UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF TEXAS TEXARKANA DIVISION

Transcription

1 UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF TEXAS TEXARKANA DIVISION LANE McNAMARA, et al., Plaintiffs, v. Civil Action No. 597CV159 BRE-X MINERALS LTD., et al. Defendants. NOTICE OF PENDENCY OF CLASS ACTION AND HEARING ON PROPOSED SETTLEMENT WITH BRESEA RESOURCES LTD.AND ATTORNEYS COSTS AND EXPENSES PETITION AND RIGHTS TO SHARE IN SETTLEMENT FUNDS To: All persons who purchased or otherwise acquired common shares of Bre-X Minerals Ltd. ( Bre-X ) and/or Bresea Resources Ltd. ( Bresea ) between January 17, 1994, and March 26, 1997 (inclusive) (the Class Period ), and who suffered a loss as a consequence of dealing in shares of Bre-X and/or Bresea (the U.S. Class ). Also: Excluded from the U.S. Class are all non-u.s. residents who purchased their Bre-X and/or Bresea shares on a Canadian stock exchange. Also excluded from the U.S. Class are defendants in this action; members of their immediate families; any subsidiary, affiliate, or employee of any such defendant; any entity in which any such excluded person has or had a controlling interest; and the legal representatives, heirs, successors, and assigns of any such excluded person. Persons who purchased or otherwise acquired Bre-X or Bresea shares after March 26, 1997 and through May 2, 1997 (who were included in the class defined in the Fourth Amended Class Action Complaint (the Complaint ) and its predecessors in this action) are hereby advised that the Court has denied class certification as to them with respect to their claims against Bresea. Further information concerning the status of the claims of persons who purchased Bre-X or Bresea shares after March 26, 1997 through May 2, 1997 is provided at 71. Please read this notice carefully and completely. Your rights will be affected by proceedings in this action. If you are a U.S. Class member, you ultimately may be entitled to receive benefits pursuant to the settlement described herein. This proposed settlement settles only claims against defendant Bresea. If the Court later certifies some or all of this case as a class action as against other defendants, you will receive a further Notice of Pendency at that time. For U.S. Class members who purchased Bre-X shares during the Class Period: This proposed settlement provides for a recovery to U.S. Class members with respect to their purchase of Bre-X shares during the Class Period of up to a total amount of $4.59 million, or an estimated $.04 per damaged share, less attorneys fees and expenses and certain deductions in the possible event of an award of costs in defendants favor. Included in these recoveries are class members in Canadian litigation brought on behalf of certain Bre-X shareholders. More details about the recoveries appear in paragraph 6 below and in the section entitled "Terms of the Settlement" (paragraphs below); particularly paragraph 45 below, which sets forth the allocation of settlement proceeds among U.S. and Canadian Bre-X share purchasers. For U.S. Class members who purchased Bresea shares during the Class Period: This proposed settlement provides for a recovery to U.S. Class members with respect to their purchase of Bresea shares during the Class Period from a pool of approximately 650,000 shares of Bresea (renamed Sasamat Capital Corporation) based on calculations and assumptions described below. (Bresea is now named Sasamat Capital Corporation, but for simplicity it will be referred to in this Notice as Bresea.) The recovery for each damaged share of Bresea stock is estimated to be.024 shares of reorganized Bresea. Plaintiffs' counsel estimate that this would represent a recovery equivalent to $.04 per damaged share, but this is subject to certain assumptions described below that may or may not in fact occur or be true. Included in these recoveries are class members in the Ontario Bresea Action. These recoveries are also subject to sharing with other creditors of Bresea, including persons who opt out of this Action or the Ontario Class Action, and all persons in the U.S. who purchased their Bre-X and/or Bresea shares after March 26, The recovery to U.S. Class members with respect to their purchases of Bresea shares is in addition to the Bresea shares that current Bresea shareholders may retain. This proposed settlement does not provide for an award of attorney fees to any plaintiffs counsel in this U.S. case. The proposed settlement does include an award to plaintiffs counsel in this case for past and future costs of litigation, not including attorney fees, in the amount of approximately $382,666 from the settlement fund (but not from consideration provided with respect to Bresea shares). Any amount that is awarded to plaintiffs counsel in this case for costs will be used to reimburse plaintiffs counsel for costs and expenses incurred to date as well as to fund costs and expenses to be incurred in the future in this litigation. Such award of costs to plaintiffs counsel would amount to an average of $.003 per damaged Bre-X share. Certain Canadian counsel for Bre-X and Bresea purchasers will also be seeking an award in Canadian proceedings of attorney fees and expenses in connection with this settlement. These fees and expenses may total approximately $896,533. Please refer to paragraphs and 68 below for more information regarding these fees. CLAIMS DEADLINE: U.S. Class members who do not exclude themselves from this settlement must submit proofs of claim, on the forms accompanying this Notice, postmarked on or before October 24, 2002.

