Bre-X Minerals Ltd.

Posted: 27 Jan 1999

Date Written: January 16, 1999


Subject Areas: Investments. gold mining, securities fraud, securities regulation, financial analysts, emerging markets Case Setting: June 1997, in North America and Indonesia, after the collapse of Bre-X Minerals.


In June 1997, the Canadian financial markets were reeling from the effects of the Bre-X Minerals stock collapse. At one time, Bre-X claimed to have found the largest known gold deposit in the world. The company had been followed and recommended by some of the best known gold analysts in both Canada and the United States. At its peak, the market capitalization of Bre-X reached over C$6 billion, all from a company that had been a penny stock with a market capitalization measured in the thousands just four years earlier.

However, in March 1997, rumors that Bre-X had not found any recoverable gold staggered the company's stock. By early May, the rumors were confirmed, revealing one of the largest gold frauds in history. How could it happen? How could a company without a single, independent audit of its gold claim be worth billions? How could so many red flags, clear in hindsight, be ignored? Some began to question whether the investment community, particularly the sell-side analysts, had done adequate due diligence and if not, should they be held accountable for what had happened?

This case tells the story of Bre-X minerals, the company behind the largest gold fraud in history. Bre-X is a lesson in hubris. Behind the dramatic story is the subtle but important question of establishing trust in the financial markets. One of the purposes of the case is to get students to think about the validity of their sources of information. How much do students implicitly trust the information providers and the financial regulators when they analyze a company? Stock market frauds, both subtle and blatant, will no doubt continue to occur. Experience is perhaps the best way to avoid the unfortunate results of investing in such a company. It is hoped that the case will give students some exposure to the hard won experience of actual Bre-X investors thus enabling them to avoid similar situations in the future.

The case package includes the case with exhibits, a teaching note, a possible 80-minute teaching outline and a list of Bre-X websites.

JEL Classification: G31, G32, L70

Suggested Citation

Irvine, Paul J., Bre-X Minerals Ltd. (January 16, 1999). Available at SSRN:

Paul J. Irvine (Contact Author)

Neeley School of Business ( email )

Fort Worth, TX 76129
United States

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