Mining
Bre-X Scandal: A History Timeline
Bre-X Scandal: A History Timeline
Sponsored by: BDO and BDO Natural Resources LinkedIn Group
This infographic documents the rise and fall of Bre-X.
From initial private offerings at 30 cents a share, Bre-X stock climbed to more than $250 on the open market. Near the peak of Bre-X share prices, major banks and media were on board:
The Peak
- It was touted by media and banks as the “richest gold deposit ever”
- In December 1996, Lehman Brothers Inc. strongly recommended a buy on “the gold discovery of the century.”
- Major mining companies such as Barrick Gold, Placer Dome, and Freeport-McMoRan Copper & Gold, among other top producers, fought an epic battle to get a piece of Bre-X’s Busang deposit.
- Indonesia’s Suharto regime managed to grab 40% of the deposit for Indonesian interests.
- Fidelity Investments, Invesco Funds Group, and other mutual-fund companies piled into the stock.
- J.P. Morgan bankers talked up Busang in a conference call in which Bre-X’s top geologist predicted the deposit might contain a staggering 200 million oz of gold, worth over $240 billion in 2014 prices. Morgan declined to comment.
- Egizio Bianchini, stock broker and one of Canada’s top gold analysts, said “What most people are now realizing is that Bre-X has made one of the great gold discoveries of our generation.”
The Timeline:
1989: David Walsh founded Bre-X Minerals Ltd. in 1989 as a subsidiary of Bresea Resources Ltd.
1993: Walsh followed the advice of geologist John Felderhof and bought a property in the middle of a jungle near the Busang River in Borneo, Indonesia.
1994: Initial drill results were encouraging, and the drill program was ramped up.
1994: However, it was the project manager, Michael de Guzman, who was filing gold from his wedding ring and mixing the flakes in with the crushed core samples.
De Guzman used realistic ratios of gold to rock to not set off alarm bells, and to keep project going forward.
Over the next 2.5 years, de Guzman would buy $61k of panned gold from locals to use in salting.
Independent auditors that were sent in by large institutional investors found that the panned gold had rounded edges, but de Guzman explained it was because of “volcanic pool” theory.
De Guzman, Felderhoff and Walsh sell off a small portion of their options for $100 million
1996: Bre-X hits a snag with the Indonesian government, who claimed that Bre-X was not playing by the “rules” of the country. Bre-X’s exploration permits are revoked.
1997: January fire at Busang destroys many of the sample records.
1997: After many major miners express interest in Bre-X, eventually a joint venture is reached that gives Indonesia 40% share, Bre-X 45%, and Freeport McMoRan a 15% share of interests.
1997: Freeport begins due diligence on deposit and starts to twin holes that were already drilled.
1997: Freeport reports “minor amounts of gold” in some holes, but not much else.
1997: On his way to meet the Freeport due diligence team, de Guzman mysteriously falls to his death 600 ft from a helicopter. Police rule it a suicide.
1997: Shares of Bre-X crash.
1997: Report confirms that there is no gold at Busang, and samples were tampered with.
Mining
Visualizing Global Gold Production in 2023
Gold production in 2023 was led by China, Australia, and Russia, with each outputting over 300 tonnes.
Visualizing Global Gold Production in 2023
This was originally posted on our Voronoi app. Download the app for free on iOS or Android and discover incredible data-driven charts from a variety of trusted sources.
Over 3,000 tonnes of gold were produced globally in 2023.
In this graphic, we list the world’s leading countries in terms of gold production. These figures come from the latest USGS publication on gold statistics (published January 2024).
China, Australia, and Russia Produced the Most Gold in 2023
China was the top producer in 2023, responsible for over 12% of total global production, followed by Australia and Russia.
Country | Region | 2023E Production (tonnes) |
---|---|---|
🇨🇳 China | Asia | 370 |
🇦🇺 Australia | Oceania | 310 |
🇷🇺 Russia | Europe | 310 |
🇨🇦 Canada | North America | 200 |
🇺🇸 United States | North America | 170 |
🇰🇿 Kazakhstan | Asia | 130 |
🇲🇽 Mexico | North America | 120 |
🇮🇩 Indonesia | Asia | 110 |
🇿🇦 South Africa | Africa | 100 |
🇺🇿 Uzbekistan | Asia | 100 |
🇬🇭 Ghana | Africa | 90 |
🇵🇪 Peru | South America | 90 |
🇧🇷 Brazil | South America | 60 |
🇧🇫 Burkina Faso | Africa | 60 |
🇲🇱 Mali | Africa | 60 |
🇹🇿 Tanzania | Africa | 60 |
🌍 Rest of World | - | 700 |
Gold mines in China are primarily concentrated in eastern provinces such as Shandong, Henan, Fujian, and Liaoning. As of January 2024, China’s gold mine reserves stand at an estimated 3,000 tonnes, representing around 5% of the global total of 59,000 tonnes.
In addition to being the top producer, China emerged as the largest buyer of the yellow metal for the year. In fact, the country’s central bank alone bought 225 tonnes of gold in 2023, according the World Gold Council.
Estimated Global Gold Consumption
Most of the gold produced in 2023 was used in jewelry production, while another significant portion was sold as a store of value, such as in gold bars or coins.
- Jewelry: 46%
- Central Banks and Institutions: 23%
- Physical Bars: 16%
- Official Coins, Medals, and Imitation Coins: 9%
- Electrical and Electronics: 5%
- Other: 1%
According to Fitch Solutions, over the medium term (2023-2032), global gold mine production is expected to grow 15%, as high prices encourage investment and output.
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