TORONTO C E N T R E The Toronto International Leadership Centre for Financial Sector Supervision OECDOECD PresentationPresentation

SeptemberSeptember 29,29, 20042004 TORONTO C E N T R E The Toronto International Leadership Centre for Financial Sector Supervision BreBre--XX MineralsMinerals LimitedLimited

SusanSusan WolburghWolburgh JenahJenah Ms.Ms. SusanSusan WolburghWolburgh JenahJenah

„ ViceVice ChairChair –– OntarioOntario SecuritiesSecurities CommissionCommission (OSC)(OSC) „ FormerlyFormerly GeneralGeneral CounselCounsel && DirectorDirector ofof InternationalInternational AffairsAffairs -- OSCOSC „ FormerFormer ChairChair ofof thethe CSACSA LegislativeLegislative CommitteeCommittee „ BABA fromfrom thethe UniversityUniversity ofof TorontoToronto „ LLBLLB fromfrom OsgoodeOsgoode HallHall LawLaw SchoolSchool „ FrequentFrequent participantparticipant atat internationalinternational trainingtraining conferencesconferences TORONTO Promoting Leadership C E N T R E KeyKey IssuesIssues

¾ The importance of effective standards for continuous disclosure and verification of asset valuation;

¾ Factors that allowed fraud to occur;

¾ The importance of interagency cooperation; and

¾ The need for independent and adequate funding of a regulatory agency, including the ability to work and share information with other local or international agencies and governments. TORONTO Promoting Leadership C E N T R E CoreCore PrinciplesPrinciples

CP # Principles for: A Focus On … 3 The Regulator Powers, resources & capacity 4 Self Regulation SROs and direct oversight

9 Enforcement Comprehensive enforcement powers 12 Cooperation in Information sharing Regulation mechanisms 14 Issuers Timely & accurate disclosure 28 The Secondary Detection and deterrence of Market unfair trading practices TORONTO Promoting Leadership C E N T R E Major Events

z Jul. 1989 Bre-X begins trading on the Alberta Stock Exchange z 1989 - 1992 Average trading price of Bre- X shares is 25 cents.

z May 1993 Bre-X gains control of part of the Busang property in Indonesia.

TORONTO Promoting Leadership C E N T R E Major Events z Oct. 1993 Drilling begins z Sep. 1994 Bre-X gains control of portion of Busang site believed to be the “mother- load” z Feb. 1995 Bre-X announces estimate of 1 million ounces of gold

TORONTO Promoting Leadership C E N T R E Major Events (cont’d)

z Mar. 1995 Bre-X’s share price increases to about $2.

z May 1995 Bre-X announces new estimate of 8 million ounces of gold

z Oct. 1995 Bre-X’s share price increases to about $18.

TORONTO Promoting Leadership C E N T R E Major Events (cont’d)

z Dec. 1995 Bre-X’s share price increased to about $53 based on continued increases in resource estimates. z Jan.15, 1996 Bre-X announces that Busang could contain 30 million ounces of gold, but company officials estimate 25 million ounces.

TORONTO Promoting Leadership C E N T R E Major Events (cont’d)

z Feb. 21 1996 Nesbitt Burns issues a research report increasing its estimate of total resources at Busang to 42.6 million ounces and increasing the 12-month target price of Bre-X’s share to $180 per share and the 18- month target price of $220 per share.

TORONTO Promoting Leadership C E N T R E Major Events (cont’d)

z Apr 23 1996 Bre-X shares starts trading on the Toronto Stock Exchange. Within minutes of the opening of trading, the price of Bre-X shares skyrocketed to nearly $200.

z May 22 1996 Bre-X shares split 10-for-1.

z June 1996 Bre-X announces new estimate of 39 million ounces of gold TORONTO Promoting Leadership C E N T R E Major Events (cont’d)

z June-July John Felderhof sells shares 1996 worth $22.6 million

z July 1996 Bre-X announces new estimate of 47 million ounces of gold

z Aug. 1996 John Felderhof sells shares worth $17.4 million Bre-X shares begin trading on NASDAQ TORONTO Promoting Leadership C E N T R E Major Events (cont’d)

z Aug-Sept. John Felderhof sells shares 1996 worth $22.9 million

z Sept. 1996 Bre-X shares hit all-time high ($6.2 billion) z Oct. 1996 Media reveal Indonesian government inquiry Bre-X share price drops Morning trading of shares is delayed until 11:08 am TORONTO Promoting Leadership C E N T R E Major Events (cont’d) z Nov. 1996 Bre-X circulates fax copies of a Far Eastern Economic Review article that claimed Barrick Gold applied pressure on Indonesian officials