2 EXCLUSION DEADLINE: U.S. Class members who request exclusion from this settlement must submit written requests for exclusion, on the forms accompanying this Notice, postmarked on or before September 5, Requests for exclusion will not affect such class members ability to participate in this action with respect to claims against defendants other than Bresea. Securities Brokers and Other Nominees: Please see instructions at 72 herein. If you wish to obtain additional information about the matters described in this Notice, please see paragraphs 21 and 67. I. Purpose of this Notice SUMMARY OF SETTLEMENT AND RELATED MATTERS 1. This Notice is given pursuant to Rule 23 of the Federal Rules of Civil Procedure and an Order of the Court dated July 3, The purpose of this Notice is to inform you that this lawsuit (the Action ) and the proposed settlement with Bresea will affect the rights of all members of the U.S. Class defined above. This Notice describes rights you may have under the proposed settlement and what steps you may take with respect to the settlement and in relation to this Action. This Notice is not an expression of any opinion by the Court as to the merits of any claims or any defenses asserted by any party in this Action, or the fairness or adequacy of the proposed settlement. II. Case Background and Description of Proposed Settlement 2. This case concerns an alleged gold mine scam involving a mine in Indonesia which Bre-X and certain of its officers described as containing huge gold deposits. It was revealed in May 1997 that the mine was a fraud. Bre-X stock had been actively traded on U.S. and Canadian exchanges at market prices that were allegedly hugely inflated because of the fraud. Bresea was controlled by Bre-X officers, and Bresea s assets consisted largely of Bre-X stock. Bre-X, Bresea, individuals associated with the companies, and certain of Bre-X s and Bresea s advisors were named as defendants in this securities fraud class action and in other legal actions in Canada. Bre-X and Bresea are now in Canadian bankruptcy and reorganization proceedings, respectively. 3. In 2000, Bresea and plaintiffs entered into settlement discussions. A conditional agreement was reached in October 2000 and amended in January Negotiations continued among the parties in On August 23, 2001, the parties finalized the terms of their agreement, and after final documentation, all parties executed the agreement in October 2001 (the 2001 Agreement ). 4. On or about May 10, 2002, an Amended Settlement Agreement (the 2002 Settlement ) was entered into, which provides for a global settlement of claims asserted against Bresea, not only in the Action for the U.S. Class, but also with respect to certain Canadian actions, including the following: (a) a class action brought in the Ontario Superior Court of Justice on behalf of certain purchasers of Bre-X common stock known as Carom v. Bre-X Minerals Ltd., Class Action No. 97-GD (the Ontario Class Action ); (b) a class action brought in the Ontario Superior Court of Justice on behalf of certain purchasers of Bresea common stock known as Stein v. Bresea Resources Ltd., Class Action No (the Ontario Bresea Action ); (c) an action brought on behalf of a group of Bre-X and Bresea shareholders in the Queen s Bench of Alberta (the Alberta Court ) known as Chow v. Bre-X Minerals Ltd., Action No (the Alberta Action ); and (d) an action in the Alberta Court, Action No naming Bresea and Bresea Enterprises Ltd. as defendant. 5. By the terms of the 2002 Settlement, the parties intend to resolve all claims and actions against Bresea relating to Bre-X which Bre-X itself and past and present Bre-X and Bresea share purchasers may have (within the Class Period described above), and all claims and actions against Bre-X which Bresea may have. 6. Pursuant to the 2002 Settlement, upon the satisfaction of certain conditions precedent described herein, a settlement fund consisting of $4.59 million (the Settlement Fund ), will be paid to members of the U.S. Class who purchased Bre-X common stock during the Class Period and suffered a loss and do not opt out ( U.S. Bre-X Class Members ), and also for the benefit of eligible Bre-X shareholders participating in the Canadian actions described above. Also pursuant to the 2002 Settlement, upon the satisfaction of certain conditions precedent described herein, a pool consisting of shares equal to ten percent (10%) of the common equity of Bresea (renamed as Sasamat Capital Corporation) (the Pool ) will be established for the benefit of members of the U.S. Class who purchased Bresea common stock and suffered a loss ( U.S. Bresea Class Members ), and also for the benefit of class members of the Ontario Bresea Action, of class members who opt out of the Ontario Class Action, and of any person who opts out of this Action. Subject to Alberta Court approval, all persons in the U.S. who purchased their Bre-X and/or Bresea shares after March 26, 1997 may also receive a recovery from the Pool, pursuant to the terms of the Bresea Plan of Arrangement (the Arrangement ). Bre-X Shareholders 7. This section describes the benefit to be provided to U.S. Bre-X Class Members under the 2002 Settlement. 8. The Settlement Fund of $4.59 million ($7 million CDN, at a conversion rate of $0.656 Canadian dollars = US$1) will be delivered to Deloitte & Touche Inc., in its capacity as Trustee of the Estate of Bre-X Minerals Ltd. ( Deloitte ), which will set aside and hold certain amounts from the Settlement Fund, including funds for the payment of legal fees, costs and disbursements, and a reserve for any future award of court costs, as described more fully herein. Acting as a distribution agent, Deloitte will thereafter distribute on a pro rata basis the remaining balance of the Settlement Fund to U.S. Bre-X Class Members and to eligible Bre-X shareholders participating in the Canadian actions. 9. Plaintiffs estimate that there were approximately 112 million shares of Bre-X common stock traded during the Class Period that may have been damaged as a result of the alleged wrongdoing. Assuming, for purposes of example only, that the Settlement Fund in its entirety were available for distribution to U.S. Bre-X Class Members and eligible Bre-X share purchasers participating in the Canadian actions, and assuming that all estimated damaged share purchases were eligible to and did seek recovery from the Settlement Fund, plaintiffs estimate that the average recovery per damaged share of Bre-X common stock under the Settlement Agreement would approximate $.04 per share, prior to any award of fees and expenses to counsel. Furthermore, depending on the number of claims submitted, when during the Class Period a U.S. Bre-X Class Member purchased shares of Bre-X common stock, and whether those shares were held at the end of the Class Period or sold during the Class Period, and if sold, when sold, an individual U.S. Bre-X Class Member may receive more or less than this estimated amount. 2

