Business Vs Science: A Dash Of Gold

Lab results are usually boring documents of jargon and numbers that only experts can appreciate.

So when would business people and investors be "excited" about scientists and their lab results?

When the scientist is a geologist, and the lab results are about the amount of gold deposits at a site.

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In 1993, geologist Michael de Guzman, project manager of Bre-X Minerals Ltd, discovered some gold near Busang River in Kalimantan, Indonesia.

Estimates of the gold deposits gradually rose from 2 million ounces to a massive 70 million ounces (~1984 tonnes), and consequentially Bre-X expanded from a penny stock into a 6-billion-Canadian-dollar company with a peak stock price of CAD $286.50 (over 10,000% increase in two years!)

Then, in 1997, the company collapsed. Bre-X filed for bankruptcy and billions of dollars of investor funds went up in smoke.

And the term "Bre-X" became synonymous with one of the biggest mining frauds in history.

Check out this documentary for a quick (and slightly over-dramatized) overview of the entire affair:



Masterminds - Fool's Gold Part 2 of 3

Masterminds - Fool's Gold Part 3 of 3


To me, two segments from the documentary are especially interesting -

1. Andrew Willis: "There was always some science backing up this fraud."

2. Narrator :"For years, de Guzman struggles for recognition in an industry dominated by large American mining companies."

Andrew Willis: "Mike de Guzman knew he was smart, he had fabulous marks, he had an engineering degree, but he never got a great job, he never got a crack at a great job. It's very difficult for the Filipinos, even with extremely good engineering training, to get senior jobs with the big mining companies."

Narrator: "While exploring the jungles of Borneo, de Guzman devises a plan to make himself rich. Unable to get the support he needs to find a gold mine, he decides to invent one."


Here's another interesting exerpt from an article entitled "The mystery of Michael de Guzman" -

3. By 1993, de Guzman was heading up the site for Walsh's Bre-X Minerals as the company's exploration manager in Indonesia.

At one point, it appeared as though the Canadians were preparing to pull the plug on the expensive -- and fruitless -- exploration.

De Guzman pleaded with Felderhof for more time and soon, Busang's drilling results turned up stunning levels of gold.

"We almost closed the property," de Guzman told Fortune Magazine in 1997, before the scandal erupted.

"In December 1993, John said, 'Close the property,' and then we made the hit."

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When business collides with science, when one person's ambition is repeatedly met with denied opportunities and rejection, when desperation coincides with brilliance and creativity...

Who can predict what happens next?


Would you like to know more?

About the Bre-X scandal:
- The mystery of Michael de Guzman (Canada.com)
- Stranger than Fiction: The Bre-X Gold Scandal (CBC Digital Archives)

About other cases of fraud:
- Scientists Who Cheat