It just dawned on me there must have been a lot of new exploration work done in the Busang area way back when. Was anything found or followed up on? There cannot be no gold there can only be background. So what was background and what was above? Where is the closest mineable deposit of anything?
Back to Busang
Alfred Maliangga hunches over a bucket, one hand in a silvery soup of mercury and dirt, the other gripping a hose held together with rubber bands.
By The Calgary Herald May 29, 2007 Alfred Maliangga hunches over a bucket, one hand in a silvery soup of mercury and dirt, the other gripping a hose held together with rubber bands.
He's seemingly unconcerned, or unaware, the highly toxic mixture could kill him. Instead, Maliangga and a half-dozen other Indonesians are more interested in the recipe to make a fortune.
"There is gold here," says Robert Lomban, 26, who has patiently waited three months for a dime-sized bit of sparkling bullion to be produced by a primitive, illegal mining operation.
This is Busang 10 years after a $3-billion hoax called Bre-X Minerals unfolded. It is the centre of an unprecedented scam, the ideal location to manufacture a motherlode and sell it to voracious investors on the other side of the world.
Once described as a "geologist's dream," this is the far-flung place where the nightmare began -- the remote Indonesian jungle location where the Calgary-based company convinced 40,000 investors they'd struck an underground fortune.
Instead, it was a fake.
Now, a decade after the gold dust turned to ashes, locals still believe buried treasure lies beneath the jungle -- and they are eager to prove it.
Speculators like Lomban are running makeshift mining operations smack in the middle of this patch of rainforest. And other business people in this region are inviting Canadian investors back.
Known in the western world as Borneo, Kalimantan is the largest island in the Indonesian archipelago. It's rich with natural resources, described as "the land of hope" in an otherwise poor and developing nation.
East Kalimantan, the province where Busang is found, is dubbed the "national coffer" due to its vast reserves of oil and gas, coal, forests -- and gold.
Its population of nearly three million is diverse, including indigenous Dayaks who are split into ethnic sub- groups with their own customs and dialects. Those living near Busang have been touched by modernization and lost many traditions. The practice of tattooing and ear lobe stretching, for instance, is dying along with the eldest members of the tribe.
All of this added to the allure of what was touted in 1996 by one Canadian analyst to be "the gold discovery of the century" and "an investor's political minefield" at the same time.
Benny Wahju believed.
The president of Inco subsidiary PT Ingold Management in Indonesia has tramped these jungles himself seeking riches.
"Limited access adds more to the mystery. It gives you a romantic touch," says Wahju, a former executive of the Indonesian Mining Association.
Indeed, he says Busang was the perfect place to start a tampering scheme of unprecedented proportions. Unscrupulous players salted exploration samples, adding outside gold to elevate the test results.
"It's remote. It's unknown. The government is corrupt. You can bribe everybody to justify your story," Wahju explains.
Ten years hasn't dulled the area's seductiveness.
Today, the journey to the heart of the jungle is just as gruelling as it was when Bre-X set up camp in 1993.
The nearest sign of civilization is about five kilometres away in the village of Mekar Baru, home to about 700 Dayaks. Even they are effectively cut off from the rest of the world, with no computers, telephones or mail service. An Indonesian travel agent won't entertain queries about visiting Busang.
The area, the agent reported, is restricted and travel there is deemed "high risk."
Villagers say they haven't seen foreigners since the nearby Bre-X exploration camp was closed in 1997 amid allegations core samples were sprinkled with outside gold from the river as well as shavings from jewelry.
In fact, no one has flown in by helicopter since the same year Bre-X exploration manager Michael de Guzman fell out of one in 1997.
Getting to Busang today is a tortuous journey that begins in Samarinda, the nearest major centre some 200 kilometres away as the crow flies. It can be done by barge, which takes about a week, or a combination of road and river travel that can be done in a day.
Overland travel takes five hours, and ends at a small village where the second leg starts by boat. It's another six hours upriver to Mekar Baru, and then a two-hour hike to the former Bre-X headquarters.
Canadian geologist Trevor Cavicchi made a similar trek a decade ago for Bre-X, his first job out of university.
The sights and smells of the jungle never left him. Leeches would worm their way into his boots. Even the tiniest of plants -- vines no wider than twine -- were hazardous.
"These little vines with hundreds of little hooks on them, they're barbed. And you had to be really careful," recalls Cavicchi, who lives in Okotoks.
It's unlikely the former Bre-X employee would recognize the place today.
The buildings situated in a once-cleared area are now hidden, reclaimed by the jungle.
Coloured rocks that once spelled out Bre-X's name on a hillside are gone, as are the roofs of the concrete-walled offices where de Guzman once barked out orders.
