Bre-X Gold Scandal

In 1995, the Canadian mining company Bre-X claimed a massive gold find deep in the jungle in the Busang area on the Indonesian island of Borneo. Bre-X had grown from a Calgary-based penny gold stock to a $6-billion company based on its claim to have discovered one of the world’s largest gold finds in the jungles of Busang, Borneo. Bre-X was a small company, so small that founder David Walsh initially ran it out of his basement. Bre-X Minerals collapsed in 1997 after the gold samples were found to be a fraud. It’s estimated that investors around the globe lost $3 billion.

Because of the artful way David Walsh promoted the stock, investors clamored for it, and much bigger mining companies competed aggressively to become Bre-X’s partner in the site, known as Busang. The Bre-X scandal is the subject of criminal investigations in Canada and Indonesia, though no one has been charged or arrested. In 1994, Walsh teamed with Filipino geologist Michael de Guzman who was producing crushed core samples that indicated Bre-X may have just purchased one of the largest gold deposits ever discovered. The initial estimates, based on the core samples, indicated that there might be more than 136,000 pounds of gold buried in them thar jungles, and this was only the beginning.

By 1995 the estimates had skyrocketed to over 2 million pounds, and by 1997 the estimate more than doubled, reaching almost 5 million pounds of rumored gold hiding just beneath the surface of the Borneo mine. All of this was based solely on de Guzman’s thousands of core samples. The end came just weeks after an American company, Freeport and Gold Inc., became Bre-X’s partner. Independent drilling by Freeport found that there was little or no gold at Busang. As it would turn out, Guzman, had been salting his core samples with gold dust, first with shavings from his own wedding ring and later with $61,000 worth of locally panned gold. In March of 1997, de Guzman was found dead in the heart of the jungle, supposedly having thrown himself from a helicopter. After de Guzman’s death (or disappearing act), things went downhill startlingly fast.


Thousands of individuals, investors and organizations lost their savings and pensions. The Bre-X scandal discredited the mining industry and Canadian stock market, yet no one was ever successfully prosecuted. Toronto Stock Exchange President Rowland W. Fleming refers to Bre-X as a “comet,” a once-in-a-lifetime scam that shows how even the most rigorous systems can be deceived by a big enough lie. It was a spectacular fraud and a warning example for investors and anyone contemplating trying to become rich that way. The IPO price of Bre-X was 30 cents per share in 1989 and the shares rose to highs of $286 in 1996. By 1997, the shares were worthless. Over the years that followed the scandal, the price of gold fell below $300 per ounce. The gold mining, financing and investment industries learned an expensive lesson from Bre-X as did many individual investors.

The scandal was so huge that Hollywood released a movie about the story behind Bre-X gold scandal. In the movie “Gold”, Bre-X became the Washoe Mining Corporation and the story moved from the concrete corridors of Calgary to the great state of Nevada. Walsh becomes Kenny Wells, played by, Matthew McConaughe, while a Venezuelan actor Edgar Ramirez playing the role of Michael Acosta (based on geologist Michael de Guzman). Gold stars Matthew McConaughey as a desperate prospector who teams up with a similarly eager geologist (Ramirez) on a journey to find gold deep in the uncharted jungle of Indonesia.

Watch the Gold on Netflix or Amazon.