To All,
This is an interesting summary of the situation, I particularily like the part about Hasan being brought in and then negociating Free-Mac into the deal...seems like the dominos line up. Could this all be motivated by Indo interests after all? Upcoming Elections?
Bre-X's maverick founder dreamed of riches
Reuters Story - March 27, 1997 17:58
FINANCIAL MET US GDM CA GOL ID AU HOT MRG GB RESF CORA BXM ABX FCX V%REUTER P%RTR
By Darren Schuettler
TORONTO, March 27 (Reuter) - David Walsh, the maverick
Canadian bankrupt turned gold prospector now embroiled in a
worldwide mining controversy, always dreamed of striking it
rich.
Walsh, 51, has made millions of dollars and appeared on the
covers of national magazines since his exploration company,
Bre-X Minerals Ltd. , made its fabulous Busang gold
discovery in Indonesia.
"I'm nuts. I'm looking for the bucket of gold at the end of
the rainbow," the beefy stock promoter who lives in the
Bahamas, told a Canadian magazine recently.
The bubble burst on Wednesday when Calgary, Alberta-based
Bre-X admitted that the find in Indonesia once thought to be
the richest this century, might not even be economically
viable.
"I would really be shocked if we find out that there is any
funny business," said Jim Bentein, a veteran Calgary journalist
who has covered Walsh since Bre-X's early days as a penny stock
on the Alberta Stock Exchange.
He described Walsh as "a sophisticated trucker," who is as
comfortable having a beer and a smoke in a bar as he is in
financial circles.
"Don't misunderstand me. This is a sharpy. This is a guy
who has been a broker and tried to run up penny stocks before.
We're not talking about a babe in the woods here, but he
strikes me as a straight shooter," Bentein said in a telephone
interview.
As regulators sifted through the tangled Busang saga and
jittery shareholders dumped the stock, Walsh defended the
company's claims on Thursday and urged shareholders to ride out
the storm.
"Like all the other trials and tribulations that we've gone
through since discovering (Busang)...we'll be exonerated and
the property will stand as we've indicated," he told reporters
outside the company's head office in a toney section of
Calgary.
Walsh rose from rags to riches in less than four years.
Raised in a wealthy suburb of Montreal, Walsh followed his
father and grandfather into the stock business.
He joined a small trust company shortly after graduating
from high school. In 1976, he moved to brokerage Midland
Doherty Ltd. (now Midland Walwyn Capital Inc.) and rose to
vice-president in its institutional equity sales department.
In the 1980s, Midland moved Walsh to Calgary, but he left
the company shortly afterward to set up his own company, Bresea
Resources Ltd.
After dabbling unsuccessfully in oil and gas, Walsh
created Bre-X Minerals Ltd in 1989 and ventured into mining.
But by 1993, his exploration efforts had dried up.
He and his wife declared bankruptcy in 1993 after they had
accumulated almost C$60,000 ($43,800) in debt on 15 credit
cards.
"We had these claims which were worthless, and no money,"
Walsh told Reuters in an interview earlier this year.
Almost broke, he scraped together C$10,000 ($7,300) to
start exploring in Indonesia, pursuading friends to invest
C$200,000 ($146,000) for a stake in the area now known as the
central Busang in Indonesia's East Kalamantan province.
Walsh hit the jackpot with Busang and Bre-X quickly became
the darling of the world's mining community. "There's nothing
like success. Our other explorations have been zero. I had
never imagined it would be this big," he said.
Walsh, his wife and other company officials added more than
C$37 million ($27 million) to their bank accounts after they
sold Bre-X shares at prices ranging from C$24.40 to C$28.40
between August and October.
But the sales were controversial because they occurred
shortly after Bre-X learned that its preliminary license had
been canceled by the Indonesian government, a development Bre-X
did not reveal publicly until last October.
Last year, Bre-X was the target of an intense bidding war
as several heavyweight mining firms battled for control of
possibly the world's richest gold discovery.
Toronto-based Barrick Gold Corp. , armed with an
advisory board that included former U.S. President George Bush
and former Canadian Prime Minister Brian Mulroney, initially
dominated the negotiations.
Barrick's inside track ended when the government of
President Suharto brought in Indonesian businessman Muhammad
"Bob" Hasan in January.
Hasan swiftly brokered a deal that gave New Orleans-based
Freeport McMoRan Copper & Gold Inc. 15 percent of
Busang and the right to mine the project.
The arrangement left Bre-X with 45 percent, down from an
original 90 percent stake, and the rest to the Indonesian
government and two Indonesian companies.
Investors complained that Bre-X received nothing for
surrendering 45 percent of Busang, but Walsh said Bre-X never
owned 90 percent and shareholders were wrong to believe so.
Shortly afterward, Bre-X's stock started a downward spiral
as rumors swirled around the company and its grip on the
discovery.
The stock sank to an all-time low last week after an
Indonesian newspaper report said Freeport had doubts about the
size and viability of the deposit.
The rumors were fanned to fever pitch by the death, billed
as a suicide, of Bre-X chief geologist Michael de Guzman, who
fell from a helicopter en route to Busang last Wednesday.
Meanwhile, Walsh hinted on Thursday that the chaos
engulfing his company may have some other explanation.
"I personally believe there has been a hidden agenda coming
up for about 10 months now and I guess we'll just have to play
this out," he said.
Thoughts? |