3 10. As part of the 2002 Settlement, any monies recovered in this Action on behalf of U.S. Bre-X Class Members, in the Ontario Class Action, and in certain actions prosecuted by the Bre-X Trustee (the Trustee s Actions ) by judgment, settlement, or otherwise, from the Estate of David G. Walsh, Jeanette Walsh, John B. Felderhof, and T. Stephen McAnulty, (the Common Insider Defendants ) will be paid to Deloitte (the Recovered Monies ), provided that the Bre-X Trustee obtains an order from the Alberta Bankruptcy Court declaring that injured Bre-X share purchasers, including U.S. Bre-X Class Members, are creditors of Bre-X. U.S. Bre-X Class Members and class members in the Ontario Class Action will thereafter share in those Recovered Monies remaining after the payment of disbursements and taxes and legal fees incurred in the U.S. Class Action and the Ontario Class Action (the Remaining Recovered Monies ). The estimates of average recovery per damaged Bre-X share do not reflect any value for the Remaining Recovered Monies, which are contingent in any event and have yet to be realized. 11. In addition to the $4.59 million to be paid by Bresea to U.S. Bre-X Class Members and class members in the Canadian class actions, Bresea will also pay $1.31 million ($2 million CDN) to Deloitte in consideration of the eight million Bresea shares held by the Bre-X Trustee. Deloitte will thereafter use the $1.31 million for purposes of bankruptcy administration, including the prosecution of certain actions against former Bre-X/Bresea directors and officers that belong to the Bre-X Trustee. In the event that the $1.31 million is not entirely used for such purposes, and provided that the Bre-X Trustee obtains an order declaring that Bre-X share purchasers are creditors of Bre-X, then these funds will likewise be available for distribution to U.S. Bre-X Class Members and class members in the Ontario Class Action at the conclusion of the Bre-X bankruptcy proceeding. 12. For purposes of the Settlement herein, a U.S. Bre-X Class Member s distribution, as described in paragraphs 8-11 above, will be made in accordance with directions given by the Alberta Bankruptcy Court in the Bre-X bankruptcy proceeding or by such other procedures as may be directed by this Court. Bresea Shareholders 13. This section describes the benefit to be provided to U.S. Bresea Class Members under the 2002 Settlement. 14. Plaintiffs estimate that the average recovery per damaged share of Bresea common stock under the 2002 Settlement is shares of Bresea, calculated on the basis of dividing the number of Bresea shares to be distributed from the Pool pursuant to the 2002 Settlement (approximately 650,000 shares) by the number of damaged Bresea shares during the Class Period (27.3 million shares). Based on Bresea s total net assets on hand at the time of the 2002 Settlement of approximately $17 million ($26 million CDN), less the $4.59 million paid for the settlement of Bre-X share purchaser claims and less the $1.31 million paid for the eight million Bresea shares held by the Bre-X Trustee, the equity of Bresea is approximately $11.1 million. On that basis, the Pool shares, which constitute ten percent (10%) of Bresea s equity, would represent a value of approximately $1.11 million. Accordingly, the recovery by injured Bresea share purchasers on the basis of a per damaged Bresea share equals approximately $0.04 ($1.11 million in settlement proceeds divided by 27.3 million shares). These recoveries are also subject to sharing with class members who opt out of the Ontario Class Action, any person who opts out of this Action, and any person in the U.S. who purchased their Bre-X and/or Bresea shares after March 26, 1997, and may be proportionately reduced on that basis. 15. At the time that the 2002 Settlement was negotiated, the common stock of Bresea was not trading. The value of the shares of Bresea stock is not guaranteed by Bresea and may go up or down depending on numerous factors, including market conditions and the operations and prospects of Bresea. In addition, depending on the number of claims submitted, when during the Class Period a U.S. Bresea Class Member purchased shares of Bresea common stock, and whether those shares were held at the end of the Class Period or sold during the Class Period, and if sold, when sold, an individual U.S. Bresea Class Member may receive more or less than these estimated amounts. 16. For purposes of the Settlement herein, a U.S. Class Member s distribution from the Pool will be governed by the Bresea Arrangement, described below at 45. III. Statement of Potential Outcome of Case 17. The parties disagreed on both liability and damages and do not agree on the estimated amount of damages per share that would be recoverable if plaintiffs were to have prevailed against Bresea on each claim alleged. The issues on which the parties disagree include: (a) the appropriate economic model for determining the amounts by which Bre-X s and Bresea s common shares were allegedly artificially inflated (if at all) during the Class Period; (b) the amounts by which Bre-X s and Bresea s common stocks were allegedly artificially inflated (if at all) during the Class Period; (c) the effect of various market forces influencing the trading prices of Bre-X s and Bresea s common shares at various times during the Class Period; (d) the extent to which external factors, such as general market and industry conditions, influenced the trading prices of Bre-X s and Bresea s common shares at various times during the Class Period; (e) the extent to which the various matters that plaintiffs alleged were materially false or misleading influenced (if at all) the trading prices of Bre-X s and Bresea s common shares at various times during the Class Period; (f) the extent to which the various allegedly adverse material facts that Plaintiffs alleged were omitted influenced (if at all) the trading prices of Bre-X s and Bresea s common stocks at various times during the Class Period; and (g) whether the statements made or facts allegedly omitted were material or otherwise actionable under the U.S. federal securities laws. 18. While risks with