The headlines read “Fever in the Jungle” and “Gold Today Gone Tomorrow”, hence the title of this talk, GOLD FEVER.
It has been 16+ years since the Bre-X/Busang scandal was revealed by the due diligence team at Freeport-McMoRan Copper and Gold Company as one of the biggest, if not the biggest, gold mining scams in history. Busang is located on the equator 1,300 miles north of Australia on the island of Kalimantan, the largest of the 5 Indonesian provinces, which is also known as Borneo. The island is 80% covered by dense forests and home to a number of contagious, infectious and vector born diseases among them malaria, dinge fever, and yellow fever. There was also another fever found on the island; contagious as well as infectious, curable but often having long-term effects on the health of individuals as well as corporations. Not limited to Kalimantan or even to the tropics it is known as
GOLD FEVER
An outbreak of gold fever occurred near the town of Busang in East Kalimantan in 1993. The index case involved a Canadian listed mineral exploration company called Bre-X. Timely reports issued by Bre-X concerning results of its Busang gold exploration program lead to an amazing run up in share price, from $0.30 in 1993 to over an equivalent of $280 in early 1997. This run was fueled by the published reports of gold reserves that had grown from nothing to 70 million ounces to 120 million ounces and was being rumored to be expanding, based on new results coming from the 6 diamond drill rigs working 24-7, to 200 million ounces.
FCX’s due diligence program involved the detailed analysis of Bre-X’s operating procedures and most importantly the drilling of 7 diamond drill holes. FCX’s geologic team included on-sight personnel to coordinate the drilling and to insure the ‘chain of custody’ of the samples, to organize the helicopter movement of the core from Busang to Balikpapan where the core was logged, split, stored under lock and key and assayed. Once discrepancies in assay results became evident additional personnel within FCX became involved and additional procedures were taken to help unravel the developing mystery and insure the accountability of FCX’s due diligence work.
As Paul Harvey would say …. “AND NOW THE REST OF THE STORY”………….
Thanks go to Freeport-McMoRan Copper and Gold Company who gave me permission to give this talk stipulating only that it be completely factual.
