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TABLE OF CONTENTS Dec 31, 2012 - Jan 6, 2013 Volume 98 Number 46 - 2 comments

Life after Bre-X

Fifteen years after the Bre-X salting scam shattered his career, The Northern Miner catches up with John Felderhof at home in the Philippines

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By: Trish Saywell
PHILIPPINES 2012-12-26

John Felderhof looks much thinner than when we first met at the Prospectors and Developers Association of Canada convention in 2010. 

The weight loss could be from the heat and humidity of the Philippines, where the 72-year-old lives in a house with a single beaten-up air conditioner in his bedroom.

Or it could be the stress of writing his memoirs — a project he started about a year ago at the urging of a handful of his nieces and nephews. When we met in June he was about to start the Bre-X chapter — which he has left for last. 

Felderhof says it has taken him 15 years to figure out how the salting was done at the Busang deposit in the Indonesian jungle of Borneo (using gravity concentrate and not alluvial gold, contrary to published technical reports), and he believes he knows which of the company’s employees were behind it, but he refuses to make their names public. 

“I know what it’s like to be accused,” he tells me. “It’s easy to accuse and destroy a person’s life, but I have no proof, so I won’t accuse them. I’m not going to point fingers at anybody.”

What he will say, and has said repeatedly since the beginning, is that Mike de Guzman — Bre-X’s chief geologist whose body was reportedly found in a swampy field after plunging from a helicopter — had nothing to do with it. And he still believes there is an economic gold deposit at Busang 1, and possibly in parts of Busang 2. “Busang is going to be mined by a company one day,” he says. “There’s no doubt about it.”

Today Felderhof lives in a sparsely furnished white-washed cement home with iron grills on the windows that, like many of its kind in Asia, house businesses on the ground floor, and a small living room and a couple of bedrooms on the second floor. 

A small convenience store and a row of plastic tables and chairs where locals can eat breakfast and lunch opens to the street, and a side door takes you through the kitchen to the back of the house, which opens to a modest backyard with a small vegetable garden. Roosters and cows roam a litter-strewn field beyond Felderhof’s fenced property, about a seven-minute walk from the sea.

His wife Maria and her four children from a previous marriage manage the convenience store and supplement their income from a restaurant run out of their kitchen. They also sell rice and rent space on their roof to a local company. 
The family works six-and-a-half days a week and earns about US$850 a month.

“I’ve gone from having millions to this, but Maria and I could be happy together living on nothing,” Felderhof says. “I don’t feel sorry for myself. I’m very lucky.”

Felderhof met Maria a year and a half after he moved from the Cayman Islands to the leafy Indonesian island of Bali in October 2000, when his second marriage ended abruptly in divorce.

“It had nothing to do with our personal relationship,” Felderhof says about the breakdown of his 17-year marriage to Ingrid, an Australian woman with whom he had a son and helped raise three stepchildren. “It was just the constant stress of one lawsuit after another.”

His first marriage to Denise, a nurse he met while working at a copper mine in Zambia in the 1960s, and with whom he had three children (Felderhof asked that the names of his biological children be withheld), also ended in divorce after 17 years. 

“Exploration wives have it tough,” Felderhof told The Northern Miner in an earlier email exchange in 2010. “Exploration geology must have one of the highest divorce rates of any profession.”

Felderhof says he remains on good terms with both ex-wives and has four children, seven stepchildren and 12 grandchildren.

But he credits his third wife Maria with helping get his life back in the wake of the four dark years he experienced after Bre-X imploded. 

In Bali, Felderhof was earning a living from a small tropical plant business called Inter-Flora Plants that he set-up with one of his two daughters from his first marriage. He exported the house plants and dry-stem arrangements to Australia, Japan, South Korea and the U.S. Felderhof’s daughter and son-in-law continue to manage the enterprise from their home in Sydney, and he receives a small royalty on the income.

