Bre-X Geologist Says Mine Might Contain Gold - Greatest Fraud in Canadian Mining Industry History Still Making Headlines

[September 17, 2007] TORONTO -- Ending a decade-long silence about the Bre-X scandal, John Felderhof has offered to go back to the company's infamous Indonesian mine to determine whether it contains gold.

"I can only hope that one day someone will go back and re-evaluate the property," the former Bre-X geologist wrote in a Sept. 12 letter, which his Toronto lawyer Joe Groia sent to reporters on Monday. "I remain ready and willing to help in any way that I can."

But Strathcona Minerals Services Ltd. -- which wrote a report blasting Bre-X's mineral testing program and warned of an unprecedented fraud - made "sweeping generalizations" that destroyed any chance to "determine the true extent of the ... deposit" at Bre-X's Busang property, Felderhof said.

Groia backed up his client, saying that Strathcona never tested survey results at the so-called central zone, where local miners were digging when the Canadian lawyer sent a survey crew there about six years ago.

Strathcona's president Graeme Farquharson took exception to Felderhof's comments, arguing that the mine has no real value.

"That's the position we still hold," he said in an interview Monday. "I'm just annoyed that he'd want to stir up the hornet's nest again. He has his liberty. I'm curious as to why he felt the need to issue a statement like this."

Meanwhile, the two-page letter took a swipe at the Ontario Securities Commission and warned that no amount of regulation could have prevented the fraud that wiped away more than $6-billion worth of investors' money.

Felderhof, the only former Bre-X official to ever face criminal charges, was acquitted of insider trading this summer after a trial that dragged on for six years.

"I have always maintained, and now the court has found, that the tampering that took place at [the mine] was 'unprecedented in the history of mining,'" he wrote. "It is my firm belief that no amount of regulation can be put into place to prevent a sophisticated and well-planned fraud.

"I do hope that the next time a case similar to Bre-X comes along, the regulators and the Strathconas in Canada will take a good hard look at the facts before rushing to a hasty judgment, destroying whatever shareholder value might still be saved."

His comments echo those of Justice Peter Hryn, who cleared Felderhof on July 31 of insider trading and issuing false press releases about the amount of gold at Bre-X's Busang property.

In a 594-page decision, Judge Hryn said that the company's top geologist wasn't the only person to miss "red flags" hinting that the gold mine was a hoax.

In his last public statement on July 25, 1997, Felderhof dismissed suggestions that he should have been aware of the so-called red flags.

Thanking his lawyers and defence witnesses for their "courage in testifying on my behalf," Felderhof described the case as a "lonely, lengthy and difficult battle."

Here is the full article.

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