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De Guzman was born in the Philippines. He was married, with six children. He is the chief geologist for Bre-X and was en route to the huge Busang deposit, which he discovered in 1992, from a prospectors conference in Toronto last week.

”This is still a small company and a tragedy like this hits you right in the stomach,” said Walsh, who was also at the conference.

The incident prompted speculation on Wall Street and Bay Street over whether de Guzman was pushed, jumped or fell.

”One would have to be Sherlock Holmes to figure this one out,” said John Ing, president of Maison Placements Canada Inc. in Toronto.

”It’s another twist in the ongoing saga. It’s very curious.”

”It’s tragic but I don’t think it’s a material event,” said John Pyper, an analyst at Deans Knight Capital Management in Vancouver.

De Guzman was part of the team with fellow geologist John Felderhof, now vice-chairman of Bre-X, that discovered the deposit the company says might hold up to 200 million ounces of gold. Mining analysts call it the gold find of the century.

De Guzman recalled in a recent interview with Far Eastern Economic Review trekking 30 kilometres with all his gear on to the Busang site and spotting the yellowish volcanic rock.

”My brain was dead at the time because I had done a difficult five-kilometre traverse,” he said. ”But I wrote the words Check It Out.”

After later tests, he added the word: ”Checkmate.”

As reports about the Busang riches grew, it attracted the attention of almost every major gold company in the world.

Last fall, Indonesian officials ordered a shotgun marriage between Bre-X and Toronto-based Barrick Gold Corp. to put Busang into production.

The deal was never completed but, amid government threats it would seize all of Busang, Bre-X struck a production deal with New Orleans-based Freeport McMoRan Copper and Gold Inc.

The company’s stock price tumbled after Walsh announced that Bre-X would receive no compensation when its share of Busang was cut to 45 per cent from 90 per cent as Freeport took 15 per cent and various Indonesian entities took 40 per cent.

Photo by Postmedia Archives

Nervous investors pound Bre-X shares

By Calgary Herald and Herald wire services

March 22, 1997 — Investors mercilessly pounded shares of Calgary’s Bre-X MineralsLtd. Friday, after an Indonesian newspaper reported the company’s Busang gold discovery may not be as large as estimated and may not be worth mining at all.

The report came two days after Mike de Guzman, Bre-X’s top geologist at Busang, died in a fall from a helicopter. A company spokesman said de Guzman committed suicide after being diagnosed with hepatitis B. He was also suffering from chronic malaria.

More than nine million Bre-X shares changed hands Friday as rumors spread that de Guzman, 41, had jumped when he learned of concerns over the size of the Busang deposit.

”So far these are just unsubstantiated rumors, but it’s easy to understand why investors are nervous,” said Richard Cohen, a mining analyst with Goepel Shields in Vancouver. ”There are billions of dollars at stake here and we’re being hit with one thing after another.”

Bre-X’s share price slumped $2.25 on the Toronto Stock Exchange to close at $15.20 after a report in a Jakarta newspaper said Freeport McMoRan Copper & Gold Inc. has doubts the Busang find holds 70.9 million ounces of gold, valued at about $25 billion US.

The report cited an unnamed source close to the companies who said he had seen a Freeport study indicating the deposit could fail to produce an economical gold mine.

Trading in Bre-X shares was halted Friday morning at Bre-X’s request when its shares went into freefall.

Bre-X issued a news release, which said officials at New Orleans-based Freeport confirmed to Bre-X president David Walsh that ”they are still conducting their due diligence at the Busang site in East Kalimantan, Indonesia, and have not commented on the progress, to the press, in this regard.”

Bre-X did not respond to calls from the Herald.

Freeport spokesman Garland Robinette said the drilling program to evaluate the size and exploitability of Busang — known as due diligence — is incomplete. He said Freeport, which has a 15-per-cent interest in the deposit, as well as control over how it is developed, continues to fulfil its legal obligations by checking out the find before taking it over.

He would not comment further.

Freeport can walk away from the deal if the due diligence indicates the project will not produce what was originally estimated, said Kerry Smith, analyst at First Marathon Securities Inc.

Analysts said it would be inconceivable that de Guzman’s fall from a helicopter into the swampy Indonesian jungle would be due to irregularities in the sampling program at Busang.

”There are these false pictures being painted behind the tragedy,” said Dorothy Atkinson, senior mining analyst at Whalen, Beliveau & Associates Inc. in Vancouver.