Felderhof was running the business and living at a small Balinese guest house when he met Maria. She was visiting her aunt, who had started a laundry business on the island, and the two women were having breakfast in the coffee shop at Felderhof’s hotel. The pair struck up a conversation, and their friendship led to marriage three years later. In 2004, the couple settled in the Philippines so that Maria could be closer to her four children from a previous marriage. 

After a stint in Manila, Felderhof and Maria bought a small piece of land on one of the country’s more than 7,000 islands. For the two months they waited while the house was being built they lived in a squatters’ village about 15 minutes away with one of Maria’s uncles. The shack they shared near the sea had a dirt floor and two small bedrooms, with sheets slung halfway to the ground for privacy.

Over the last eight years, Felderhof and Maria have settled into a familiar routine. A typical day starts in the dark when Felderhof rises at 4:30 a.m. to make coffee for the household, while Maria and her daughters aged 25, 19 and 17, begin chopping the vegetables, hunks of seafood and meat that go into the meals they serve until mid-afternoon.

When the power goes out — as it does frequently in the Philippines — the women are forced to cook by candlelight. Maria’s teenaged son Charles, who dropped out of school at 15, helps out occasionally with odd chores around the house.
“The kids all call me ‘Dad,’” Felderhof smiles. “When they come and hug me, it’s because they want to — not because they want something . . . having family around me brings me joy.”

Felderhof is fondest of Maria’s granddaughter. The five-year-old loves going to school and is always winning awards, he says, pointing to a number of certificates and a photograph on the wall. He hopes she goes to university and becomes a medical doctor.

His big worry these days is that she or his stepchildren might be kidnapped — despite the fact that he is broke. “They think as a white man living in a big house you have plenty of money,” he explains. “I could be killed, or my family kidnapped.” He rarely sees his two sons and two daughters from his first two marriages, all of whom are scattered across Australia, New Zealand and the Cayman Islands. “It costs money to go and see them,” he says quickly.

Most days Felderhof tends his vegetable patch, where he has planted seeds of spring onion, cabbage, carrots and green peppers that he buys on infrequent trips home to Canada. On the days he writes his memoirs, he does so longhand at the kitchen table. Once a week one of his stepdaughters types up the pages and emails them to his niece, Suzanne, who has volunteered to edit the draft from her home in Holland.

Felderhof isn’t sure yet whether he wants to publish his memoirs, and notes that his ex-wife Ingrid is in the process of writing her own book about Bre-X.

But if he does try to find a publisher, the timing might be right. About a year ago a Hollywood producer contacted Felderhof about a feature film he is planning to make about Bre-X. Scott Rosenfelt, an indie filmmaker, is best known for producing the 1990 comedy Home Alone. His other credits include Mystic Pizza, Teen Wolf, Kids in America, Smoke Signals and Extremities.

Rosenfelt says the film would be a dramatized version of the Bre-X story in the same genre as movies like All The President’s Men and JFK. “There are a lot of people with differing opinions,” he says. “Did David Walsh [Bre-X’s chief executive] know? Did John know? Who knew? Was de Guzman in on it? I have a point of view, and it’s going to come out.”

The film will be independently financed and shot mainly in the Philippines — which will double for Indonesia — and in Canada, as well as in New York, Europe, the Bahamas and the Cayman Islands. Shooting is expected to get underway in January 2013.

Even after more than a decade, Rosenfelt says, the story remains relevant. “It’s a cautionary tale, it has fascinating characters and it is a true life story that is more interesting than fiction,” he says. “I was actually surprised the film hadn’t been made. It seems like an incredibly topical film even now — even after fifteen years.”

Felderhof says he wasn’t pleased to learn about the film project. He worries about its accuracy, and says he wants to live his life quietly in the Philippines. But after meeting with Rosenfelt over a few days earlier this year, he agreed to sign on as technical advisor, and was promised he could vet the script.

John Bernard Felderhof was born on July 28, 1940, the fifth of 12 children, in the small fishing village of Spakenburg in Holland.

