Glimmer of Gold Lured One Town

Sometime in the spring of 1995, a loan officer at a credit union in the little town of St. Paul, Alberta, started spreading the word: a big gold find in Indonesia by a little company called Bre-X.

And that, says St. Paul Mayor John Trefanenko, was the beginning of a gold rush. Local residents, including farmers and others who had never invested in stocks, jumped into Bre-X stock.

By his estimate, as many as 200 people in the mostly French-Ukrainian community of 5,200 held shares - possibly the largest concentration of Bre-X stockholders anywhere.

"What we're hearing in the coffee shops is that a lot of people were stuck with Bre-X," Mayor Trefanenko says in a telephone interview. "But it doesn't seem to have had a great impact on our community. A lot of people who invested took out their original principal and kept the rest in Bre-X."

Certainly several residents were, at one point, thought to be "Bre-X millionaires," he says. They bought the stock near $6 a share, and it rose to more than $200 a share before splitting. This month, however, the paper millionaires have watched Bre-X nose-dive back to earth.

"It's been a lesson to our community to be more cautious," he says.

Despite the heavy thud by Bre-X, Trefanenko reckons that not too many local residents were hit severely. He believes he would have heard if people had lost their life savings or had homes foreclosed because of Bre-X.

Still, he suggests such damage may not really be known for several weeks.

"I never did buy any Bre-X shares myself," he says. "I felt in the beginning there was no gold in those jungles. But I admit that after a while, when people were making money after two full years, I was beginning to doubt myself. Now I realize I was right the first time."