Article in the Northern Miner by Talma Tarikh. Keiran Logan of Logantek, Dean Turner as Resourcve Geologist with CEO Tom Bowen and Biz Mgr Doug McGay of InterGeo Copper and the Rest of the Russian and International team.

1. Site visit: IG Copper advances
Malmyzh copper-gold project in
Russia
IGC's crew and visitors at the Malmyzh copper-gold project in Far East Russia. Photo by Salma
Tarikh.
POSTED BY: SALMA TARIKH DECEMBER 9, 2016
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KHABAROVSK, RUSSIA — IG Copper (IGC), a privately held U.S. company, is
making headway at its 51% held Malmyzh copper-gold porphyry project in Far
East Russia, near the border of China, where Freeport-McMoRan (NYSE:
FCX) holds the remaining 49%.
In mid-2016, IGC successfully completed the Russian government’s review for
“strategically significant” deposits and received a Strategic Industries Law

2. (SIL) approval. The SIL approval is required for any large copper, gold,
platinum group metals or uranium deposit to be held by a non-Russian firm.
As a result, IGC’s joint venture firm Amur Minerals LLC — not Amur
Minerals Corp. (LON: AMC) — retained full control of its 226.9 sq. km
exploration and mining licenses at Malmyzh as well as the mining and
production rights for all minerals extracted from Malmyzh and Malmyzh
North.
The approval makes it easier for IGC and its partner to raise funds and push
the massive project— containing an inferred resource of 12.5 billion lb.
copper and 9.1 million oz. gold (nearly 16 billion lb. copper-equivalent) — to
development.
Monument to Count Nikolai Muravyov-Amurskii (1891) in Khabarovsk, Russia. Photo by Salma
Tarikh.
On the SIL announcement, IGC’s largest shareholder Eurasian Minerals
(TSXV: EMX; NYSE-MKT: EMXX) soared 22% to $1.28 per share on July 25.
Eurasian owns a 36% equity stake in IGC on a fully diluted basis.
During a mid-November site visit, Scott Close, Eurasian’s director of investor
relations, reveals that Eurasian heard that IGC needed cash to explore
Malmyzh. Interested, the royalty and prospect generator bought its stake in
IGC through three private placements, totaling just under US$8 million in
2011.

3. Eurasian, known for being a pioneer in places such as Serbia, Kyrgyzstan,
Turkey, believes its IGC investment could become its “most lucrative.”
“At some point, IGC is going to be bought out by somebody for way too much
money,” Close reckons. Our taxi crawls through the evening rush hour traffic
from South Korea’s Incheon international airport to the heart of Seoul. The
plan is take a three-hour flight the next morning (Nov. 16) to Khabarovsk Krai
in Russia’s Far East.
Close assumes a large Asian entity or a Western multinational company
might be interested in a potential takeover. Project partner Freeport, given its
current debt load, might not be a likely candidate. Freeport declined to
comment on its plans for Malmyzh.
“Some people get a little nervous when you start talking about Russia,” Close
says, adding he has not come across any evidence of any mining project ever
being nationalized in Russia. The country’s oil and gas sector, however, is a
“completely different ball of wax,” he adds.
Currently, Russia’s second and third largest gold producers are Western
miners: Kinross Gold (TSX: K; NYSE:KGC) and Petropavlovsk (LON: POG).
“It really does show the world that Russia is still open for business with
Western companies. And it’s being done right now.”
Humble beginnings
The city of Khabarovsk gives off a faint Parisian vibe, with its wide
boulevards, accented with vintage street lamps, and streets lined with shops,
cafes and bars.
Home to about 600,000 people, Khabarovsk is the second largest city in
Russia’s Far East, after Vladivostok, about an hour flight or 650 km to the
south. Khabarovsk sits 30 km from northeastern China along the Amur River,
the world’s tenth longest river, which forms a natural border between these
parts of Russia and China.

4. A shot of the Amur River in Khabarovsk, Russia. Photo by Salma Tarikh.
At IGC’s spacious office in downtown Khabarovsk, American CEO Tom
Bowens, a few weeks shy of turning 54, and Western Australian business
manager Douglas McGay, 69, provide a brief history of IGC, previously known
as InterGeo Copper.
Bowens, a trained geologist — with a penchant for cowboy hats and singing —
and McGay, a licensed surveyor, both know each other from their days in
Mongolia and share an entrepreneurial streak.
Bowens began combing through Russia’s Far East, as the vice president of
exploration and chief of operations for Lukas Lundin’s Fortress Minerals, 11
years ago. He played a crucial role in the discovery of two major deposits in
the Far East, including the Svetloye gold project and Malmyzh.
McGay spent the past 20 years in Mongolia, building and managing resource-
oriented businesses. He previously held senior roles in Harrods Minerals
Mongolia and Ivanhoe Mines Mongolia around the Oyu Tolgoi discovery
period. He was also the founder and CEO of Batu Mining.

