Strategic Investments

IG Copper LLC

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EMX has been participating in the advancement of the Malmyzh porphyry copper-gold project in Far East Russia since identifying IG Copper LLC ("IGC") as an early-stage strategic investment opportunity in 2011. EMX is IGC's largest shareholder with 39% of the issued and outstanding shares. The Malmyzh exploration and mining licenses are held by a joint venture between IGC (51%) and Freeport-McMoran Exploration Corporation (49%), with IGC operating and managing the project. Malmyzh is a grassroots discovery that has rapidly developed into a world-class district-scale exploration project. IGC also 100% controls the Shelekhovo and Salasinskaya exploration projects ~150 kilometers northeast of Malmyzh.

Malmyzh Project Overview

Malmyzh is located approximately 220 kilometers northeast of the city of Khabarovsk and the nearby border with China. The joint venture's land position totals 226.9 square kilometers covering the project area, and consists of the Malmyzh and Malmyzh North exploration and mining licenses (152.8 sq km), as well as the Malmyzh Flanks exploration license (74.1 sq km).

Malmyzh's porphyry deposits, prospects, and targets occur within a district-scale 16 by 5 kilometer intrusive corridor concealed beneath shallow cover. Mineralization extends from shallow subcrop (~1 to 50 meters) to greater than 400 to 800 meters depth. The porphyry centers occur as Cretaceous-age dioritic stocks that intruded and hornfels-altered siltstone and sandstone sedimentary sequences. Copper-gold mineralization occurs in the porphyry intrusives, as well as in the hornfels-altered and stockworked sedimentary wall rocks.

IGC's drill campaigns have been designed to meet Russian Federation and international reporting requirements. There is a project total of 221 diamond drill holes (HQ and NQ) totaling 74,000 meters that has delineated porphyry copper-gold mineralization at fourteen separate target areas concealed beneath a shallow cover of overburden. The majority of the drill meters (i.e., ~55,000 m) have been concentrated on defining the Valley, Freedom (SE), Central, and Flats inferred resource deposits on nominal 200 meter centers.

The open pit constrained inferred resources at a 0.30% copper equivalent cut-off are 1,661 million tonnes at average grades of 0.34% copper and 0.17 g/t gold, or 0.42% copper equivalent, containing 5.65 million tonnes (12.45 billion pounds) copper and 9.11 million ounces gold, or 7.06 million tonnes (15.56 billion pounds) copper equivalent. All four inferred resource deposits (i.e., Valley, Freedom (SE), Central, and Flats) are open at depth.

Malmyzh Inferred Resources at a 0.30% CuEq Cut-off.
Deposit Million
Tonnes
CuEq % Cu % Au
g/t
CuEq Million
Tonnes
Cu Million
Tonnes
CuEq
Billion lbs
Cu
Billion lbs
Au
Million Oz
Valley 1,000 0.41 0.34 0.15 4.13 3.38 9.10 7.44 4.88
Freedom
(SE)
334 0.46 0.34 0.24 1.54 1.13 3.40 2.50 2.63
Central 218 0.45 0.39 0.12 0.97 0.85 2.15 1.87 0.81
Flats 109 0.38 0.27 0.23 0.41 0.29 0.91 0.64 0.79
TOTAL 1,661 0.42 0.34 0.17 7.06 5.65 15.56 12.45 9.11
Note: Totals may not sum to 100% and calculations based on this table may differ due to rounding.

* Phil Newall, PhD, BSc, CEng, FIMMM, a Qualified Person under NI 43-101 and managing director of Wardell Armstrong International, an independent UK based consulting company, provided the statement of Malmyzh open pit constrained Inferred Resources effective as of May 1, 2015 under NI 43-101 Standards of Disclosure for Mineral Projects and CIM definition standards. Copper equivalent was calculated as CuEq% = Cu% + (Au g/t x 0.5), and assumed prices of $3.25/lb Cu and $1400/oz Au, with recoveries of 90% Cu and 70% Au. See EMX news release dated May 26, 2015, and SEDAR filed report titled "NI 43-101 Technical Report on the Initial Mineral Resource Estimate for the Malmyzh Copper-Gold Project, Khabarovsk Krai, Russian Federation" with an effective date of May 1, 2015 and filing date of July 10, 2015 (which can be downloaded here). For more information on the CuEq calculation, exploration results, QA/QC procedures, and methodology used to estimate the Malmyzh inferred resources.

In-fill drilling may lead to the delineation of discrete higher grade zones of copper-gold mineralization, and will provide additional confidence for resource estimation. Relatively elevated copper-gold grades are often hosted in the potassically altered rocks at Malmyzh. For example, at Valley, this style of alteration and mineralization is developed to the southeast in shallow hornfels-host rocks that occur from near-surface to depths of ~150 to ~250 meters. A table of inferred resources at a range of cut-off grades is given below (base case at 0.30% CuEq cut-off).

