"What happened to me could happen to anybody," John Felderhof, a former geologist and senior vice-president at Bre-X Minerals, told a small group gathered in a seminar room at the recent Prospectors and Developers Association of Canada convention.
"Do I know what happened at Busang? My answer is no. Do I believe there is commercial gold there? Yes I do. Did Michael de Guzman commit suicide? Most likely not; it's much easier to take sleeping pills than jump out of a helicopter."
Felderhof, who lives in the Philippines with his second wife, attended the annual mining convention in Toronto in support of a start-up company called Benchmark Six, which publishes detailed consumer reports that offer the mining industry a way of benchmarking assay laboratory performance.
The reports compare performance between laboratories and track changes within laboratories. They contain independent assessments and provide key measures of performance beyond accuracy and precision, including sampling costs and turnaround times, success rates in meeting sample preparation specifications, and frequency of sample mix-ups.
"If your company releases to the public any information that is false, you must show you took all measures to prove information in your work was accurate should you be challenged," Felderhof explained. "I really truly believe Benchmark Six will be vital."
After many years of litigation, Felderhof was acquitted in July 2007 of all eight charges of insider trading against him under the Ontario Securities Act in the Bre-X gold mining fraud. But the ordeal has shattered his career.
"Since the demise of Bre-X, I've been in continuous litigation for thirteen years," Felderhof said. "The OSC (Ontario Securities Commission) interrogated me for two weeks. I have given 160 days of testimony and I was found not guilty on all eight charges."
When Freeport-McMoRan Copper & Gold (FCX-N) said that it couldn't duplicate Bre-X's our results it "came as a shock to me," he continued.
"We had done 120,000 metres of drilling, demonstrated visible gold, and completed a prefeasibility and an interim feasibility study. We also had had a ten-day audit in 1996 that said exploration was being carried out at a very high standard. And seventy international mining companies had visited us; some of them twice."
Bre-X started exploration at Busang on the Indonesian island of Borneo, in March 1993, and in October 1995 the mining company announced that it had discovered significant amounts of gold. Its stock soared to $280 per share in 1996, but investors lost around $6 billion when the company collapsed in 1997 after the gold samples were found to have been salted.
Benchmark Six's president, R. Mohan Srivastava, who worked on Felderhof's case for the better part of a decade against the OSC charges, admitted that his decision to invite Felderhof to speak on behalf of the company had been controversial.
But he said Felderhof's case illustrated better than any how important it was for the mining industry to have data reliability and an independent monitoring system to oversee laboratories and how they perform.
"There's a need to sort fact from fiction. John's story is an interesting one (and demonstrates the gap between) what we think is true and what is actually true.
"For him to be left carrying the bag for this massive failure was unfair. It was a rough ride."