5 The Fabulous Bre-X Minerals

Minerals are the letters of the geological alphabet. They are the building blocks for rocks—mixtures of rocks that help us interpret the past. Minerals have a distinct composition , crystal structure, are solid, natural, and inorganic. Most are combinations of elements, such as halite (salt), NaCl, but a few are pure elements, such as copper and gold.

Gold. Of all the metals, it has been the one that means wealth, status, glory. Compared to gold, silver is an also-ran, relegated to making table knives and goblets. So when Bre-X Mineral announced that it had discovered the largest gold deposit in the world at Busang on the island of Borneo in Indonesia, a lot of people were suddenly interested—geologists and mining companies, stock brokers and investors. At first blinded by the glitter, only later did they realize that they had been taken by one of the oldest scams in the mining world—the salting of samples with gold, making the mine’s advocates look like fools with no gold. When the samples of the gold ore were finally examined by an independent lab, the faking wasn’t even well done. Some samples when examined under a microscope included shavings from gold jewelry. In two days, Bre-X stock dropped 85%, losing $3 billion in market value. Meanwhile, two Bre-X executives had moved to the Caribbean, and a key geologist had apparently committed suicide. How did things get to that point?

Bre-X Minerals was the unsuccessful company of David Walsh, started in 1989 and soon going bankrupt. Using his last $10,000, Walsh flew to Indonesia to meet John Felderhof, discoverer in 1968 of a large gold deposit in Papua New Guinea. Felderhof convinced Walsh to invest in some jungle property, hired a Filipino geologist named de Guzman, and soon drilling began for gold prospects. The first couple of holes showed no gold, and Walsh was ready to shut things down. Suddenly, things began to pick up, even though a dozen other companies had no luck previously. Felderhof claimed that the previous companies had looked in the wrong places, or too shallow, or with the wrong drilling techniques. Whatever. Soon, Bre-X claimed to have proven the existence of 71 million ounces of gold, worth about $25 billion, and Felderhof estimated that there were at least 200 million ounces present. Egizio Bianchini, stock broker and supposedly Canada’s top gold analyst, said “What most people are now realizing is that Bre-X has made one of the great gold discoveries of our generation.”

To produce such a huge deposit, Indonesia required that Bre-X partner with a large mining company. Freeport McMoRan of New Orleans, already in Indonesia and operating the world’s largest gold mine, won the right to develop the Bre-X mine. Freeport first undertook some of its own independent drilling, but no significant amount of gold showed up. Stock analysts who follow the mining industry were incredulous, some accusing Freeport of trying to drive down the Bre-X stock. As the possibility of the samples being salted began to be rumored, Bianchini, the gold analyst, weighed in with the statement to his clients that the rumors were “so preposterous, I am not even going to address the possibility.” An independent company, Strathcona Minerals, was hired to examine the Bre-X samples and drilled holes next to those of Bre-X and Freeport. After their study, Strathcona concluded, “the magnitude of the tampering with core samples that we believe has occurred and resulting falsification of assay values at Busang, is of a scale and over a period of time and with a precision that, to our knowledge, is without precedent in the history of mining anywhere in the world.” So much for the rumors being preposterous.

Even now, it’s not clear who is to blame for the salting of the samples. Walsh moved to the Bahamas and later died. Felderhof is in the Cayman islands. But an even more likely culprit, de Guzman, is dead, maybe, from jumping 800 feet from a helicopter into the jungle. I say maybe because when his body was found 4 days later, the face was eaten off.  Missing were his internal  organs, brain, and genitalia. A partial thumb print from mushy, decayed flesh plus a couple of molars are the basis for identification.  De Guzman carefully controlled access to the mine site. He and a fellow Filipino, Cesar Puspos, controlled the samples from the time they were collected until they were turned over to a down-river lab for analysis. Most likely, that window of opportunity was when the salting of samples occurred.

Meanwhile, the Canadian Mounties have called off their investigation.  With Walsh and de Guzman dead and Bre-X officers refusing to cooperate, the Mounties ran into a dead end. No one has been arrested or imprisoned. In the old days of the gold fields, someone would have gotten strung up. Today, we sue. A lot of angry investors want some of their money back. With $3 billion dollars lost on Bre-X stock, the investors want to know why their advisors encouraged them to get taken by the oldest scam of the gold fields. The lawsuits continue.

Notes on Basic Chemistry:

We’ve touched on geologic history and its role in shaping Iowa.
Now it’s time to focus in at the chemical level. The letters forming the words of geology are minerals. To understand minerals, we need to first understand atoms and elements.

