It had the trappings of a Hollywood hit: greed, gold, love, treachery. No wonder the titanic hoax that was Bre-X Minerals Ltd. of Canada got a little star treatment this year, with the inspired-by-actual-events movie “Gold,” starring Matthew McConaughey (reviews were mixed).
Bre-X, which collapsed 20 years ago, may be the craziest story that ever came out of the wild west of the junior mining world — but it’s hardly the only one.
Unproven penny-stock companies, in Canada or anywhere else, are never for the faint of heart. But add to that the strike-it-rich ethos of energy and mining, major drivers of the Canadian economy, and the results can be explosive.
No one is forecasting another Bre-X or suggesting these are frauds. Most juniors, as penny stocks are known in Canada, are perfectly legitimate. But volatility and unproven finds call for a heightened sense of buyer beware.
Take West High Yield (W.H.Y.) Resources Ltd., a Canadian miner that was virtually unknown before Thursday, when its stock surged as much as 956 percent on the TSX Venture Exchange after it said it sold a magnesium deposit for $750 million — 46 times its market value.
For the rest of this article: https://www.bloomberg.com/news/articles/2017-10-11/in-bre-x-country-junior-miners-can-crash-or-post-1-000-gains