When he was 12 years old his parents emigrated to Canada, and in April 1954, the family boarded the Southern Star — a vessel that had served as a troop ship during the Second World War — to make the five-day crossing to Halifax.

His early days in Canada were harsh. Within days of the family’s arrival in Nova Scotia, and without his prior knowledge, he was sent off to an uncle’s farm in Ontario. It all happened so quickly, Felderhof recalls, that he didn’t even get a chance to say goodbye to his parents, or find out if he would see them again.

For the next two years, Felderhof lived with his aunt and uncle in a turn-of-the-century brick farmhouse with no running water. He spent his first year as a new immigrant to Canada cutting hay and doing heavy chores on the 50-acre farm.
After the first year, his uncle and aunt, with whom he grew close, finally sent him to junior high school, where he picked up his first words of English. And then out of the blue one day in August 1958, his father reappeared to take him back to the family’s new home in Nova Scotia.

Felderhof entered Grade 10 at New Glasgow High and was elected class president within the first month. “It was a bit of a surprise,” he writes in his memoirs, chalking up the win to curiosity because he was the only Dutch immigrant in the class. (His teacher later rejected the election result because according to Felderhof, she didn’t think he had been at the school long enough to merit the win, and another student was chosen instead.)

In Grade 11, Felderhof played central heeler on the school rugby team and was promoted to team captain the following year. He was named captain of the school’s soccer team and the B-hockey team, and topped off Grade 12 with an appointment as president of the Concerned Youth Association. Other achievements included reaching the rank of “sargeant” in the Cadets.

In his memoirs, Felderhof recalls his high school years as being among the happiest of his life. He got good grades — near the top of his class in his final year — and excelled at sports while maintaining an active social life that included school dances, snooker and bowling. His rugby skills did not go unnoticed, and when he graduated, he was invited to training camps at three universities.

While sports were important to him, academics were more so, he says, and he decided to pursue a university degree in the sciences. He spent his first year at Dalhousie University studying medicine but quit after the first year. “I saw how hard my father worked as a medical doctor and I also realized that I didn’t want to listen to patients’ complaints for the rest of my life,” he writes in his memoirs. “It just didn’t sit well with me.”

He studied geology instead and graduated in April 1962 with a major in structural and economic geology and a minor in English. Finding a job proved more difficult. But he finally landed a position as an open-pit engineer with the Iron Ore Company of Canada in August 1963.

He spent the next two years in Schefferville, a town in northern Quebec about 2 km from the border with Labrador on the north shore of Knob Lake, where the snow can fall as early as September. “I enjoyed my job, but the long winters were just too much for me,” he recalls. It was in Quebec that Felderhof vowed to spend as much of his career as possible in warmer climates.

Felderhof resigned from the Iron Ore Company of Canada in April 1964, and returned to Nova Scotia to look for a job. After seeing an advertisement in a mining journal he wrote a letter to a placement office in London requesting a position in Africa. When he learned there were two jobs available, one in Sierra Leone and the other in Northern Rhodesia (now Zambia), he chose the latter and took a job as a mine geologist at the Roan Antelope copper mine in Luanshya.

En route to Africa, Felderhof enjoyed a brief layover in London and spent his time there indulging in his passion for sports cars. He bought an ivory-coloured Austin Healey convertible with red leather seats, and in August boarded a passenger-mail ship in Plymouth for the 10-day voyage to Cape Town. From Cape Town the Austin Healey took him the remaining 2,000 miles to Luanshya, a mining town in the copper belt, where he reported for work on a blistering day in September 1963.

Felderhof was one of three geologists at the Roan Antelope mine, which at the time was one of the largest copper mines in the world, with resources of well over 100 million tonnes grading 3% copper at a 1% cut-off grade. Upon his arrival he was assigned a two-bedroom house that came with a servant and membership to a club with a swimming pool and tennis courts.