Malmyzh Inferred Resources at a Range of CuEq% Cut-offs.
CuEq%
Cut-off
Million
Tonnes
CuEq % Cu % Au
g/t
CuEq
Million Tonnes
Cu
Million Tonnes
CuEq
Billion lbs
Cu
Billion lbs
Au
Million Oz
0.20     2,544 0.37 0.29 0.14 9.29 7.49 20.49 16.52 11.62
0.25     2,149 0.39 0.31 0.15 8.41 6.76 18.54 14.89 10.64
0.30     1,661 0.42 0.34 0.17 7.06 5.65 15.56 12.45 9.11
0.35     1,107 0.48 0.38 0.19 5.26 4.20 11.59 9.25 6.85
0.40        757 0.52 0.41 0.21 3.95 3.14 8.72 6.93 5.22
0.45        517 0.57 0.45 0.24  2.94 2.32 6.47 5.11 3.98
0.50        346 0.61 0.48 0.27 2.12 1.66 4.68 3.67 2.96
0.55        220 0.67 0.51 0.30 1.46 1.13 3.22 2.49 2.14
Note: Calculations based on this table may differ due to rounding.

Freedom, comprised of two distinct northeast trending bodies of copper-gold mineralization, has an inferred resource for the Southeast (SE) deposit, but also has drilled mineralization on 400 by 400 meter fences for the Northwest (NW) prospect.In-fill drilling at Freedom (NW) during late 2016 intersected 747.4 meters (108.7-856.1 m) averaging 0.49% copper equivalent (0.41% copper and 0.17 g/t gold) in hole AMM-213 (true width unknown). Mineralization is principally hosted in phreatomagmatic breccias and diorite porphyries. The hole doubled the drilled vertical extent of the Freedom Northwest system, while bottoming in mineralization. This is the longest mineralized intercept drilled to date on the property, and underscores the project's additional exploration upside (see EMX news release dated January 24, 2017).

The extent of porphyry copper-gold mineralization has not been fully determined within the Malmyzh district. There is substantial exploration upside given by the ten additional prospects with reconnaissance drilling that intersected porphyry alteration and mineralization. Further, there is considerable exploration potential in undrilled areas of the property, particularly towards the southeast where there is more than 15 meters of cover that provides opportunities for additional "blind" discoveries within the project area.

The project has excellent physiographic, infrastructure and logistical characteristics. The property occurs in the low relief hills of the Amur River valley, which is the major shipping river in the region. There are multiple options for transportation besides the Amur that include an adjacent paved Federal highway and regional rail facilities. As well, the project has readily available power and water sources.

Malmyzh Project Status

IGC has advised that approval to advance the Malmyzh project has been received from the Government Commission on Monitoring Foreign Investment (the "Commission") chaired by Prime Minister Dmitry Medvedev. The Commission's approval represents the successful completion of the review process required for "strategically significant" deposits according to Russian law (i.e., the Law on Foreign Investments in Strategic Industries, also termed the Strategic Industries Law or "SIL"). The SIL approval process commenced after the Joint Venture, through its Russian subsidiary Amur Minerals LLC, received certified "on balance C1+C2 reserves" from the GKZ (State Reserves Committee) that exceeded thresholds for both copper and gold defining Malmyzh as a "strategically significant" mineral deposit. EMX emphasizes that the Malmyzh "C1+C2 reserves" were estimated according to the rules and regulations of the Russian Federation, and are not the same as reserves under NI 43-101. Highlights of the Commission's approval include:

  • The Joint Venture, as a majority foreign owned business entity, has been approved to retain control of the Malmyzh project exploration and mining licenses.
  • The Joint Venture, therefore, maintains mining and production rights for the Malmyzh and Malmyzh North exploration and mining licenses. The original license terms can be extended until the end of mining.
  • The Joint Venture holds 100% of the rights for the Malmyzh and Malmyzh North exploration and mining licenses, and is entitled to recover all minerals of economic value including copper, gold and by-product minerals.

The conclusion of the SIL process initiates a new, multi-year phase in the project's development that includes additional technical work (i.e., drilling, exploration, metallurgy, engineering, and hydrology), as well as environmental, social, and economic assessments. This next phase of work will ultimately conclude as a detailed "TEO of Permanent Conditions" report, which is considered to be a precursor to commencement of exploitation and mining.

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Shelekhovo and Salasinskaya Overview

IGC has also leveraged its in-country operational expertise to acquire the Shelekhovo and Salasinskaya properties that are outside of the Malmyzh joint venture and 100% controlled by IGC.

At Shelekhovo, historic government exploration surveys identified multiple occurrences of gold, silver, and copper associated with quartz veining and alunite. IGC completed geologic reconnaissance, a ground magnetic survey, and a soil survey late in the 2015 field season that was focused on an interpreted nested caldera complex adjacent to the Sikhote Alin structural zone. IGC advises that this work identified a low level gold geochemical anomaly on the northeast edge of the soil grid, and confirmed the occurrence of quartz-alunite alteration in a geologic setting characteristic of a high sulfidation epithermal system. IGC is planning for a follow-up exploration program.

Salasinskaya is considered to be the northern extension of the Shelekhovo anomaly cluster. Salasinskaya is marked by the widespread occurrence of quartz-alunite alteration. IGC is planning reconnaissance exploration for the upcoming field season.

Together, the Malmyzh, Shelekhovo, and Salasinskaya properties cover approximately 877 square kilometers of exploration ground occurring along a ~200 kilometer belt of prospective Cretaceous-age arc terrane rocks.

Core logging back in camp.
Core logging back in camp.
Core drilling at the Valley prospect
Core drilling at the Valley prospect.