8 December 1996. The whole world was mesmerised by a penny stock company based in Alberta, now worth US $6 billion — from nothing. Anecdotes abounded in small towns and villages across the province of burgeoning millionaires on every street, thanks to stock they’d once bought for pennies now worth millions.
A few years prior, my friend Hamid ran an Indian restaurant in Inglewood, Calgary. David Walsh, the president and promoter of a start-up corporation called Bre-X Minerals, would eat there regularly but couldn’t pay off his delinquent tab. “Hamid, let me issue you 10,000 shares in my new company,” he said.
Suddenly, word spread: the chief geologist, John Felderhof, along with his bag carrier, Michael de Guzman, had discovered the largest deposit of gold in the world — at Busang, Indonesia. Within three years, Hamid’s $2,000 tab was now worth $2,650,000. He, like most fellow Albertans, held on — believing the stock would soon double in value, especially with two of the world’s largest mining companies eyeing a takeover.
The frenzy wasn’t limited to investors. Financiers and promoters splashed out millions on quickly setting up penny-stock companies, then hired shoals of geologists and engineers to explore the “region of fire”, which included the southern tip of the Philippines.
And what was my family — including two boys, one aged three and the other eighteen months — doing? We were in the final stages of losing our new 5,000 sq ft home and all our assets, due to bank guarantees on half a dozen businesses about to go bankrupt.
On the very day we received our final notice to vacate — with nowhere to go, scraping pockets and piggy banks for coins to feed the kids (our power and cable already cut off) — I went out to meet a client.
The man was examining a large, detailed map. As I entered, he asked, “Your wife’s Filipina, isn’t she?”
I looked surprised. “Yes. Why?”
“Do you recognise this island on the map?”
“It’s Mindanao. My brother-in-law is head of security there.”
“We hired a Filipino engineer to survey the area. He believed there was an abundance of gold on a mountain in Surigao, on the island’s north side. It faces Busang across the sea and shares the same topography.
Unfortunately, the engineer accepted a better offer elsewhere, and we lost him. Can you go instead?”
“I don’t speak Tagalog. My wife does — and she’s her brother’s favourite. If you want me to proceed, you’ll have to pay for my wife and toddlers to accompany me.”
Within two days of receiving our eviction notice — allowed only a suitcase each, everything else to be left for judicial auction — we were flying business class to Hong Kong, then to a luxury resort in Cebu before finally landing in Davao City. We were met at the airport and treated like royalty. The less than $10 we had found in coins had turned into business credit cards with $20,000 limits and $20,000 in cash up front for the month’s service. I handed out metal business cards that read: “Vice-President, Southeast Asia Acquisitions, GEM Corporation” (GEM stood for Gerald Edward Miller, President).
It took ten days to secure armed bodyguards, local engineers, camp staff, and provisions. My wife stayed in Davao. Her brother accompanied me to the site. In the middle of the jungle, we were welcomed by a village of houses on stilts beside a lake — neon green in colour.
“How come?” I asked.
“The whole village digs into the hillside, extracting chunks of rock. See all those wooden churns? They pulverise the rock, then use arsenic to separate the gold. Because of excessive mining and these primitive methods, the arsenic seeps into the lake. That’s what turns the water neon green. No one swims in it — it’s toxic.”
We collected dozens of rock samples, tested portions in Davao (with excellent results), and sent the rest back to Calgary for further analysis. The mountain stood beside the sea — perfect for transport by ship, and far from the reach of local bandits.
The difficult part? Years earlier, the government had divided the site into small strips sold to related parties in Davao. Nothing could proceed unless GEM Corporation secured a blanket agreement from all owners — subject to standard due diligence and detailed engineering reports, which would take months. We were urged to move fast before rival companies caught wind.
Funds were tight. GEM’s initial offering raised $150,000. Based on our findings, a further $500,000 was being pursued.
It took three months to negotiate with the mountain’s registered holders.
A private venture capital firm in Vancouver, thrilled by Bre-X’s published results, agreed to finance the rest. We were all to fly to Vancouver that Thursday. With my shares, salary, and options, this one deal would restore our family’s fortunes.
Then came the call, a day before our departure.
“Have you heard? Mike de Guzman threw himself out of a helicopter. All bets are off.”
And with Michael, fell away all our hopes and dreams… once again.