”I think it’s just a totally false article based on the personal tragedy of de Guzman.”

However, Cohen said it is difficult to understand why Freeport didn’t simply issue a statement stating the allegations were false, and end the speculation.

Kilborn Engineering Pacific Ltd. of Vancouver, which did the original assessment of Bre-X’s drilling and assay results said Friday that it stands by its findings.

The company has estimated the Busang deposit contains 70 million ounces of gold, although Bre-X’s chief geologist, John Felderhof, has since said the discovery could contain a staggering 200 million ounces.

”It’s a very viable ore body,” said Wilf Pickles, Kilborn Engineering vice-president and general manager.

This is just the latest in a series of events in the rags to riches story of Bre-X.

As the news spread last summer that the company had possibly found the largest gold deposit in the world, almost every major gold company began plotting to gain a piece of the action.

Last fall, Indonesian officials ordered a shotgun marriage between Bre-X and Toronto-based Barrick Gold Corp.

The deal was never completed and amid government threats it would seize all of Busang, Bre-X struck a surprise deal with Freeport.

”When the story of Bre-X is written, you won’t know what part of the library to find it — under . . . mystery or intrigue,” said Cohen.

The many conspiracies about Bre-X

When Bre-X went up in flames, the conspiracy theories took off. Even in the relative infancy years of the Internet, tales of what might have happened to the gold, the fortune and the key players spread like mad. Here are some of theories investors came up with:

De Guzman Lives: In this popular yarn, Bre-X geologist Michael de Guzman — known as Big Boss by underlings — fakes his own death and takes off to South America with his millions. Like Bigfoot, this story is supported by occasional, but unproven, sightings.

Filipranos: As if plucked from the pages of a Mario Puzo novel, believers of this theory say the whole Bre-X hoax was cooked up by the Filipino mafia, which gets rich on the soaring stock. In the end, de Guzman is killed to keep him quiet.

Goldfingered: In his day, Indonesian President Suharto was every bit as powerful as a Bond-movie villain. In this tale, Suharto — who has only one name, like Goldfinger — orchestrates Bre-X’s collapse by actually staging lousy test results in 1997. His government then seizes control of the huge gold deposit.

Soldiers of misfortune: Popular with those who didn’t trust Suharto’s Indonesian military, it purports soldiers kidnapped and tortured de Guzman for information about Busang’s gold. When they were done, they dumped the body in the jungle. Rumours include supposed rope marks on de Guzman’s corpse.

Kingpin: David Walsh an innocent pawn? Not for believers of this theory. They say Walsh didn’t actually die of a brain aneurysm in 1998. Instead, the Calgary promoter faked his death and is living the high life elsewhere — maybe with Michael de Guzman.

Gold nuggets: A digest of Bre-X facts

For Your Eyes Only was the name of the Toronto strip bar where Bre-X geologist Michael de Guzman proposed to one of the dancers days before he fell from a helicopter.

Before Bre-X Minerals moved into its red-brick office in Calgary’s Kensington area in 1996, the company was run out of the Walsh family home in Varsity.

Minerals moved into its red-brick office in Calgary’s Kensington area in 1996, the company was run out of the Walsh family home in Varsity. David Walsh’s father and grandfather were both stockbrokers.

Walsh’s first business venture was Bresea Resources, a junior exploration company named after sons Brett and Sean. In 1989, he launched Bre-X . Bre stood for Bresea, and X was short for exploration.

. Bre stood for Bresea, and X was short for exploration. Before Bre-X , vice-president John Felderhof‘s claim to fame was his co-discovery of the massive Ok Tedi copper-gold mine in Papua New Guinea in the late 1960s. Ok Tedi, which was developed years after it was found, is considered by many people to be an environmental disaster.

, vice-president John Felderhof‘s claim to fame was his co-discovery of the massive Ok Tedi copper-gold mine in Papua New Guinea in the late 1960s. Ok Tedi, which was developed years after it was found, is considered by many people to be an environmental disaster. Once a penny stock, Bre-X ‘s share price peaked at $286.50 on the Toronto Stock Exchange, with a total capitalization of more than $6 billion.

‘s share price peaked at $286.50 on the Toronto Stock Exchange, with a total capitalization of more than $6 billion. If Bre-X ‘s gold claims had been real, the company would have had roughly eight per cent of the world’s resource.

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