respect to proving liability and proving damages exist in any action that must be tried, the 2002 Settlement with Bresea recognizes the realities of the financial condition of this settling defendant. Currently, Bresea, which is under the supervision of the Alberta Court, has approximately $17 million in total net assets. The costs to Bresea to continue defending the U.S. Class Action and the Ontario Class Action would consume a substantial portion of its assets. Bresea s Interim Receiver has obtained an estimate from Bresea s U.S. counsel of $5 million to defend the U.S. Class Action. Class counsel in the Ontario Class Action has estimated that the costs to Bresea to defend the Ontario Class Action will be approximately $2.62 million. In addition, Bresea s Board of Directors has been authorized by the Alberta Court to spend as much as $98,400 per quarter for business expenses. Assuming that trial in this Action, and any appeals therefrom, will not be completed for at least two years, the administrative costs to operate Bresea in the interim would be approximately $787,200. In addition, because U.S. Class Members and Ontario Class Members are disputed creditors, there is a substantial risk that Bresea s current board of directors could oust the Interim Receiver and take direct control of Bresea s $17 million in net assets, resulting in dissipation of any potential recovery if Bresea should subsequently suffer operating or investment losses. In summary, continuing the litigation against Bresea is estimated to diminish its 3

4 assets by approximately $8.41 million over the next two years ($5 million to defend this Action, plus $2.62 million to defend the Ontario Class Action, plus $787,200 for administrative costs), with a substantial further risk that even the remaining assets would be dissipated if the Interim Receiver were terminated. IV. Statement of Attorneys Costs and Expenses Sought 19. Lead Counsel intend to apply for an award of past and future costs and expenses in the amount of approximately $382,666 from the Settlement Fund. Lead Counsel will not seek an award of fees from the Settlement Fund, and will not apply for any fee or costs award on the basis of those Bresea shares contributed to the Pool. The amount that is awarded to Lead Counsel will be used to reimburse Lead Counsel for costs and expenses incurred to date as well as to fund costs and expenses to be incurred in the future in the Action. The requested award of $382,666 by Lead Counsel would amount to an average of $.003 per damaged Bre-X share. Class counsel in the Ontario Class Action, who are not counsel in this Action, have indicated that they will seek approximately $765,333 from the Settlement Fund for fees and expenses. In addition, class counsel in the Ontario Bresea Action, who likewise are not counsel in this Action, have indicated that they will seek $131,200 from the Settlement Fund for fees and expenses. 20. In the event that the Bre-X Trustee obtains an order from the Alberta Bankruptcy Court declaring that Bre-X share purchasers are creditors of Bre-X, and further provided that a recovery is obtained from any of the Common Insider Defendants in either this action, the Ontario Class Action, or in the Trustee s Actions, then Deloitte will pay 8.334% of the Remaining Recovered Monies to Lead Counsel as legal fees. Under those same circumstances, Deloitte will pay to class counsel in the Ontario Class Action % of any Remaining Recovered Monies as legal fees. At this time, Lead Counsel are not applying to this Court for approval of the 8.334% recovery rate from the Remaining Recovered Monies, but will instead submit such application in the event Recovered Monies are obtained. V. Further Information 21. Further information regarding the Action and this Notice may be obtained by contacting Lead Counsel: H. Lee Godfrey, Esq., Susman Godfrey LLP, 1000 Louisiana, Suite 5100, Houston, Texas 77002, (713) or R. Paul Yetter, Esq., Yetter & Warden, L.L.P., 909 Fannin, Suite 3600, Houston, Texas 77010, (713) ; or the Claims Administrator, Gilardi & Company, P. O. Box 990, Corte Madera, California , (415) VI. Reasons for the Settlement 22. The principal reason for the settlement is the benefit to be provided to the U.S. Class. This benefit must be compared to the risk that no recovery might be achieved. As described above, if the litigation continues, approximately $8.41 million of Bresea s total net asset base of $17 million could be spent in defending the U.S. Class Action and the Ontario Class Action, as well as on continuing administrative expenses. After trials in both the U.S. Class Action and the Ontario Class Action, therefore, a maximum of only approximately $8.59 million could be available to satisfy the claims of Bre-X investors. Considered in this light, the recovery obtained on behalf of Bre-X investors under the 2002 Settlement represents approximately 53% of those assets that would otherwise be available to Bresea after trial (i.e., settlement proceeds of $4.59 million divided by estimated post-trial assets of approximately $8.59 million). Furthermore, without a settlement, there is a substantial risk that the current management of Bresea may prevail upon the Alberta Court to remove the Interim Receiver, thereby allowing the dissipation of Bresea s assets if Bresea should subsequently suffer operating or investment losses. 23. The 2002 Settlement further benefits U.S. Bre-X Class Members by providing them the potential of participating in distributions from the Remaining Recovered Monies obtained in the Trustee s Actions and in the Ontario Class Action. The Trustee is currently pursuing actions against assets belonging to the Estate of David Walsh in the Bahamas and against assets belonging to John Felderhof in the Cayman Islands. While like any other litigation, the successful outcome of these lawsuits cannot be guaranteed, Lead Counsel believe that the lawsuits represent a valuable opportunity for U.S. Bre-X Class Members to obtain a recoveries where such recoveries might otherwise be doubtful or at least problematic. 