The Bre-x scandal of 1997 awakened the mining industry from its slumber. Data had been fabricated to hoodwink prospective investors into believing that the project of interest was a pot of gold, while it was a dud. There was a realisation that the data gathered from exploration projects could no longer be taken for granted. Auditing was to be done at all levels so that robust data sets that are validated can be delivered for the best interest of industry, investors, governments and the range of other stakeholders who benefit from mining.
One of the groundbreaking developments in mineral exploration is the increasing obligation to apply best practice in reporting. Gone are the days when a mining house would deploy a team of in-house geologists to a site where the expectation was that they would always come back with news of a lucrative find. Then, there was trust in the data, its integrity was considered unquestionable and sacrosanct. The in-house geologists were feted as heroes who could find huge mineral reserves at all times – almost pulling a rabbit out of a hat, consistently.
The Bre-X scandal of 1997
Originally, the idea was premised on the thinking that mining companies could be trusted to self-regulate. However, this turned out to be naive, as it overlooked the fact data could be fabricated to present a project as viable to prospective investors. The Bre-X scandal of 1997 in the Canadian mining sector would change the assumptions forever.
Bre-X Minerals collapsed in 1997 after the gold samples were found to be fraudulent. Preposterously, Bre-X’s independent consulting company,Kilborn Engineering (a division of SNC-Lavalin of Montreal), estimated Busang’s gold resource to be approximately 71,000,000 troy ounces (2,400 short tons;2,200 t). The salting of crushed core samples with gold constitutes the most elaborate fraud in the history of mining. Following the revelation, Bret-X collapsed.
Change in reporting standards
This event elicited a groundbreaking change in international reporting requirements for mineral resources and reserves. It was a development that would occasion changes in the way data was gathered, stored and verified forever. Since then it has become imperative to apply a best practice framework to ensure that exploration projects are compliant with international expectations and standards.
New levels of transparency and compliance
The Codes developed under the ambit of the Committee for Mineral Reserves International Reporting Standards (CRIRSCO) underline new levels of transparency and compliance required. This requires auditing at all levels so that robust data sets that are validated can be delivered for the best interest of industry, investors, governments and the range of other stakeholders who benefit from mining. An independent consultancy can be engaged to provide a more confident and robust evaluation of projects.
