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Bre-X Granted Protection From Creditors

May 09, 1997|From Times Wire Services

Bre-X Minerals Ltd. said Thursday that it has been granted protection from creditors by an Alberta, Canada, court as it liquidates the company, in what was described this week as the biggest mining fraud in history.

Bre-X also said that its chief geologist has left the company.

Calgary, Canada-based Bre-X faces eight lawsuits from shareholders in Canada and the United States and an investigation by the Royal Canadian Mounted Police after an independent consulting firm said Bre-X's Busang deposit on Borneo, once touted as one of the world's largest gold finds, contained only trace elements of gold.

Bre-X said its filing under the Companies' Creditors Arrangement Act, the Canadian equivalent of Chapter 11 protection under U.S. bankruptcy law, will allow the orderly disposition of the company's assets. The court order appointed Price Waterhouse Ltd. as monitor of the assets and records of Bre-X and affiliated companies Bresea and Bro-X.

"We felt it was important that shareholders and creditors of Bre-X, Bresea and Bro-X derive some confidence from the fact that the assets of the various companies will remain intact," David Walsh, Bre-X chairman, president and chief executive, said in a statement. "Secondly, this provides the basis for a mechanism by which the various claims being advanced against the companies can be dealt with in an orderly way."

Bre-X also said chief geologist John Felderhof resigned from the Bre-X, Bresea and Bro-X boards.

The announcement came as Bre-X said it was removing its shares from trading on Nasdaq.

A day earlier, Bre-X was dumped by the Toronto Stock Exchange after a plunge Tuesday in which Bre-X shares, once worth more than $200 each, closed at about 6 cents.

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