24. The 2002 Settlement will also benefit U.S. Bresea Class Members. The fact that Bresea has limited assets, and the possibility that those assets could be materially dissipated, pose significant risks to U.S. Bresea Class Members. NOTICE OF SETTLEMENT FAIRNESS HEARING 25. NOTICE IS HEREBY GIVEN, pursuant to Rule 23 of the Federal Rules of Civil Procedure and an Order of the United States District Court for the Eastern District of Texas, Texarkana Division (the Court ) dated July 3, 2002, that a hearing will be held before the Honorable David J. Folsom in the U.S. Courthouse, 500 State Line Avenue, 3rd Floor, Texarkana, Texas, at 10:00 a.m., on September 12, 2002 (the Settlement Fairness Hearing ) to determine whether a proposed settlement of the Action with respect to defendant Bresea only, as set forth in the 2002 Settlement, is fair, reasonable and adequate for the settlement of the U.S. Class claims against Bresea, and to consider the application of Lead Counsel for an award of costs and expenses. 26. The Court, by Order for Notice and Hearing in Connection with Settlement with Bresea Resources Ltd., dated July 3, 2002, has provisionally certified a Plaintiff Class (the U.S. Class ) consisting of: All persons who purchased or otherwise acquired Bre-X Minerals Ltd. common shares and/or Bresea Resources Ltd. common shares between January 17, 1994 and March 26, 1997 (inclusive), and who suffered a loss as a consequence of dealing in shares of Bre-X and/or Bresea; excluding all non-u.s. residents who purchased their Bre-X and/or Bresea shares on a Canadian stock exchange; and further excluding defendants in this action; members of their immediate families; any subsidiary, affiliate, or employee of such defendant; any entity in which any such excluded person has or had a controlling interest; and the legal representatives, heirs, successors, and assigns of any such excluded person. BACKGROUND OF THE LITIGATION 27. This is a class action on behalf of persons who purchased the common stock of Bre-X and/or Bresea. The Complaint seeks remedies under the Securities Exchange Act of 1934 (the Exchange Act ). The facts set forth in this section are based on allegations set forth in the Complaint, a complete copy of which is available on the web site established for the Action, at 4

5 28. Bre-X became a star of the investing public based on its ownership of a purportedly huge gold deposit -- perhaps the largest ever discovered -- located in the Busang area of East Kalimantan, Indonesia. Defendants descriptions of gold-laden drill samples extracted from Bre-X s properties were accepted as proof of the Company s claims, until independent analysis and drilling revealed a massive deception perpetrated by defendants. The Bre-X saga is now called the gold fraud of the century. 29. After making repeated statements that million ounces of gold were available for extraction at Busang, Bre-X announced on March 26, 1997 that a mining consultant had concluded that there was a strong possibility that prior estimates concerning the quantity of gold at Busang have been overstated because of invalid samples and assaying of these samples. That same day, Freeport McMoRan Gold & Copper, Inc. ( Freeport ), which had been announced as Bre-X s partner in the Busang project, reported that its analyses of seven core samples indicate insignificant amounts of gold. That news came one week after the announced death of Bre-X s chief geologist, who reportedly fell from a helicopter while traveling to Busang to meet with Freeport representatives to discuss their assay results. 30. Following the initial announcement on March 26, 1997, trading in Bre-X stock was halted on the U.S. and Canadian markets. Upon resumption of trading, Bre-X s stock price plummeted 83 percent, resulting in a market loss of approximately $2 billion. Bresea stock, which tracked Bre-X in market performance, followed suit. Trading in both stocks was halted permanently in May The Complaint alleges, among other things, that Bre-X, Bresea, and their management, as well as other defendants -- J.P. Morgan Securities, Inc., P.T. Kilborn Pakar Rekayasa, Kilborn Engineering Pacific Ltd., Nesbitt Burns Inc., and Barrick Gold Corporation -- knowingly or recklessly issued or made false and misleading press releases or other public statements regarding Bre-X s and Bresea s assets, value, and financial condition during the Class Period. 32. The Complaint further alleges that plaintiffs and other members of the U.S. Class purchased the common stock of Bre-X and Bresea during the Class Period at artificially inflated prices as a result of the defendants dissemination of false and misleading statements regarding Bre-X and Bresea in violation of Sections 10(b) and 20(a) of the Exchange Act, and Rule 10b-5 promulgated thereunder. SUBSEQUENT EVENTS 33. On May 8, 1997, the Alberta Court gave Bresea protection under the Companies Creditors Arrangement Act (the CCAA ) and required it to file a plan of reorganization by October 31, 1997 and appointed PricewaterhouseCoopers Inc. ( PWC ) as Monitor. Bresea did not file a plan of reorganization as required, and the protection afforded by the CCAA expired on October 31, In the fall of 1997, class counsel in the Ontario Class Action applied to the Alberta Court to have Bresea placed in bankruptcy. 34. On November 5, 1997, the Alberta Court appointed PWC as Interim Receiver and directed PWC to place Bresea in bankruptcy. Subsequently, however, the Alberta Court of Appeals concluded that Bresea may not be insolvent and prohibited PWC from placing Bresea in bankruptcy. On February 11, 1998, the Alberta Court issued a receivership order setting out the powers and duties of PWC as Interim Receiver. 35. On November 5, 1997, Bre-X made a voluntary assignment pursuant to provisions of the Bankruptcy and Insolvency Act (Canada) ( BIA ). Deloitte was named as Trustee, and its appointment was subsequently affirmed by the Alberta Court. BACKGROUND TO THE SETTLEMENT 36. Settlement discussions among Bresea, Deloitte, Lead Counsel, counsel for the Ontario Class Members, and class counsel in the Ontario Bresea Action, which began in 2000, were difficult, contentious, and prolonged. A conditional agreement was reached in October 2000 and amended in January Negotiations continued among the parties in On August 23, 2001, the parties finalized the terms of their agreement, and after final documentation, all parties executed the 2001 Settlement in October On November 5, 2001, Plaintiffs and Bresea jointly moved the Court for preliminary approval of the 2001 Settlement. After oral argument on November 20, 2001, and briefing by the parties, the Court denied preliminary approval of the settlement on January 15, 2002 (the January 15 Order ), concluding that class certification with respect to purchasers of Bre-X and/or Bresea common stock who acquired their shares either before January 17, 1994 or after March 26, 1997 was not appropriate. The parties to the 2001 Settlement thereafter engaged in further settlement discussions, which resulted in further amendments to the settlement as embodied by the 2002 Settlement. 