Seven years ago EMX Royalty (TSXV: EMZ; NYSE-AM: EMX) identified privately held IG Copper and its Malmyzh copper-gold porphyry project in Russia as a strategic investment opportunity and poured US$13 million into the company.
That investment has just paid off with IGC's sale of the project for US$200 million to Russian Copper Company, a large privately held copper producer in the Russian Federation.
The sale gives EMX US$65 million in cash. A further US$4 million, held in escrow, will be made to EMX in two payments over the next 12 months.
"It's the largest profit we've had in the history of the company on any deal," David Cole, EMX's founder, president and CEO, said in an interview, adding the cheque from Russian Copper Company "did not bounce."
"It's done a lot for my personality," he jokes. "You can imagine facing impatient shareholders for years and then when you finally crystallize a big investment and the money is in the bank, they come up and shake your hand and say, 'Dave, great to see you!'"
IGC owned 51% of the Malmyzh project and Freeport McMoRan (NYSE: FCX) held the remaining 49% stake.
The IGC team has been exploring and developing in Russia since 2005.
Malmyzh is an advanced copper-gold exploration property, 210 km northeast of Khabarovsk in Russia's Far East.
The project is about 200 km from Russia's border with China and is just 65 km from rail access at Komsomolsk.
Malmyzh contains four known deposits with total inferred resources of 1.66 billion tonnes grading 0.34% copper and 0.17 gram gold per tonne, or 0.42% copper-equivalent. The resource was based on a copper-equivalent cut-off grade of 0.30%
The district-scale 16 km by 5 km porphyry intrusive corridor is concealed beneath a thin alluvial cover.
EMX remains a shareholder in IGC with roughly a 40% stake.
EMX, formerly known as Eurasian Minerals, has 90 projects worldwide with over 2 million acres of mineral rights exposure.
The company, founded fifteen years ago, has a three-pronged business model.
The first is prospect generation (acquiring large tracts of real estate and adding value), which eventually leads to a combination of cash payments, advanced royalty payments, work commitments, and ultimately a production royalty.
EMX also buys royalties outright, if and when it can, although it's a tough business, Cole concedes. The third prong is strategic investments, like ICG and Malmyzh.
"Having astute geologists around the world means they occasionally come across a share purchase opportunity that is so good you cannot not do it, and so the strategic investment arm of the company has been very successful and the liquidation of the Malmyzh investment is one example."