Bre-X Fools for Gold Fraud

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Bre-X Minerals Ltd. was a small Canadian mining firm that made an enormous announcement in 1995. Geologists had found gold on a website Bre-X owned close to Busang, Indonesia. Not just a bit gold, both—a minimum of 30 million ounces, presumably as a lot as 200 million ounces. Given the high prices of gold, such a deposit would have been price tens of billions of {dollars}. Bre-X’s inventory value shot via the roof; shares went from being valued at a number of cents to over $280 Canadian.

Actually, the deposit appeared so wealthy and so giant {that a} small firm like Bre-X couldn’t presumably deal with all of it with out some assist. In 1997, the Indonesian authorities satisfied Bre-X to tackle an American agency as a companion to assist extract the gold. When this agency, Freeport-McMoRan, began sampling the soil on the deposit website as a part of its due diligence, it reached a confusing conclusion: there wasn’t any gold within the soil. Subsequent examinations by impartial auditors reached the identical conclusion. The “pure”?? gold that within the authentic samples Bre-X had taken was largely river gold from different areas or shavings off of gold jewellery.

Though the corporate’s market cap had climbed to $4.4 billion, this report rapidly destroyed Bre-X’s worth. Share prices dropped 97 % in a day following the announcement, the corporate was quickly faraway from the Toronto Inventory Alternate and Nasdaq, and Bre-X rapidly went bankrupt. Amazingly, nobody ended up in jail from this rip-off, however you need to nonetheless most likely be cautious if anybody presents to promote you an unlimited gold mine on Borneo.

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