Indonesia orders Bre-X to strike a deal with Barrick Gold

TORONTO Promoting Leadership C E N T R E Major Events (cont’d)

z Nov. 1996 Concerns expressed that Barrick Gold could be open to action under U.S. Foreign Corrupt Practices Act

z Dec. 1996 Bre-X announces Busang has 57 million ounces of gold

Deadline for deal with Barrick Gold expires TORONTO Promoting Leadership C E N T R E Major Events (cont’d)

z Dec. 1996 President of Indonesia strips Bre-X’s mining license Trading in Bre-X shares is halted on TSE and NASDAQ TSE allows inclusion of Bre-X in the TSE 300 and TSE 100 indexes Barrick and Bre-X announce tentative joint proposal TORONTO Promoting Leadership C E N T R E Major Events (cont’d)

z Jan. 1997 Fire in Bre-X’s Busang office destroys key documents Placer Dome proposes merger with Bre-X Indonesian timber magnate purchases 50% interest in the Indonesian company expected to hold Indonesia’s participation in Busang TORONTO Promoting Leadership C E N T R E Major Events (cont’d)

z Feb. 1997 Bre-X announces that Busang has 71 million ounces of gold Bre-X announces deal to develop a gold mine with Freeport-McMoRan Cooper & Gold Inc. Bre-X share price falls losing nearly $750 million TORONTO Promoting Leadership C E N T R E Major Events (cont’d) z March 1997 Bre-X geologist Michael de Guzman dies in fall from helicopter. Death is ruled suicide but is considered suspicious Bre-X admits that estimates may have been overstated Share price plunges losing $3 billion in a day TSE and NASDAQ halt trading

TORONTO Promoting Leadership C E N T R E TORONTO C E N T R E The Toronto International Leadership Centre for Financial Sector Supervision BreBre--XX MineralsMinerals LimitedLimited

GroupGroup DiscussionDiscussion ActivityActivity 1:1: AnalyzeAnalyze thethe SituationSituation

GroupGroup discussiondiscussion followedfollowed byby presentationpresentation

„ RedRed GroupGroup QuestionQuestion #1#1

„ BlueBlue GroupGroup QuestionQuestion #2#2

TORONTO Promoting Leadership C E N T R E ActivityActivity 1:1: AnalyzeAnalyze thethe SituationSituation

RedRed GroupGroup

1.1. HowHow dodo thethe issuesissues inherentinherent inin thethe BreBre--XX situationsituation relaterelate toto thethe objectivesobjectives ofof protectingprotecting investors,investors, andand ofof maintainingmaintaining fair,fair, efficientefficient andand transparenttransparent markets?markets? WhatWhat reformsreforms couldcould bebe mademade toto thethe regulatoryregulatory systemsystem toto addressaddress thethe issuesissues raisedraised byby thethe BreBre--XX situation?situation?

TORONTO Promoting Leadership C E N T R E ActivityActivity 1:1: AnalyzeAnalyze thethe SituationSituation

BlueBlue GroupGroup

2.2. WhatWhat powerspowers andand jurisdjurisdictioniction doesdoes thethe OSCOSC needneed inin orderorder toto eeffectivelyffectively respondrespond toto BreBre-- XX toto maintainmaintain confidenceconfidence inin thethe CanadianCanadian capitalcapital markets,markets, andand toto workwork cooperativelycooperatively withwith otherother agenciesagencies (at(at thethe nationalnational andand internationalinternational level)level) toto addressaddress interinter-- jurisdictionaljurisdictional andand internationalinternational issues?issues?

TORONTO Promoting Leadership C E N T R E TableTable GroupGroup DiscussionsDiscussions

2525 MinutesMinutes

TORONTO Promoting Leadership C E N T R E FullFull GroupGroup PresentationsPresentations

2020 MinutesMinutes

TORONTO Promoting Leadership C E N T R E TORONTO C E N T R E The Toronto International Leadership Centre for Financial Sector Supervision

CoffeeCoffee BreakBreak ActivityActivity 2:2: DevelopDevelop aa FocusFocus StakeholderStakeholder AnalysisAnalysis

„ StateState youryour goalgoal „ IdentifyIdentify strategiesstrategies „ IdentifyIdentify keykey stakeholdersstakeholders andand theirtheir needs,needs, concerns,concerns, interestsinterests „ IndicateIndicate eacheach stakeholder’sstakeholder’s positionposition regardingregarding youryour goalgoal „ RecordRecord thethe threethree mostmost importantimportant stakeholdersstakeholders TORONTO Promoting Leadership C E N T R E StakeholderStakeholder AnalysisAnalysis