Elements

Atoms are our basic building block of the physical world. The simplest model of the atom looks like the solar system, with the nucleus in the center and electrons orbiting around it. The nucleus has two types of particles in it, protons and electons, both much larger than electrons, as the sun is larger than the planet. Protons have positive charges. Neutrons are neutral. Electrons have negative charges. The number of protons determines the element. For example, carbon has six protons, nitrogen has seven, and oxygen has eight. The mass of the element is the sum of the number of protons and number of neutrons. For example, most carbon atoms have six neutrons to go with their six protons. 6 + 6 = 12 Thus, the mass of most carbon atoms is twelve. We write the number and mass of carbon as ¹²₆C.

Isotopes and Radioactivity

Though all atoms of an element must have the same number of protons, some have more or fewer neutrons. For example, carbon usually has six neutrons, as stated above. However, another well-known form is carbon-14, ¹⁴₆C, which has eight neutrons. However, 6 this heavier form of carbon isn’t stable—over time it breaks down radioactively into nitrogen-14, ¹⁴₇N.

The breakdown of a radioactive isotope occurs very regularly—half of the carbon-14 (the parent isotope) will become nitrogen-14 (the daughter product) in 5730 years, its half-life. In another 5730 years, three-fourths of the carbon-14 will have become nitrogen-14. And so on. Since carbon is incorporated into the tissue of living organisms, we can study their remains, using the change of the ratio of the stable carbon-12 to the radioactive carbon-14 to estimate the age of the remains. The limit of its usefulness depends on the sensitivity of the equipment we use to determine the relative carbon concentrations.  When we tell time, we use a variety of measures—years, days, seconds—depending on our need. Anthropologists often use carbon dating for things like determining the age of an old campfire from Native American ruins. A geologist is typically looking much further back in time (like using a calendar instead of a stopwatch) and uses radioactive isotopes like uranium-238, ²³⁸U, which has a half-life of 4.5 billion years. For more info, see [here.]

Bonding

Atoms combine together to form molecules, which may have very different physical properties than the elements themselves.
For example, Na (sodium) is an explosive metal, and Cl (chlorine) is a gas. They combine together to form the compound molecule NaCl (halite, common salt). The way in which atoms combine is determined largely by their outermost electrons—their valence electrons. Na has one, lonely valence electron that it is quite willing to give away. Cl has seven valence electrons but space for eight. Thus, it is quite willing to take the electron that Na wants to give away.
The way in which atoms bond takes four main forms:

Ionic bonds form like NaCl, described above, when atoms give away or accept electrons. An atom that does not have the same number of electrons and protons (balanced, with no net charge) is called an ion. In the case of NaCl, the charges are Na⁺ and Cl⁻, as the chlorine has taken a negatively charged electron from sodium. Thus, they have opposite charges, and they attract each other, forming an ionic bond. Because of the ions they form from attract opposite ends of the polar water molecule, many ionic compounds dissolve in water, like salt does.

Covalent bonds are strong, based on the sharing of electrons.  For example, carbon can either give or accept four electrons, allowing it to share electrons in long carbon chains, the building blocks of life. Pure carbon that is extremely heated and compressed becomes diamond, where the carbon is covalently bonded in three dimensions, giving diamonds their extreme hardness.

Metallic bonds are similar to ionic bonds, except the electrons flow freely in a soup of metal atoms, such as copper, Cu. No one electron is attached to any particular metal atom. Thus, if we push electrons in one place, they flow out somewhere else. This flow of electrons is electricity.

Weak intermolecular bonds form between molecules that may be bonded in other ways. Diamonds and graphite are both pure carbon, but diamonds are bonded covalently in three dimensions, while graphite is bonded covalently in sheets. Between the sheets, graphite is bonded with weak intermolecular bonds. Graphite is what your pencil lead is made of—there is no lead metal, Pb, in it. When you write, you are dragging sheets of graphite onto your paper.

Minerals  Minerals are specific types of chemical compounds. Their properties include the following:

solid: liquids don’t count as minerals.

naturally occuring: man-made solids, like cubic zirconia, aren’t minerals, though if they duplicate naturally occurring minerals, such as diamond, we often count them anyway.

having a specific composition: All minerals are formed from bonded elements in specific proportions and manner. The mineral galena is formed from aroms of lead and sulfur, bonded one-to-one as PbS. Quartz is formed from silicon (Si) and oxygen (O), with twice as many oxygen atoms as silicon, SiO₂

having a definite crystal structure: Just as it’s possible to connect Legos in multiple structures, atoms bond in a variety of forms, such as carbon forming both diamond and graphite, as discussed above. Temperature, pressure, and the presence of other elements can all affect which structure forms. And some solids, such as glass, don’t have a crystal structure at an atomic level. Glass is made from melted quartz, but it is cooled so quickly that crystals don’t have a chance to grow.  This accounts for quartz scratching glass despite being made of the same elements.

inorganic: Wood is a solid but not a mineral. Organic means something is, or once was, alive, or is derived from something that was alive. Gasoline is formed of organic molecules whose original source was microscopic living marine organisms. Only inorganic compounds can be minerals.