Wednesday, February 29, 2012

Bre x - Salting the mine Gold Scam

October 1995: Bre-X Gold Mine

The Bre X Gold mine scandal used the trick of Mine Salting.

This has become the most notable example of this technique. “Salting the mine” was commonly used in old prospecting days.

In the original gold scam, the perpetrators would “salt” a non-producing mine with some gold dust and a few gold nuggets in order to make it appear to be quite literally a "Gold Mine."

Investors would be lured in with promises of huge wealth, and encouraged to “act now” in order to beat other investors when the news broke.

This was the tactic used in the case of Bre-X gold mine in 1995.
The mine site had been “salted” with what turned out later to be grains of gold from rivers located elsewhere in the world, gold jewellery shavings and finely crushed ore.

Despite locals never finding gold in the river, Bre-X announced to the world in 1995 that it had hit the mother lode and used their “salted mine” site as evidence. 

Thousands of people were caught by this trick and investors lost a fortune

Just one, former Bre-X geologist John Felderhof, was ever prosecuted.

He was acquitted in 2007 due to his insistence that, despite the “lucky” timing of him selling off his Bre-X shares, he had no knowledge of “any discrepancies” with the analysis of the find.