AA StakeholderStakeholder ……

„ CanCan bebe supportive,supportive, neutralneutral oror againstagainst whatwhat youyou areare tryingtrying toto achieveachieve „ CanCan helphelp oror hurthurt youyou inin youryour effortsefforts

Î SupportiveSupportive –– defenddefend andand leverageleverage Î NeutralNeutral –– convertconvert Î AgainstAgainst –– convertconvert oror mitigatemitigate

TORONTO Promoting Leadership C E N T R E TheThe OUIOUI ModelModel

UPWARD Executive Legislative OUTWARD OUTWARD Owners Judiciary Service Providers Managers Trade Associations Supervisory/ Depositors Regulatory You /Policyholders Bodies Your Staff /Investors The Media INWARD

TORONTO Promoting Leadership C E N T R E ActivityActivity 2:2: DevelopDevelop aa FocusFocus

ToTo developdevelop aa focusfocus considerconsider whether…whether…

¾ TheThe stakeholdersstakeholders areare supportive,supportive, againstagainst oror neutralneutral toto youryour proposedproposed changes.changes.

¾ TheirTheir concerns,concerns, needs,needs, wants,wants, andand vestedvested interestsinterests thatthat mustmust bebe addressedaddressed inin orderorder toto gaingain thethe stakeholdersstakeholders’’ support?support?

TORONTO Promoting Leadership C E N T R E PersuadePersuade OthersOthers WorksheetWorksheet

TORONTO Promoting Leadership C E N T R E PersuadingPersuading OthersOthers

GroupGroup discussionsdiscussions followedfollowed byby presentationpresentation

Stakeholder Presentation

„ RedRed The Minister responsible for overseeing the Securities regulator

„ BlueBlue Companies in the Mining Industry

„ Yellow The Media

TORONTO Promoting Leadership C E N T R E TableTable GroupGroup DiscussionsDiscussions

20 Minutes

TORONTO Promoting Leadership C E N T R E FullFull GroupGroup PresentationsPresentations

30 Minutes

TORONTO Promoting Leadership C E N T R E Running of Activity

1. Stakeholder analysis: 15 Minutes 2. Stakeholder Role-Play Planning: 30 minutes

A total of 10 minutes will be allocated for each role-play.

TORONTO Promoting Leadership C E N T R E LessonsLessons LearnedLearned

„ AlwaysAlways expectexpect thethe unexpected.unexpected.

„ YouYou cancan alwaysalways learnlearn valvaluableuable lessonslessons fromfrom aa disasterdisaster toto makemake posipositivetive changeschanges toto thethe regulatoryregulatory regime.regime.

„ YouYou cancan nevernever introduceintroduce thethe necessarynecessary changeschanges asas quicklyquickly asas youyou wouldwould wish,wish, butbut youyou havehave toto trytry toto implemimplementent themthem inin timetime toto avoidavoid anotheranother disaster.disaster.

TORONTO Promoting Leadership C E N T R E LessonsLessons LearnedLearned

„ NeverNever assumeassume thatthat thethe mediamedia willwill getget itit right,right, oror thatthat theythey willwill eveneven trtryy to;to; DoDo youryour bestbest toto givegive themthem thethe informatiinformationon whichwhich theythey needneed toto getget itit rightright ifif theythey wantwant to.to.

„ TryTry toto anticipateanticipate thethe concernsconcerns thatthat stakeholdersstakeholders willwill hhave,ave, andand communicatecommunicate effectivelyeffectively withwith themthem toto trytry toto alleviatealleviate theirtheir concerns.concerns.

„ NoNo mattermatter howhow severesevere thethe problem,problem, trytry toto useuse itit toto achieveachieve thethe longlong--termterm goalsgoals ofof youryour agency.agency. TORONTO Promoting Leadership C E N T R E TORONTO C E N T R E The Toronto International Leadership Centre for Financial Sector Supervision BreBre--XX MineralsMinerals LimitedLimited

SusanSusan WolburghWolburgh JenahJenah TORONTO C E N T R E The Toronto International Leadership Centre for Financial Sector Supervision SessionSession EvaluationEvaluation

BreBre--XX MineralsMinerals LimitedLimited TORONTO C E N T R E The Toronto International Leadership Centre for Financial Sector Supervision

EndEnd ofof PresentationPresentation