5. McGay reveals he delayed his plan to retire in a log cabin he built himself in
the hills outside of Ulaanbaatar to join Bowens in Russia a year ago.
Bowens’ interest in the region dates back to his time at the Colorado School
of Mines, where he graduated with a degree in geological engineering and
master’s degree in geology.
IGC’s CEO Tom Bowens provides an overview of IG Copper in his office in Khabarovsk. Photo by
Salma Tarikh.
Sitting behind his desk, the jovial and sharply dressed executive explains as a
student he was intrigued by how the deposits that formed around the Pacific
Ring of Fire— known for frequent earthquakes and volcanic eruptions—
stopped in Russia, possibly due to a lack of data. “It was just like a big juicy
steak sitting there,” he says of the potential.
In 2005, Fortress did a license swap with Phelps Dodge on its Mongolian
licenses, in exchange for 51% of Phelps’ Russian subsidiary that owned the
Svetloye license.

6. In the following year, Phelps identified the Malmyzh target, after perusing
archives of data in Moscow from the Soviet days.
IGC believes the Soviets had overlooked Malmyzh as it was a small gold in
stream anomaly. Generally, they were exploring for tin deposits in the
Khabarovsk Krai because the “high-grade gold deposits in the Magadan
district were sufficient for their needs,” Bowens explains.
Freeport acquired Phelps’ interest in Malmyzh after it took over Phelps in
2007. Three years later, Fortress exited Russia. It sold the Svetloye project to
Russia’s Polymetal International and its 51% interest in Malmyzh to
Bowens’ IG Copper.
IGC paid US$500,000 for the earn-in agreement on Malmyzh in 2010. “I heard
later that Lukas said it was one of his biggest mistakes,” Bowens says and
chuckles.
Malmyzh a district-scale play
IGC’s flagship Malmyzh copper-gold porphyry project is 220 km or a four-
hour smooth drive northeast of Khabarovsk. Beyond the city, the paved
highway passes a few settlements and then cuts through forested terrains,
with little but snow-covered trees and low-lying hills in sight.
After a few pit stops, including one for borscht and cabbage-stuffed rolls, we
arrive at camp, where IGC’s eclectic crew and two camp dogs greet us.
“Malmyzh is really a hallmark of what the potential is of this area,” Dean
Turner, an American resource geologist and consultant to IGC and Eurasian,
explains during a technical presentation. “This is a concealed porphyry
copper, not deposit, but district.”

7. IGC’s consultant Dean Turner reviews drill core samples from the Malmyzh project. Photo by
Salma Tarikh.
Malmyzh’s four porphyry deposits— Valley, Freedom, Central and Flats— and
over 10 porphyry targets occur within a district scale, 16 by 5 km intrusive
corridor concealed under shallow cover. Much of the property has more than
15 metres of cover.
IGC largely used ground magnetics to help delineate the hidden porphyry
deposits, as well as soil geochemistry to outline the copper and gold
anomalies.
From 2011 to the end of 2013, IGC drilled over 70,000 metres in 205 holes on
Malmyzh. A majority of that drilling went towards defining the project’s four
inferred resource deposits on nominal 200-metre centres. All four deposits
remain open at depth.
Using a copper-equivalent cutoff grade of 0.30%, Malmyzh contains a
National Instrument 43-101 open-pittable inferred resource of 1.66 billion
tonnes of 0.34% copper and 0.17 gram gold per tonne for 12.5 billion lb.
copper and 9.1 million oz. gold.
It hosts nearly 16 billion copper-equivalent lb. at 0.42% copper-equivalent.
Valley is the largest deposit with l billion tonnes at 0.41% copper-equivalent.
Freedom is the second largest with 334 million tonnes at 0.46% copper-
equivalent.

8. Copper-gold mineralization at Malmyzh occurs in diorite porphyries and
hornfelsed sedimentary rocks. Mineralization extends from shallow subcrop
to 400 to 600 metres depth.
Turner describes diorities as intrusive rocks and hornfels as altered
sedimentary rocks or “ugly” black rocks that “only a geologist could love.”
To help identify deeper copper-gold porphyry drill targets, IGC has contracted
Aussie geophysicist Keiran Logan who runs Logantek. So far, Logan has used
3-D induced polarization and 3-D magnetics on the project. He applied these
two methods on the Valley deposit to complete an orientation survey. The
results from the survey combined with these two methods will assist IGC in
exploring for “sweet spots” or higher grades at Malmyzh.
“Stacked deposits, deep high-grade core zones, and lateral overprinting of
adjacent deposits are all targets we are investigating for high grades,” Bowens
notes.
A view of the Malmyzh campsite, roughly 220 km northeast of Khabarovsk. Photo by Salma
Tarikh.

