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Investors in Bre-X Minerals reacted quickly to news that the company's claimed gold discovery in Busang was a fraud. According to published reports in the Wall Street Journal, shares collapsed 97 percent to near-worthless levels in early May, from $3.145 to $0.85 (Canadian dollars) on the Toronto Stock Exchange. More than 58 million shares changed hands on the Toronto exchange in one day.
The frantic trading began when news of a recent independent drilling report showed only trace amounts of gold at Bre-X's Busang property in the Indonesian jungle. Bre-X, based in Calgary, Canada, had claimed the area held as much as 200 million ounces of gold.
The independent mining was conducted by Bre-X's consultant, Strathcona Mineral Services Ltd., which said its drilling results at Busang show "virtually no...