In an incredible five years in the mid-1990s, a bustling business centre was built by the Canadian firm at Busang.
"When we first arrived, there was just old shacks, rat houses made from wooden (planks)," senior Bre-X geologist Cesar Puspos once told forensic investigators, who later alleged he was a key conspirator in the tampering.
Many local villagers worked at the company during Busang's glory years. In fact, they had pegged their future on the upstart mining company, which promised to build a secondary school and a cistern for well water.
Even they were taken by the fraud.
However, looking back, there were signs something was wrong early on.
Drilling operator Ian, 34, remembers a yellow rock being pulled from the ground in 1995.
The sample was hidden away in a bag. The drilling hole was filled in.
"I thought it was very strange," says Ian, who like many Indonesians goes by one name. "Then after Cesar closed the hole, they signed it with a yellow flag."
After that, the area was closed. Ian was sent to work farther away, in an area known as Busang II. The stone he pulled from the expanded area was green.
"Such rock has no gold," he says through an interpreter.
Yet, that same year, Bre-X declared Busang contained one of the biggest gold deposits in the world.
Former vice-president John Felderhof once speculated there could be as much as 200 million ounces of gold at Busang.
Isolated from the outside world -- and unaware of the stock market fever surrounding the find -- Ian sensed trouble.
"I hoped Busang or Bre-X would still do exploration, but the fact was they manipulated the data," he says at his village, taking a long pull on a cigarette.
"But why did they do it?" he asks.
"Why?"
Even today, locals believe gold is in nearly every river on this island, as well as the mountains, where the most precious rocks are found deep underground.
River panning is one thing; extracting gold from the land is another story.
Processing material pulled from Busang is even more difficult than getting there.
On this day, Lomban and his co-horts cook up a tiny bead of the shiny bullion after three months of relentless digging by hand to a depth of 30 metres.
The material was bagged and hauled down the mountain, along a slippery footpath about 500 metres from the former Bre-X camp headquarters.
Today, the soil sparkles in the Indonesian sun with flecks of pyrite, better know as fool's gold.
It's 32 C. With near 100 per cent humidity, a cotton shirt melts to the skin like Saran Wrap.
It takes several hours hours to transform a bag of dirt into a bit of bullion, a process that will be repeated many times.
"It's very simple," says Hasyim Asyari, who earns the equivalent of $250 per month to run the operation for the Dayak villager who owns it.
It's hardly effortless. Indeed, the process of extracting invisible bits of gold is back-breaking.
The soil is placed in six drums connected by large rubber belts to a wobbly wheel.
A gas-powered generator rotates the barrels. A steel pipe inside each drum crushes the material, separating dirt from rock.
Then, the recipe to make gold takes over.
Liquid mercury is added to bind the gold. Water washes the mixture, leaving a small amount of sediment which is then filtered through a handkerchief.
The tiny nugget that remains is placed under a blowtorch to burn off impurities.
What's left is worth about $50 when it's sold in Samarinda to a dealer.
Since this rudimentary operation was set up in 1998, workers say about 10 kilograms of gold have been produced.
There used to be four similar sites in the area. Two have shut in recent years.
Despite the Bre-X trickery, there are still those who believe massive amounts of gold could kickstart a commercial mine in the jungle.
Felderhof says those who declared Busang lacked gold, causing the company's stunning collapse, were "inept."
He's not alone believing in the area's potential. Busang is still a mystery, says Ahmad Syakerani of PT Askatindo Aneka Karya in Indonesia, an original partner in the Busang area.
Syakerani contends there is gold, but a deeper question remains: How much?
"That is the problem," says Syakerani. "If there is someone who was interested to continue the Busang project, please come to Indonesia. Do not hesitate, because there is gold at that area.
"We would say many thanks if there is (someone) from Canada to invest again."
swilton@theherald.canwest.com
Mining for Gold With Bare Hands
Four rudimentary gold mining operations were set up at Busang after Bre-X Minerals collapsed and closed its doors. This trommel operation, called "common people mining" by the locals, has been operating since 1998.
Today, gold is being mined from the ground in small amounts.
It's a back-breaking process that takes several hours and will be repeated many times. Here are the steps:
1. Earth pulled from a depth of 30 metres is put into six drums along with a steel pipe which separates the soil from rock. The material is rolled around for about two hours.
2. Quick silver is added to the drums. The highly toxic liquid mercury binds together the flecks of gold separated from the rock. The mixture inside churns for another 20 minutes.
3. The drums are emptied and a long, slow process of filtering occurs. The silvery soup is poured into buckets and washed over and over by hand until there's nothing left but a fine sediment. The sediment is poured into a handkerchief and all the liquid is wrung out.