9. Touring the camp
IGC’s campsite can house a maximum of 120 people in a mix of cabins and
yurts. IGC currently has 100 employees, including 53 on site.
Project geologist Vlad Mramornov lets us peak inside his shared yurt
containing five beds, with a warm stove in the middle. Depending on the size
and quality, a yurt could cost around US$2,000 to US$3,000 apiece, making for
relatively cheap housing.
There is also a banya (sauna), where employees could soak in the heat after a
cold day’s work. “You’ll feel like you’re in paradise in an hour or so after,”
Mramornov says.
Once the drilled core arrives at camp, employees log and split the core,
according to international standards, before it goes to a ISO-certified
lab. Malmyzh has also gone through independent sampling, Turner says.
IGC’s geologist Vlad Mramornov inside of his yurt on the Malmyzh campsite. Photo by Salma
Tarikh.
After a stop at the core shack, we drive a few kilometres to where the drillers
are working on hole 211, the sixth hole in this year’s 35,000-metre program.
Drilling at Malmyzh resumed in late September, after IGC took a two-year
break to complete a GKZ report and the SIL review. The GKZ report includes a
Russian-compliant C1 and C2 reserve estimate (5.6 million tonnes copper and
9.6 million oz. gold) and a TEO economic analysis to show that the project is a
viable mining operation. The reserve estimate is not 43-101 compliant.

10. Bowens explains if a foreign-owned company has an asset with approved GKZ
reserves of more that 1.5 million oz. gold or 500,000 tonne copper then the
deposit becomes of strategic importance to the Russian Federation. As a
result, the company would then need an SIL approval to retain ownership.
IGC got the thumbs up for its GKZ report, which included the TEO economic
analysis, in mid-2015, and received the SIL approval in mid-2016. It also
prepared a 43-101 inferred resource estimate in May 2015.
There’s currently one drill turning at Malmyzh. IGC expects to bring on a
second drill in June 2017. It plans to drill another 35,000 metres by the end of
2017, with an aim of defining higher-grade zones, expanding known
resources and uncovering additional concealed porphyry deposits.
While it is still early days for the program, IGC has been hitting some
interesting intercepts.
In early November, IGC intersected a new blind discovery called Sleeper near
the Valley deposit. “We drilled it based on geomorphology and gut instinct,”
Bowens explains.
In early December, IGC began drilling hole 213 — its deepest hole to date. “It
is currently 775 metres vertical into well mineralized hydrothermal explosion
breccia in the Freedom NW deposit — many kilometres east of Sleeper — and
has been in this mineralized breccia starting at 100 metres from surface,”
Bowens shared in an email. “We are very excited!”

11. IGC’s CEO Tom Bowens (second right) poses with the drill crew at the Malmyzh copper-gold
project. Photo by Salma Tarikh.
To help fund the current program, IGC is raising US$10 million through an
equity raise, where it will issue 1 million shares at US$10 apiece. It currently
has 7.2 million shares outstanding.
“We plan on either closing it in mid-January and going one more year as a
private company or listing the company on the AIM in 2017,” Bowens says.
As of mid-November, IGC and Freeport have invested a total of US$35 million
on the project. To keep costs low, Bowens uses his private service company
KolymaGeo, equipped with three rigs. Drillers on average complete 70 metres
a day for an average cost of US$50 per metre.
KolymaGeo, contains about 10 of IGC’s early investors, and is IGC’s second
largest shareholder at 11%. Bowens uses the revenue generated by
KolymaGeo, which provides a range of services for other mining companies,
to fund IGC. The two companies share technical staff and office space.
Working in Russia

