Suicide of Bre-X geologist shocks markets

The apparent suicide of Michael de Guzman, chief geologist for Bre-X Minerals (BXM-T), on March 18 sent shock waves throughout the mining community and, in the process, cast the first doubts about the size, grade and economic viability of the Busang gold project in Kalimantan.

When he visited Toronto in early March to attend the annual convention of the Prospectors & Developers Association of Canada, de Guzman appeared to be in good health. Mining analysts were stunned by reports that he had committed suicide by jumping out of a helicopter while en route to the Busang gold property in Indonesia to assist potential partner Freeport McMoRan Copper & Gold (FCX-N) with its due diligence review. His body was reportedly found on March 24.

Bre-X issued a statement saying de Guzman had left a note indicating he was “giving up on life” after being informed he had contracted acute hepatitis B.

Bre-X officials said de Guzman’s prognosis was poor, owing to his many bouts of malaria over the years.

De Guzman managed the day-to-day exploration at Busang, and was well known by analysts who had visited the property in recent years. News that he had taken his life while en route to the Busang property initially generated rumours of foul play, as well as suspicion that the due diligence review might not have been going well for Bre-X.

Soon after, a New York-based investment firm downgraded its rating on Bre-X stock to “neutral” from “outperform”, promoted by the uncertainty created by the combination of de Guzman’s apparent suicide and early press reports that Freeport’s due diligence was not producing results similar to those previously reported by Bre-X.