The next four years were happy ones. He adopted a German shepherd-Rhodesian ridgeback mix that he named Whisky, picked up a Land Rover, bought himself a partial share in a speedboat that he and a friend used to fish and water-ski across Lake Kariba and went on occasional hunting trips for antelope and springbok.

It was also during this time that he met Denise, a nurse who had been born in Luanshya but raised in South Africa. Denise and her family returned to Luanshya after she graduated from high school.

Working in sub-Saharan Africa in the 1960s brought its unique challenges. In one of his first assignments, Felderhof was asked to log several exploration pits that averaged 30 feet deep, many of which hadn’t been worked in months or even years, and contained the rotting remains of various species of wildlife.

He did this by tossing a linen tape measure to the bottom and sitting in a boatswain’s chair that his co-workers lowered into the pit. His job was to take notes of each geological feature at various depths. The operating instructions were straightforward: tug sharply once on the rope if he wanted to descend, tug twice to stop and three times to return to surface.

But one day, when he was about halfway down his last pit, he noticed something winding its way toward him along the measuring tape. A closer look told him that it was a black mamba — one of the deadliest and most aggressive snakes in Africa. They are also among the fastest snakes in the world, capable of travelling at speeds of greater than 20 km an hour.

In his extreme panic, Felderhof frantically tugged on the rope, forgetting the commands and confusing his co-workers.  Fortunately, they pulled him up in time. “I never finished logging that pit,” Felderhof writes of the experience. “I was not going to go down there ever again.”

Another geologist working at a different mine wasn’t so lucky. He died after a bite to the stomach from a boomslang, also known as a tree snake, another venomous reptile indigenous to that part of Africa.

The snakes were a constant terror. “Geologists were given anti-snake bite kits, which we strapped to our belts, but I didn’t have much faith in them and I wasn’t anxious to try them out to see if they worked,” Felderhof pens in his memoirs, which he is calling: “An immigrant, a tree, a blanket and billions.”

But it wasn’t the lethal snakes that would drive Felderhof, his wife Denise and their two young children out of Northern Rhodesia — it was the politics.

In 1964, Ian Smith became prime minister of Southern Rhodesia, and in November 1965 unilaterally declared independence from Great Britain, antagonizing the North. Southern Rhodesia began restricting supplies of oil and agricultural products to the North, Felderhof recalls.

“There were too many reasons for us to leave, despite the excellent working conditions,” he says. “Things like meat were becoming scarce, and the outlying roads were becoming unsafe to drive on.”

In July 1967, Felderhof jumped at an opportunity to work with Kennecott Copper in the Indonesian province of Northern Sulawesi.

Things didn’t turn out quite as he had expected, however, because by the time the family landed in Sydney en route to Indonesia, Kennecott’s plans for the young geologist had changed. The company had lost out on the Indonesian property to a Japanese company, and Felderhof and his family were told they would have to move instead to Goroka, a tiny administrative town in Papua New Guinea, about 285 km from Lae, Papua’s second-largest city. “I had the sinking feeling this was not good news,” Felderhof remembers.

But the young Felderhof family tried to make the best of it, rented a small apartment, quickly familiarized themselves with the town’s one supermarket and pub, and made friends with another expatriate family. And as it turned out, while challenging for Denise and the couple’s two young children, who were left on their own for long weeks on end while Felderhof worked in the bush, the assignment was to change Felderhof’s career forever.

The exploration camp at Yandera where Kennecott was drilling a prospective porphyry copper project was about 20 minutes flying time from Goroka. Initial results were not promising, so Felderhof was asked to conduct a helicopter-supported stream sediment program in the Yandera vicinity. The work began by hacking helicopter pads out of the jungle.

One of the first areas he worked was Mount Wilhelm, the highest mountain in Papua New Guinea. From there Felderhof and his colleagues worked their way west towards Mount Hagen. “The further out we got on our exploration program, the more primitive it got,” Felderhof recollects, adding that from time to time they used remote missionary stations as base camps.