38. The 2002 Settlement contains several provisions that differ from the terms of the 2001 Settlement. Those terms are as follows: (a) in compliance with the Court s January 15 Order, the Class Period has been defined in the 2002 Settlement to exclude Bre-X and Bresea share purchasers who acquired their shares either before January 17, 1994 or after March 26, 1997; (b) the $5.9 million to be paid by Bresea will reflect separate payments by Bresea of $1.31 million to the Bre-X Trustee in consideration of the eight million Bresea shares held by the Bre-X Trustee and of $4.59 million for settlement of the class actions pending in the U.S. and Canada, the latter of which (less attorneys fees and expenses and certain other deductions) will be distributed directly to eligible Bre-X class members and will not be available to the Bre-X Trustee for any purpose; (c) funds payable to Lead Counsel for past and future expenses are reduced from $492,000 under the 2001 Settlement to $382,666 under the 2002 Settlement; (d) funds payable to class counsel in the Ontario Class Action for attorneys fees and expenses are reduced from $984,000 under the 2001 Settlement to $765,333 under the 2002 Settlement, while attorneys fees and expenses payable to class counsel in the Ontario Bresea Action remain $131,000; (e) the Bre-X Trustee has agreed to seek as soon as practicable a declaration that Bre-X share purchasers are creditors of Bre-X, but such a declaration is not a condition precedent to the rights and obligations of the parties under the 2002 Settlement; (f) recoveries from Bre-X/Bresea insiders Rolando C. Francisco, Hugh C. Lyons, John D. Thorpe, Bryan A. Coates, and Paul M. Kavanagh will no longer be shared among this Action, the Ontario Class Action, and the Bre-X Trustee; and (g) recoveries from John B. Felderhof, the Estate of David G. Walsh, Jeannette Walsh, and T. Stephen McAnulty will be shared among this Action, the Ontario Class Action, and the Bre-X Trustee, only if the Bre-X Trustee obtains an order declaring Bre-X share purchasers to be creditors of Bre-X. 39. Lead Counsel believe the revised settlement provides fair and adequate compensation to U.S. Class Members. Most significantly, the 2002 Settlement provides that U.S. Bre-X Class Members will receive a direct distribution of $4.59 million from the settlement proceeds paid by Bresea, less attorneys fees, expenses, and certain other deductions. Those funds will no longer be available to the Bre-X Trustee for any purpose, which the

6 Settlement had expressly allowed. Given that these settlement funds will be distributed directly to class members, an order from the Alberta Bankruptcy Court declaring that Bre-X share purchasers are creditors of Bre-X is no longer necessary, and that provision has accordingly been removed and replaced by a commitment from Deloitte to seek such an order as soon as practicable. In addition, because certain insider defendants have been dismissed from the Ontario Class Action since the execution of the 2001 Settlement, Lead Counsel concluded that it was inappropriate to pool such claims given the lack of any benefit to U.S. Bre-X Class Members. Accordingly, recoveries obtained from Messrs. Francisco, Lyons, Thorpe, and Kavanagh in this Action will not be shared with class members in the Ontario Class Action or with the Bre-X Trustee. (Mr. Coates is not a defendant in this Action.) 40. Prior to executing both the 2001 Settlement and the 2002 Settlement, Lead Counsel conducted an investigation relating to the events and transactions underlying plaintiffs claims and conducted pretrial discovery on the merits, including, inter alia, analysis of tens of thousands of pages of documents produced by Deloitte and Bresea and other parties, including certain of Bre-X s and Bresea s directors and officers. Lead Counsel s decisions, on behalf of Lead Plaintiffs and proposed Class Representatives, to execute both the 2001 Settlement and the 2002 Settlement were made with knowledge of the facts and circumstances underlying plaintiffs claims and the strengths and weaknesses of those claims, as well as the financial condition and new management of Bresea. In determining to settle the Action with respect to Bresea, Lead Counsel has taken into account most importantly the likelihood (or unlikelihood) of being able to collect any greater amount from Bresea by such continued litigation. Plaintiffs believe that the 2002 Settlement confers substantial benefits upon the U.S. Class. Based upon their consideration of all of these factors, Lead Plaintiffs, the proposed Class Representatives, and Lead Counsel have concluded that it is in the best interest of plaintiffs and the U.S. Class to settle the Action, as against Bresea only, on the terms described herein. 41. The 2002 Settlement with Bresea does not constitute an admission by Bresea of wrongdoing or liability whatsoever. 42. The Court has not finally determined the merits of plaintiffs claims against Bresea or the defenses thereto. This Notice does not imply that there has been or would be any finding of violation of the law by Bresea or that recovery could be had in any amount if the Action were not settled as against Bresea. TERMS OF THE SETTLEMENT 43. The 2002 Settlement provides for a global settlement of all claims asserted against Bresea, not only in the U.S. Class Action, but also in the Ontario Class Action, the Ontario Bresea Action, and the Alberta Action. 44. This Notice contains a summary of the terms of the 2002 Settlement as it relates to the U.S. Class. Please refer to for the full terms of the 2002 Settlement. 