I sorted out the Bre-X fraud faster than Bre-X’s salting squad took to cook it up. I think Barrick liked what I did. At least Barrick did when I applied statistics to prove that Bre-X was a salting scam. So much so that I signed on July 4, 1997 a Consulting Services Agreement with Barrick Goldstrike Mines Inc. I submitted on August 18, 1997 my report on Statistical Quality and Grade Control . Geostatisticians on Barrick’s staff didn’t think much of it. I had applied Fisher’s F-test to verify spatial dependence between gold grades of ordered core sections from a single borehole by applyingit to the variance of the set and the first variance term of the ordered set. I had done the same thing with Bre-X’s salted boreholes. Stanford’s Journel would have assumed rather than verified spatial dependence. But then, Matheron’s most gifted disciple never signed a Consulting Services Agreement with Barrick Goldstrike Mines Inc.
When I was working with Bre-X’s test results my closest contact was a staff mining engineer at Barrick Gold Corporation in Toronto. We got along great because he knew plenty about sampling and assaying. So, he knew why Bre-X’s bogus grades and Busang’s barren rock added up to a geostatistically engineered gold resource. He also knew how to test for spatial dependence, and why geostatistics should not be applied in reserve and resource estimation. And he asked me whether I wanted to take a look at a large set of borehole data for a real gold deposit. Guess what? So, I did agree to and signed on October 22, 1997 a confidentiality agreement with Barrick Gold Corporation. I submitted my report on Confidence Limits for Gold Contents and Grades on February 9, 1998. When I called my contact to find out what he thought of my report, he said, “It’s worth its weight in gold”. I didn’t ask him to put it in writing. His word was good enough for me!
Worth its Weight in GoldGeologists, mining engineers and mineral process engineers rarely agree on metal grades of in-situ ores, mined ores and mill feed. I witnessed many such rituals. Top brass wants high mineral inventories in glossy annual report and geostatisticians always deliver. Barrick’s geologists may find confidence limits for gold contents and grades of mineral inventories a bit much of a commitment. Shareholders do want a measure for risk.
Another year passed by, Christmas 1999 came along, and the Confidentiality Agreement between Barrick Gold Corporation and Bre-X Minerals expired. I liked to talk about the Bre-X fraud. Barrick engaged lawyers who wanted to come to Vancouver and tell me not to talk. I called on a friend and the visit to Vancouver was cancelled. All I have done since Christmas 1996 is show why geostatistics is a scientific fraud.
What Barrick asked me ten year later blew my mind. Barrick wanted consulting services. I’m not about to describe the required services but it had nothing to do with confidence limits for gold contents and grades of in-situ ore. I agreed to and signed on March 20, 2007 a Consulting Services Agreement for services to be provided at Barrick Technology Centre, Vancouver, BC. My contact had a lot of practical experience but stood to gain from a touch of real statistics. Before we could get going he was needed at Barrick’s Bulyanhulu gold mine in northwest Tanzania. Long before Barrick acquired Placer-Dome and its former Bulyanhulu gold deposit I knew Placer-Dome had born geostatisticians on board.
A Munk Debates on scientific fraud makes no sense whatsoever. Who would dare make a case for scientific fraud? Yet, a scientific fraud underpins the geostatistical practice of reserve and resource estimation all over the world. Blatantly biased, shameless self-serving peer review is all it took. But that’s another story. I have called it Behind Bre-X, The Whistleblower’s Story.