GOLD: A Pinch of Salt

When assayers announced an incredibly rich gold strike in the Orange Free State last June, the shares of Joseph Milne’s Free State Gold Areas, Ltd., which had made the drilling, nearly tripled in price on Johannesburg’s stock exchange. Milne’s paper profits were estimated at from $8 million to $20 million (TIME, June 27) on what was called the richest gold strike in South African history. But the boom collapsed when a police-supervised test showed that the ore was only a fraction as rich as the three previous tests had showed.

The South African government, which was preparing to try Milne on a charge of fraud after one of his companies was thrown into receivership, began investigating. Last week, after three months of digging into the affair, it explained why there had been such a difference in the samples. Said the government: “The gold content of each of three ore samples . . . had been fraudulently increased … or . . . ‘salted.’ “

The police had not yet disclosed who had done the “salting,” or how.* Next day, Milne’s Free State Gold Areas tumbled 41% in value, to 8s. a share ($1.12).

* Deep mines can be salted by pumping in a solution of gold dissolved in acid, or stuffing gold into the core to be tested.