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. Last Updated: 07/27/2016

Amur Boosts Resources With New Mineral Zone Discovery

Amur Minerals, a top-five nickel operation in Russia, has boosted its resources by almost 40 percent after the discovery of a new mineral zone at its deposit, the firm's CFO David Wood said Monday.

The zone, spotted in May, could increase the nickel resource base of the London-listed miner from 209,000 tons to 280,000 tons, Wood said. Amur Minerals explores nickel and copper deposits in the Far East Amur region.

With such a resource base, some analysts said the company could see its $40 million market valuation jump five-fold once production starts, due to high nickel demand in China. Nickel and copper have both hit record prices this year.

"On a very conservative estimate we have added 36,000 tons to our reserves," Wood said. A further 35,000, however, is "more than realistic ... [and] it could get much larger," he said. "We're only 350 kilometers from China," the probable end-point of sale for the nickel, he said.

Norilsk Nickel, by comparison, mined 243,000 tons in 2005.

Started by mostly British investors in 2004, Amur raised about $10 million in a London flotation in March to finance exploration at its Kun-Manie deposit in the Amur region. At the time of listing, the company had a $55 million market capitalization. Kun-Manie's newest zone, called Maly Krumkon, is the fourth mineralized zone in an area rich in copper, and some palladium and platinum. Amur has more than 60,000 tons of copper reserves.

"We're still some way from calling this a mine," said Timothy McCutcheon, a fund manager with DBM Capital. "There is a need to be big in this business" and Amur would need to have about 250,000 tons of proven reserves in nickel or 100,000 tons in copper before mining makes economic sense, he said.

Vladimir Katunin, a metals analyst at Aton, disagreed. "The size is starting to sound interesting," he said. With a 200,000-ton resource base, you'd expect annual production of up to 20,000 tons for 10 years, he said.