45. In settlement of the claims which have or could have been asserted against Bresea, and all claims and actions against Bre-X which Bresea may have, and subject to the terms and conditions of the 2002 Settlement, Bresea will give the following consideration: A. Pursuant to the Arrangement, as previously approved by the Alberta Court, Bresea will contribute a pool of shares representing approximately 10% of the equity of Bresea, as reorganized, which shall be paid by pro rata distribution to satisfy the claims of various claimants as described in the Arrangement, including specifically the U.S. Class Members in the U.S. Class Action who purchased or who otherwise acquired Bresea common shares and suffered a net loss as a consequence, and any person who opts out of the U.S. Class Action. B. Bresea shall deliver a Settlement Fund of approximately $4.59 million to Deloitte, as to which Deloitte will act as a distribution agent for U.S. Bre-X Class Members and class members in the Ontario Class Action. The Settlement Fund delivered by Bresea to Deloitte shall be applied by Deloitte as follows: 1. First, Deloitte shall set aside and hold $1,148,000, less certain Notice costs of the Settlement Fund, as payment of legal fees, costs, disbursements and taxes in the Ontario Class Action and the U.S. Class Action allocated as follows: (a) The sum of $765,333 in trust for the Ontario Class Members (the Canadian Trust ) to pay legal fees, costs, disbursements and taxes in the Ontario Class Action; (b) The sum of $382,666 in trust for the U.S. Bre-X Class Members (the U.S. Trust ) to pay past and future costs and expenses in the U.S. Class Action; 2. Second, in payment of the amount approved by the appropriate court for fees, disbursements and taxes of class counsel in the Ontario Bresea Action, up to a maximum amount $131,000; 3. Third, Deloitte shall set aside and hold $500,000 of the Settlement Fund as a reserve for the purpose of paying any award of court costs to Defendants in either the Ontario Class Action or the U.S. Class Action, up to a maximum of $250,000 per action; such payments of court costs will be made only provided (a) an award of court costs is made in Defendants favor in either the Ontario Class Action or the U.S. Class Action; and (b) such court authorizes the payment of court costs by Deloitte from this reserve. The reserve will terminate only upon the expiration of all appeal periods in both the Ontario Class Action and the U.S. Class Action, or no later than December 31, 2006, without court authorization to the contrary; and 4. Fourth, the remainder of the Settlement Fund (the Class Action Claimants Fund ) shall be distributed among the class members in the Ontario Class Action and the U.S. Bre-X Class Members who file a proof of claim in accordance with the direction given herein. Deloitte shall be paid its reasonable costs of administering and distributing the Class Action Claimants Fund, as well as its reasonable costs of administering the claims process, which costs shall be paid from and form a first charge on the Class Action Claimants Fund. 46. Provided that the Alberta Bankruptcy Court enters a final, non-appealable order declaring that U.S. Bre-X Class Members and class members in the Ontario Class Action are creditors of Bre-X for their net losses pursuant to the BIA, the 2002 Settlement provides for the sharing of recoveries in certain actions, including the U.S. Class Action, on claims against the Common Insider Defendants, as follows: 6

7 A. Any monies recovered in the Ontario Class Action, in the Trustee Actions, and in the U.S. Class Action on behalf of the U.S. Bre-X Class Members by judgment, settlement, or otherwise, and whether directly or indirectly from the Estate of David Walsh, Jeannette Walsh, John Felderhof, and Stephen McAnulty shall be paid to Deloitte (i.e., the Recovered Monies ). B. Immediately after receipt of the Recovered Monies, Deloitte shall apply the Recovered Monies as follows: 1. First, in payment of all disbursements and taxes incurred in the Ontario Class Action that are approved for payment by the Ontario Court and all disbursements and taxes incurred in the U.S. Class Action that are approved for payment by the U.S. Court insofar as such disbursements and taxes are reasonably related to Recovered Monies; 2. Second, from the balance of the Recovered Monies remaining after making the payments provided for in section (1) above (i.e., the Remaining Recovered Monies ), Deloitte shall: (a) Pay into the Canadian Trust as legal fees in the Ontario Class Action % of the Remaining Recovered Monies, plus applicable taxes; (b) Pay into the U.S. Trust as legal fees in the U.S. Class Action 8.334% of the Remaining Recovered Monies, plus applicable taxes; 3. Third, Deloitte may use all or part of the balance of the Remaining Recovered Monies, after paying the amount referred to in sections (1) and (2) above for the purposes of the administration of the Bre-X bankruptcy, subject to its accounting to the Alberta Court; and 4. Fourth, allocate any portion of the Remaining Recovered Monies, after payment of the amounts required by sections (1), (2), and (3) above in the exercise of its discretion and following consultation with the provisional inspectors, counsel in the Ontario Class Action, and Lead Counsel, among the Trustee Actions, the Ontario Class Action, and the U.S. Class Action, and any amounts allocated to the Ontario Class Action and the U.S. Class Action shall be added to the Class Action Claimants Fund and distributed accordingly. The allocation shall be approved by the Alberta Court. 47. The effectiveness of the terms of the settlement is conditioned upon the following approvals, some of which, in the context of the 2001 Settlement have previously been obtained: A. the Alberta Court or the Alberta Bankruptcy Court, as the case may be, shall have: 1. approved the completion and performance by Bresea of the terms of the settlement, including the filing of the Arrangement and the payment of the Settlement Fund to Deloitte (such approval as to the 2001 Settlement having been granted on August 27, 2001 and September 26, 2001); and 2. approved, on the application of Deloitte, the completion and performance by Deloitte of the terms of the settlement, including undertaking the duties and obligations contemplated by the provisions of the 2002 Settlement (such approval as to the 2001 Settlement having been granted by the Alberta Bankruptcy Court on October 19, 2001); B. the Ontario Court has approved the completion and performance of the terms of the settlement (such approval having been granted as to the 2001 Settlement on October 29, 2001); C. the U.S. Court has approved the completion and performance of the 2002 Settlement; and D. such regulatory approvals or exemptions as are necessary shall have been obtained to permit Bresea to complete the transactions contemplated by the terms of the settlement. 48. Bresea shall pay the sum of $2,000,000 (CDN) (or approximately $1.31 million) to Deloitte for the eight million Bresea shares held by the Bre-X Trustee. 49. As soon as practicable, Deloitte will seek a declaration from the Alberta Bankruptcy Court that U.S. Bre-X Class Members and class members in the Ontario Class Action are creditors of Bre-X for their net trading losses pursuant to the BIA. 50. If the 2002 Settlement is finally approved, a judgment shall be entered in the U.S. Class Action (I) approving the completion and performance of the 2002 Settlement, and (ii) dismissing the claims of the U.S. Class Members against Bresea with prejudice. 