The company had applied for two prospecting authority permits. The first covered a large area in Papua’s Western Province, on the border with Indonesia, and the second spanned the Stanley Ranges near Lae. Felderhof and co-worker Doug Fishburn, an Australian geologist, were assigned to explore the first area — a region so isolated it lacked even missionary stations, and where the inhabitants had never before seen Caucasians.

The two men had to carry heavy coins, then worth about £40, which the authorities in Goroka demanded that they take with them to introduce the locals to the value of money. They also were asked to carry goods such as stick tobacco, bush knives, cloth and tinned fish to sell to the tribes they encountered.

From Olsobip, one of the northernmost stations in Western Province, Felderhof and Fishburn hacked their way through the jungle with machetes to survey and draw the Upper Fly River. In particularly challenging parts of the river, the men were lowered by helicopter with ropes strapped around their waists.

They set-up fly camps as they moved further away from Olsobip, choosing a central village from which surveys could be taken. Felderhof recalls how the villagers would disappear as soon as they arrived, with the exception of the elderly or sick.  Only after the villagers determined that the geologists were no threat, he says, and “had no intention of stealing women,” would the villagers return.

“They were fascinated by matches, flashlights and kerosene lamps,” Felderhof writes in his memoirs, adding that he was equally fascinated by the sacks of human skulls the villagers used to keep track of the passage of time.

From time to time Felderhof says he would see dead bodies stretched out on raised platforms so that the bodies could be picked clean by insects, rather than ripped apart by wild pigs.

By the time the geologists reached the Ok Tedi River, one of the major headwaters of the Fly River on the Papuan side, their search had yielded nothing of interest.

In June 1968, the pair explored the area around the Ok Tedi River. After returning from a two-week field break in Sydney where his family eventually had relocated from Goro, he learned that Fishburn had found boulders of pyritized siltstone in the river. It was the first good news in more than a year, and the pair set-up a permanent base camp where the Ok Tedi meets the tributary Ok Galore.

For the next six months, Felderhof and Fishburn mapped streams and outcrops in pretty miserable living conditions. “Ok Tedi is one of the wettest places on earth, and we stayed in the field from Monday to Saturday,” Felderhof remembers. “Our clothes and our blankets were always damp. And there was a leech problem. Once I took off my field boots and had to remove eighteen of them with a cigarette.”

The OK Tedi discovery eventually went into production in 1984 and became one of the world’s biggest copper-gold mines. “I knew we had a big one,” Felderhof says, recalling the excitement he felt as a 28-year-old making his first big discovery.  “You feel satisfaction that you’ve succeeded despite all the difficult terrain and the hardship.”

The hardship included three particularly severe attacks of malaria (out of a total of 12 attacks he says he suffered over his career). Interestingly, the disease struck when he was on leave visiting his family in Australia. Felderhof is convinced the attacks he had during his three years with Kennecott were triggered by the temperature changes between PNG and Australia.

The last time he was treated for malaria was by a doctor in the tropical disease section of St. Vincent Hospital in Sydney, a facility that had been set-up to treat soldiers returning from the Vietnam War. That last bout with the disease — about the time his third child was born on March 28, 1970 — turned out to be the catalyst for leaving Papua New Guinea. During his recovery he learned that a close friend had nearly died of cerebral malaria, which triggered Felderhof’s own decision to ask for a transfer to Australia. When Kennecott turned down his request, he says, he resigned.

Between November 1970 and December 1974, Felderhof, Denise and the children settled into an old red-cedar settlers’ cottage in the Atherton Tablelands just outside of Atherton, a rustic country town about an hour’s drive southwest of Cairns that was built on the side of an extinct volcano called Halloran’s Hill. The area is known for its rich red volcanic soils that are estimated to run more than 30 metres deep. Atherton services the Atherton Tablelands, a World Heritage Site that is home to rainforests, national parks, mountains, rivers and lakes.