12. Back in the office in Khabarovsk, a beaming Bowens shows off two discoverers
medals that the Russian Federation awarded his team in 2015 for Malmyzh
and 2016 for Svetloye, which Bowens played a role in discovering years
earlier. The silver medals are the first two given to a foreign mining
company.
The executive believes the perceived geopolitical risk of investing in Russia
has stopped many Western firms and geologists from exploring the country’s
geological potential.
“If this was not Russia because everybody is scared of Russia, and you hit
Malmyzh, there would be Canadians all over it. Everybody would be going
‘eh,’” Bowens reckons.
Analysts at Florida-based Kopernik Global Investors write some of the
common risks investors have of Russia, include resource nationalization,
corruption, overlooking shareholders’ interests, government default and the
risk of war.
While acknowledging the risks, the analysts argue they are not unique to
Russia and in some cases are overblown. The country has a lot to offer,
including low tax rates, high saving rates, and high education levels, they
write. “Russia has gotten less risky while most developed markets have
become meaningfully more risky, yet the market is pricing that in reverse.”
As of late October, three of Kopernik’s top 10 holdings in its US$887.5-million
Global All-Cap fund were Russian firms: Gazprom, Sberbank of Russia and
RusHydro.
Despite the risks, the attitude towards working in Russia has been shifting.
The Fraser Institute’s 2015 survey of mining companies places Russia 47 out
of 109 jurisdictions in terms of overall investment attractiveness, just behind
Washington (46) and ahead of Spain (48). Since 2013, Russia has gone from 83
to 64 to 47. On the policy perception index, Russia ranked 75 in 2015, up from
97 in 2014.
IGC’s McGay attributes the improvement to Russia’s new tax laws, which
provide companies certain exemptions and reductions for income tax and
mineral extraction tax.

13. Al’bina Evgen’evna Gajda, the mayor of Nergen Village, says exploration at the Malmyzh project
gives young people in her community hope of potential jobs. Photo by Doug McGay.
So far, the Russian Federation and the nearby communities have been
supportive of the Malmyzh development, particularly because it can create
jobs and wealth.
As part of its social initiative, IGC contributes 0.5% of its annual exploration
expenditures to the nearby 550-person Nanai (native) village and 70-person
Russian village through a fund managed by a steering committee. The
villages, collectively known as Nergen, are about a 15-minute drive from the
project. For 2017, IGC plans to contribute US$500,000 to the fund.
Asked about the challenges of working in Russia, Bowens replies, “It’s cold.
The women are too pretty.” On a serious note, he reveals there are many
regulations that companies have to obey. “Some Westerns just consider them
burdensome and goofy and they don’t pay attention to them. And they break
the regulations. When you break them, you have to pay.”
In particular, Bowens says labour laws and forestry laws are “intense,” adding
there’s a lot of paperwork involved in cutting down trees even to make drill
pads. “So it’s not a country for old men.”
One of the common mistakes Western companies make is that they want to
joint venture with a strong Russian firm, Bowens says, adding that could
complicate the management of a project and resources.
While infrastructure could be a challenge, at Malmyzh it isn’t. The project is
adjacent to National Highway 46, and 65 km from the rail in Komsomolsk,
which is a 1.5-hour drive from the project. There’s also a high-voltage power
line within 500 metres of the project and a nearby natural gas pipeline.

14. “Compared to Oyu Tolgoi, Malmyzh is sitting in the middle of London,”
McGay says.
Looking ahead
IGC plans to add more ore and grade to the Malmyzh project before
construction at the project would have to start according to the project
implementation timeline in the GKZ report.
Geophysicist Keiran Logan explains how he has been helping IGC explore for deeper targets at
Malmyzh. Photo by Salma Tarikh.
The company intends to sit down with Russian regulators to extend the
current 2021 deadline by a few years, so it would have more time to fully
unlock the deposit’s potential and arrange financing.
According to the GKZ report, the Malmyzh project has a potentially low strip
ratio and a long mine life, with decent project returns even at current copper
prices.
IGC is currently optimizing the project. It has hired Oreoll Engineering to
revise the TEO economic analysis by updating the ruble to U.S. dollar
conversion rate and assessing the economics of shipping the copper-gold
concentrate to Asia via the closer Vanino port instead of shipping it to a
processing facility in Western Russia.
As metal prices improve, Bowens notes that will further boost the value of the
Malmyzh project (currently estimated at US$430 million).

15. In an October research note, TD Securities analysts write that the “copper
market will move into deficit over the next several years, with the supply gap
opening up by 2020.” Their long-term copper price forecast is US$3.10 per lb.
Spot copper closed Dec. 6 at US$2.65. Over the past month, it has gained
15.6%.
IGC also plans to complete a 43-101-compliant preliminary economic
assessment on Malmyzh in late 2017.
Asked if he would be open to selling Malmyzh, Bowens says, “To me selling it
now… would be stupid because I wouldn’t make nearly as much money. I’m
not young, but I plan on being around long enough to spend whatever I get
out of this.”
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TAG:Site Visit
COMMODITY: CopperGold
REGION: Russia and CIS
COMPANY: Eurasian Minerals IncFreeport-McMoRan IncIG Copper LLCKinross Gold
CorporationPetropavlovsk PLC