Wednesday, 15 August, 2007

by Mark Hawthorne
The Age - Business Day

LESSONS are obviously learned with much difficulty among Canada's junior miners.

Just a week ago, one of the biggest insider trading trials in Canadian history concluded in a Toronto courtroom — Bre-X geologist John Felderhof was acquitted of all charges, including that of issuing phoney gold estimates.

Back in 1997, the share price of Bre-X plummeted from $C28.17 to zero in a day, wiping out the company's market value of $C6.17 billion. Bre-X said it had found 200 million ounces of gold at Busang, in the jungles of Borneo. That claim turned out to be a hoax.

The Ontario Securities Commission says almost 30,000 ore samples from the Borneo site were tampered with, but it has been unable to pin the crime on any individual.

Former Bre-X chief executive David Walsh died of a brain aneurism in the Bahamas in 1998, aged 52. Company geologist Michael de Guzmant died in April 1997, after falling 240 metres from a helicopter while travelling to Busang.

Borneo police identified his body from fingerprints and said they found a suicide note.

Canada's Toronto Globe and Mail and Singapore's Straits Times have both reported that de Guzmant, who would now be 51, may be alive and living in Brazil. Others even suggest he's living in Bondi.

That left Dutch-born Felderhof, 66, as the last possible scapegoat for the OSC. Felderhof sold $C84 million of Bre-X stock just days before the company's collapse.

Judge Peter Hryn of the Ontario Court of Justice disagreed that Felderhof knew the gold estimates were false.

"The tampering at Bre-X was unprecedented," he said. "But there were no red flags that should have been apparent to Felderhof."

At least some red flags were picked up by junior Australian explorer Crossland Uranium Mines, which listed in July. Crossland holds exploration licences with Toronto-listed junior Centram Exploration, covering Chilling district and the Alligator Rivers region of the Northern Territory.

Last week Centram issued an exploration update to the Toronto exchange, claiming: "Alligator Rivers hosts over 300,000 tonnes of U3O8 (uranium oxide with an in-situ value exceeding $US60 billion at current prices) in medium to high-grade deposits similar to some of those in the Athabasca Basin of Saskatchewan."

Canada's Athabasca Basin supplies about 30 per cent of the world's uranium.

Centram duly sent the release to the Australian Stock Exchange — much to the horror of the Crossland board.

Within hours, a complete retraction of the uranium estimate had been made by Crossland to the ASX — aerial exploration of the claims has only just begun, after Centram came on board in late July.

Crossland's chairman is Robert Cleary and managing director Geoff Eupene. Both are veterans of uranium mining and worked on the Ranger Mine — and are said to be a little embarrassed by the claims of their new partner.