EDITORIAL AND OPINION — One for the history books — Strathcona bursts the bubble

We broke one of our own rules this week. The editorial staff of The Miner threw caution to wind and gathered up some loose change to buy an equity position in Bre-X Minerals. Normally, writers are not allowed to own shares of companies they write about, but it was decided that the shares were worth having for reasons other than collecting pretty wallpaper.

Mind you, having seen all those angry shareholders and vigilante lawyers lurking outside the Bre-X building in Calgary, we were not looking for a control position. And we will be responsible. The gold will not reappear in our next issue. We have full confidence in the worthlessness of the shares.

Our goal was to secure a few share certificates to frame and place in our offices to remind us — and future generations of reporters — of the Busang bust and the lessons to be learned from it.

Our only shock was that we had to buy at least 1,000 shares, which, at a total price of about $60, far exceeded the Loonies and twoonies to be found in the editorial department. The purchase was completed only after extensive negotiations with the advertising department and its deeper pockets, which resulted in a lopsided and unfair pooling of interest arrangement (considering it was our idea in the first place).

The share certificates, once obtained and hung for viewing, will serve as a permanent reminder that if something seems too good to be true, it usually is. That gold deposits do not grow as fast and as big as Busang without a lot of fertilizer. That it is not what they tell you, but what they don’t tell you that matters. That doing anything unconventional, such as not splitting cores, is a warning sign that should be heeded. That people generating rumors usually have an agenda rooted in either greed or gullability. That common sense and reason are the only tools we have for overcoming the trap of delusional thinking. That nature’s laws are subtle, but not malicious. That Seargent Friday was right when he insisted on “just the facts, ma’am.” And that when Graham Farquharson calls someone’s samples “invalid,” he means exactly what he says.

Farquharson, who heads up Strathcona Mineral Services, burst the Busang bubble when he reported the preliminary results of his audit program at the Indonesian property. His findings were definitive and unequivocal and settled the debate over the no-gold, lots-of-gold and some-gold theories. The only gold at Busang is the gold Bre-X used to salt its samples. While Bre-X shareholders were not happy about the news, Strathcona at least put at end to their weeks of nail-biting, indecision and nervous tension.

Strathcona initially believed that salting was unlikely, given the number of samples that were involved. But after reviewing the results of its work, as well as that of Bre-X’s potential partner Freeport McMoRan Copper & Gold, it became clear that virtually all of the gold in the samples submitted by Bre-X for assaying had originated from some other source. What was difficult for Strathcona — and the world — to accept was that the tampering occurred for so long, on such a scale, and with such precision, as to give assay results and subsequent resource calculations the appearance of being plausible.

While Bre-X’s conduct at Busang may tarnish the reputation of Canada’s mining industry in some quarters, the quality and soundness of Farquharson’s work provide a counterpoint that reinforces the industry’s integrity. Fortunately for Canada’s mining industry, there are many others with equally impeccable credentials and high professional standards. And we tip our hat to them.