51. The 2002 Settlement provides for a settlement with defendant Bresea only. The 2002 Settlement does not settle claims against the remaining nonsettling Defendants: Bre-X Minerals Ltd., John B. Felderhof, Estate of David G. Walsh, Jeanette Walsh, T. Stephen McAnulty, John B. Thorpe, Rolando C. Francisco, Hugh C. Lyons, Paul M. Kavanagh, J.P. Morgan Securities, Inc., P.T. Kilborn Pakar Rekayasa, Kilborn Engineering Pacific Ltd., Nesbitt Burns Inc., and Barrick Gold Corporation. 52. Monies recovered in the U.S. Class Action on behalf of U.S. Bresea Class Members are not included in the amounts that will be paid to Deloitte, pursuant to the pooling arrangement with respect to claims against the Common Insider Defendants described above. 53. If the 2002 Settlement is approved by the Court, all claims which have been asserted in the Action against Bresea will be dismissed on the merits and with prejudice as to all U.S. Class Members. For Purchasers of Bre-X Common Stock: PLAN OF ALLOCATION OF SETTLEMENT PROCEEDS AMONG CLASS MEMBERS 54. Members of the U.S. Class who had losses from transactions in Bre-X common stock during the Class Period are required to submit a Bre-X Proof of Claim form to share in the Settlement Fund and to share from any Remaining Recovered Monies (if any), less fees and expenses. Deloitte shall conduct the 7

8 claims process for U.S. Bre-X Class Members and class members in the Ontario Class Action generally in accordance with the BIA or such other procedures as may be directed by this Court or by the Ontario Court. 55. U.S. Bre-X Class Members who had losses from transactions in Bre-X common stock during the Class Period should submit their Bre-X Proof of Claim to: Deloitte & Touche Inc. Suite 3000, Scotia Centre 700 Second Street, S.W. Calgary, Alberta Canada T2P 0S7 Attn: Rick Anderson Bre-X Proofs of Claim must be mailed to the above address no later than October 24, For Purchasers of Bresea Common Stock: 56. U.S. Class Bresea Class Members who had losses from transactions in Bresea common stock during the Class Period are required to submit a Bresea Proof of Claim form to share in the Pool of shares of reorganized Bresea that are allocated to U.S. Bresea Class Members. Bresea shall process the claims of U.S. Bresea Class Members in accordance with the Arrangement. Bresea shall determine each class member s pro rata share of the pool of shares of reorganized Bresea allocated to U.S. Bresea Class Members. 57. U.S. Bresea Class Members who had losses from transactions in Bresea common stock during the Class Period should submit their Bresea Proof of Claim to: Sasamat Capital Corporation Attn: Company Secretary Burrard Street Vancouver, British Columbia Canada V6C 3A6 Bresea Proofs of Claim must be mailed to the above address no later than October 24, Claims Process Procedures: 58. Members of the U.S. Class who purchased both Bre-X and Bresea common stock during the Class Period and had losses from both should file two Proofs of Claim, one for their Bre-X shares and another for their Bresea shares. 59. If a Proof of Claim is rejected, in whole or in part, written explanation of the rejection shall be given to such class member who will then have an opportunity to dispute such rejection. Lead Counsel shall be given a copy of all such rejection notices and will have standing to participate (whether for or against acceptance of any such claim) in any hearing or process dealing with disputed claims, in Lead Counsel s sole discretion. 60. Members of the U.S. Class who do not submit acceptable Proofs of Claim will not share in the settlement proceeds of this settlement with defendant Bresea. Members of the U.S. Class who do not either submit a request for exclusion or submit an acceptable Proof of Claim will nevertheless be bound by the settlement and the Order and Final Judgment of the Court dismissing this Action. 61. If you are a member of the U.S. Class and you do not properly exclude yourself from the U.S. Class, you will be bound by the settlement and the Order and Final Judgment of the Court dismissing this Action, even if you do not submit a Proof of Claim. If you exclude yourself from the U.S. Class, you will not be bound by the judgment of the Court in this Action, although you may nevertheless be bound by the terms of the Bresea Arrangement. 62. All Proofs of Claim must be submitted by the date specified in this Notice unless such period is extended by Order of the Court. 63. With respect to submitting Proofs of Claim for Bresea shares, each U.S. Bresea Class Member shall be deemed to have agreed to the jurisdiction of (I) the United States District Court for the Eastern District of Texas, Texarkana Division; and (ii) the Alberta Court. With respect to submitted Proofs of Claim for Bre-X shares, each U.S. Bre-X Class Member shall be deemed to have agreed to the jurisdiction of (I) the United States District Court for the Eastern District of Texas, Texarkana Division; and (ii) the Alberta Bankruptcy Court. THE RIGHTS OF CLASS MEMBERS 64. The United States District Court for the Eastern District of Texas, Texarkana Division, has certified this Action to proceed as a class action for purposes of the proposed settlement. If you purchased common stock of Bre-X and/or Bresea between January 17, 1994 and March 26, 1997, inclusive, and suffered a loss as a consequence of dealing in shares of Bre-X and/or Bresea, then you are a member of the U.S. Class. Members of the U.S. Class have the following options pursuant to Rule 23 (c) (2) of the Federal Rules of Civil Procedure: A. If you wish to remain a member of the U.S. Class with respect to the claims against Bresea, you may share in the proceeds of the settlement, provided that you submit an acceptable Proof of Claim. Such members of the U.S. Class will be represented by the Plaintiffs and their counsel, unless you enter an appearance through counsel of your own choice at your own expense. You are not required to retain your own counsel, but if you choose to do so, such counsel must file an appearance on your behalf on or before September 5, 2002, and must serve copies of such appearance on the attorneys listed in 67 below. B. If you do not wish to remain a member of the U.S. Class with respect to the claims against Bresea, you may exclude yourself from the U.S. Class for purposes of this proposed certification and settlement by following the instructions in 65 below. Such persons will NOT receive any share of the 8