed on the Alberta Stock Exchange, averaged a price of 27 cents between 1989 and 1992.

A bar of gold bullion excites fever dreams of wealth.

Bre-X bought the Busang site in March 1993 and in October 1995 announced significant amounts of gold had been discovered. After starting drilling, Felderhof claimed that they had found up to 2 moz of gold. As the drilling continued, they need more capital to fund exploration and initiated its first private placement, with Loewen Ondaatje McCutcheon, Ltd., for C$4.5 million in March 1994. As it began to explore the new site, the estimates of recoverable gold rose to 6-8 moz by November 1994. By March 1995, the stock price had increased to C$2.05.

Cont
In May 1995, Bre-X initiated its second private placement: this time Nesbitt Burns, Scotia McLeod, and McLean McCarthy Ltd. joined Loewen in the placement of C$7.5 million. The stock shot up to C$14.87 that day when the company announced that it had found a large gold deposit that raised their estimate of recoverable gold to 30 moz. On February 20, 1996, Bre-X announced its third private placement by Nesbitt, ScotiaMcLeod, Levesque Beaubien Geoffrion, and First Marathon Securities. After the company raised its estimate of recoverable gold to 42.6 moz, Bre-X stock rose C$13.875 to C$153 per share.

Cont
By May 1996, Bre-X had a market capitalization of over C$4 billion and late may they completed a 10 for 1 stock split, deemed necessary because the capitalization of the firm had peaked at $6.2 billion. The estimate of the site's worth increased over time:In 1995 1996 1997 . 30 million ounces 60 million ounces 70 million ounces

Frauds exposed
The Fraud began to unravel rapidly on March 19, 1997 when Michael de Guzman died by falling from a helicopter in Indonesia. A week later the American firm Freeport- McMoRan announced that its own due-diligence led by Australian geologist Colin Jones, showed "insignificant amounts of gold After that Bre-X demanded a review of the test drilling but results were not favorable to them.

David Walsh blamed the whole affair on web "ghost writers" who had spread rumors on the Internet and damaged the company's reputation.

Cont
Strathcona Minerals a third-party independent company published their results the Busang ore samples had been salted with gold dust. The lab's tests showed that gold in one hole had been shaved off gold jewelry though it has never been proved at what stage this gold had been added to those samples. Its shares became worthless and it was one of the biggest stock scandals in Canadian history, and the biggest mining scandal of all time.

David Walsh died in 1998 from an apparent brain aneurysm, leaving only Felderhof to face charges.

Causes
NO inspectors at the side Mining methods were not meeting the evaluation standards.

Major Losers
The Ontario Municipal Employees Retirement Board (loss of $45 million), The Quebec Public Sector Pension fund ($70 million), The Ontario Teachers Pension Plan ($100 million).

 In 1999, the Ontario Securities Commission accused Felderhof of four counts each of insider trading and misleading investors for selling C$84 billion worth of Bre-X stock in 1996 and not disclosing correct information about the gold deposit to investors. Other charges brought against Felderhof have not been pursued. In 1999, the Royal Canadian Mounted Police decided not to charge Felderhof due to lack of evidence.

 Felderhof's trial began in October 2000 but was delayed by years of legal battles. He has not appeared at the trial since March 2005, and he never took the stand to defend himself against the allegations. Closing arguments wrapped up nearly a year ago in August 2006.

 July 31, 2007

The Bre-X Scandal Ends: Chief Geologist Found Not Guilty The sample falsifying scam that rocked the mining world 10 years ago - came to a close today.

Effect of Bre-X Stock Price

Bre-X Income Statement (in C$000s)

Thank you