Timberland Case

Bre-X started as a small mining company that was an offshoot of Bresea Resources,

started by David Walsh. Bresea was named by combining David Walsh's sons' names,

Brett and Sean. Bresea was shortened to Bre for the new company and the X was added

to represent exploration. In 1989 Bre-X Minerals was formally incorporated and was

listed on the Alberta Stock Exchange. From 1989 to 1993, the stock price for Bre-X

stayed within the ten- to thirty-cent price range. In 1992 Walsh had to declare personal

bankruptcy because he owed more than $60,000 on fifteen different credit cards. However, the luck for Bre-X would change in 1993 when Walsh contacted an old friend,

John Felderhof. Felderhof was a Dutch geologist who recommended to Walsh that Bre-X

consider acquiring the mining rights to some land in Indonesia. Felderhof claimed

that the land in Busang, Kalimantan, had the potential to yield significant results. In

May 1993 Bre-X acquired 475,000 acres for just more than eighty thousand dollars.

Fe1derhof was hired by Bre-X to be in charge of the mining aspects of the operation while Walsh would address the strategic and financial issues of the company, including promoting Bre-X stock. By 1994, Fe1derhof and other Bre-X employees began claiming that there were large gold deposits on the Bre-X land. In December 1994 Bre-X stock had climbed to more than $2.80 per share.'

By November 1994, Bre-X started to put a quantifiable measure on the gold deposit by stating that it had found a good reserve estimated to be more than two million ounces. This estimate would increase to two hundred million ounces at the peak of the

scandal. If the two hundre