The family was happy during this period, Felderhof says, and he worked for a succession of exploration companies starting with Marytown Minerals, a private company exploring properties in North Queensland. After a stint with Marytown, Felderhof joined Horizon Minerals, a Melbourne-based company that was exploring for uranium on a concession in the Laura sedimentary basin near Cooktown, also in Queensland. That job led to another as manager of base metals exploration (mainly zinc and lead) on concessions in the Northern Territories near Darwin that were held by U.S. oil company Pennzoil.

The pull of home brought the Felderhofs back to New Glasgow in 1974, but it wasn’t long before the family set off again — this time to join the Johannesburg office of consulting company A.C.A. Howe International. Felderhof worked for the company’s founder, Peter Howe, in South Africa from November 1975 until October 1980, before being transferred to the firm’s Jakarta office. During his years in Indonesia he played a key role in discovering A.C.A. Howe’s three gold mines in Central Kalimantan: Mount Muro, Ampalit and Mirah.

OK Tedi proved to be Felderhof’s biggest discovery, but he says he was always convinced that Busang was going to be bigger. This dream exploded into a million pieces with news in March 1997 that samples from the Busang 2 deposit had been salted, in what a report by Strathcona Minerals described as a fraud “of a scale and over a period of time and with a precision that is without precedent in the history of mining anywhere in the world.”

The fraud vaporized about $6 billion in shareholder value.

On May 11, 1999, the Ontario Securities Commission charged Felderhof with eight counts of violating provincial securities laws. Felderhof hired Toronto securities lawyer Joe Groia and was acquitted in July 2007.

To those who believe Felderhof knew or should have known there was fraud going on, the geologist counters that as general manager in charge of four different drilling projects in Indonesia at the time, he was often away from sites and dealing with contractors, the mine department or handling various other demands of the business. “I tried to visit each site once every two months for two or three days, and I’d do a field inspection, look at new areas and layout the program,” he says.

When asked if he could go back in time and do anything differently, he says “no,” and adds that “it’s like being a bank manager — your bank can still get robbed.”

When asked about the emotional toll Bre-X has taken, Felderhof says the first four years were the worst. “I was bitter at the beginning — I was angry,” he says. “This sort of thing can kill a person, and Joe Groia was always amazed at how well I handled things. Maybe it’s because I endured a lot of hardship in my life that I can cope with hard stuff.”

When asked how he would like to be remembered, Felderhof reflects and says, as someone who never gives up. “Even if you’ve been a multi-millionaire twice in your life like I was, and you have to start from scratch all over again, you never give up. You keep going. You keep your sense of humour. That’s important.”

Felderhof says the people he thinks are responsible for the salting, whom he won’t identify in print, should be charged and jailed. “They ruined a lot of peoples’ lives — including mine.”



© 1915 - 2014 The Northern Miner. All Rights Reserved.


Photos

Former Bre-X Minerals vice-chairman John Felderhof in his backyard vegetable garden in the Philippines. Photo by Trish Saywell
Former Bre-X Minerals vice-chairman John Felderhof in h...
John Felderhof giving his acceptance address after receiving the Prospector of the Year Award from the Prospectors and Developers Association of Canada in March 1997. Photo by The Northern Miner
John Felderhof giving his acceptance address after rece...
John Felderhof and his wife Maria revisit a squatter village near the sea, where they lived for a time. Photo by Trish Saywell
John Felderhof and his wife Maria revisit a squatter vi...
The Bre-X Minerals team at the Busang gold project in East Kalimantan, Indonesia, in 1996, from left: Metallurgist Jerry Alo; John Felderhof; project manager Michael de Guzman; and geologist Cesar Puspos. Photo by The Northern Miner
The Bre-X Minerals team at the Busang gold project in E...



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Reader Comments

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Sailormac

Pure baloney. Mr. Felderhof had participated in a similar scheme some 10 years previously to Bre-ex.

Posted December 5, 2013 12:40 PM


Bambang Tri

living like a normal person is better rather than a fake or gold salting, it was so embarassing for Geologist....

Posted January 3, 2013 04:55 PM


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