4. A silver-coloured ball is placed in a tiny container and a white, powdery chemical is sprinkled on top. A manual blow torch, operated with a foot pump, burns off impurities and exposes the bullion. The mine workers say the tiny 3.5 grams of pure gold will be sold to a dealer for about $50.
-- Suzanne Wilton, Calgary Herald
Studying the Hoax: Theories on How The Bre-X Tampering Scam Was Carried Out
Beginnings: According to an independent study by Toronto-based Strathcona Mineral Services, the salting -- or the act of adding outside gold dust to rock before it can be tested in a laboratory -- is believed to have begun as early as 1993 in Busang's central zone using a combination of gold and copper. The scheme later became more sophisticated, relying on finer- quality river gold obtained from local Dayak panners.
Open Bags: Canadian geologists who worked for Bre-X said it was routine for open bags of exploration core samples to pile up in a billiards room at the company's office in the Indonesian city of Samarinda, prior to being shipped to a testing lab in nearby Balikpapan.
Odd Practice: It is virtually unheard of in the mining industry to open core sample bags, due to the possible risk of contamination, but witnesses say senior geologist Cesar Puspos defended the practice as necessary in order to maintain the quality of the rock and prevent bag breakage.
Job Strategy: Strathcona president Graham Farquharson believes the hoax began as a "job preservation strategy" that spiralled out of control.
"The larger it got, the more difficult the exit plan became," he says. "When it started, I don't think anybody envisioned that it would grow into the humongous enterprise it became."
Laying Blame: Forensic Investigative Associates -- retained by Bre-X in 1997 to look into the scheme -- directly blamed geologist Michael de Guzman. FIA alleges the Bre-X exploration manager instructed Puspos, his right-hand man, and a handful of other trusted conspirators to salt core samples, likely late at night when no one else was around the Samarinda office.
-- Tamara Gignac, Calgary Herald
The Quest for Gold
For thousands of years, humans have searched for the most precious of metals
- Gold cups and jewelry made as early as 3500 BC have been dug up in Mesopotamia (now Iraq).
- The pharaohs of ancient Egypt wore garments made with thin threads of gold. Some fabrics had up to 500 gold threads per inch of cloth.
- During the Middle Ages, alchemists tried to convert other metals such as lead into gold, laying the foundation for today's chemistry.
- European exploration of the Americas was fuelled by reports of gold ornaments worn by native American people in Central America, Peru and Colombia.
- Throughout history, gold rushes have followed the discovery of most large deposits. In 1850, so many miners had laid claims in California that the territory had enough people to be admitted as a state. The Yukon gold rush in the late 1890s drew nearly 30,000 prospectors to the banks of the Klondike.
- The largest gold nugget still in existence was discovered in Victoria, Australia, in 1980. The Hand of Faith weighs 27 kilograms and is on display at a Las Vegas casino.
- The largest nugget ever found (again in Australia) weighed 78 kilograms; when melted down, it produced 71 kilograms of pure gold.
- The Federal Reserve Bank of New York holds the world's largest accumulation of gold.
The vault is 25 metres under the street and holds $147 billion US worth of gold.
-- Compiled by Andrea Caza, Calgary Herald
Bre-X: 10 Years Later
Gold, Deceit and Unfinished Business
Day 1: 10 years, 10 lives:
Lies were told. Blood was spilled. Fortunes were won and lost. The Herald looks back at the intrigue of Bre-X over the past 10 years through the eyes of 10 people from Calgary to Southeast Asia.
Day 2: The Mystery of Michael de Guzman: Did he jump, or was he pushed? How Michael de Guzman's infamous plunge from a helicopter to the Borneo jungle below started the precipitous Bre-X share freefall.
Day 3: The tribulations and trial of John Felderhof
The last man standing from the Bre-X inner sanctum, senior vice-president Felderhof awaits a July verdict on charges he violated Ontario securities law.
Day 4: The town of Bre-X millionaires
Gold fever swept through tiny St. Paul, Alta., creating many bullion-driven millionaires. Some sold their shares early and prospered. Others watched their fortunes evaporate.
Today: Back to Busang
It's exotic, remote and dangerous. But the Indonesian jungle is reputedly rife with gold, which made it the perfect place to pull off an unprecedented mining hoax.
Go Online:
For exclusive bonus material on Bre-X, including video, photographs and interviews, please log on to calgaryherald.com
- View a slideshow and exclusive video clips of the journey to Busang taken by the Herald's Suzanne Wilton and Ted Rhodes
- Click through our interactive map
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