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By John Helmer, Moscow

When we last put down the telephone to Maxim Finsky’s office at Intergeo in Moscow, he wasn’t saying much of anything about his attempt to persuade Canadian shareholders to accept his proposed merger of two junior goldminers he controls, White Tiger Gold and Century Mining.

Just three days later, he and his old school chum, Mikhail Prokhorov, have released parallel announcements, placed in two Moscow business papers today, in which they claim they are planning to sell shares of their mineral prospecting company, Intergeo, on the Toronto Stock Exchange soon. They also claim that the market valuation of the assets, and thus of Intergeo’s shares, is $3 billion.

As a footnote to the White Tiger story, this is a Bigfoot note.

Most Canadians know the legend of that larger than life, ape-like creature – among the Indians of the Northwest, he’s been given the name Sasquatch. In the Himalayas, he’s called Yeti. What makes him special is that his footprint has been found to be outsized, but the rest of him has never been verified. Scientific research suggests that Bigfoot may be a remote throwback to Gigantopithecus; a hungry bear on his hind legs; or a hoax which generates pay-to-view profits for the hoaxers from time to time.

Prokhorov is a tall fellow, with a big footprint. But he’s never been seen in an ape or bear suit, and noone has ever suggested he’s capable of a hoax. Finsky is smaller.

They appear to have decided to place the following advertisement about Intergeo, suggesting that “creating a hit has begun”. What they mean is that Prokhorov, who owns 100% of Intergeo, and Finsky, the CEO, have registered for permission of the Federal Antimonopoly Service (FAS) to buy Intergeo out of Onexim, and then sell a bloc of 10% of Intergeo shares abroad. In order to do this, they say they have spun, or will spin, the Intergeo unit company out of Prokhorov’s Onexim holding, and issue share sale documents to the Toronto Stock Exchange. The timing in one newspaper is “within the next six months”; in the second newspaper, “at year end”. Although one newspaper headline calls this an initial public offering, the report suggests it may in fact be a “private placement” or “a reverse takeover deal”. Neither of those options would require a prospectus. Disclosure would not be subject to the rules of the Canadian or US stock market regulator. If Prokhorov sold shares to his associates, the price paid would be a private agreement between them..

According to Prokhorov’s remarks to the reporters, Intergeo will .be a “mini-Norilsk Nickel”. The company website, which can be reached via a link on the Onexim website, is not particularly informative. Finsky reportedly told the reporters that right now he is planning to “restructure [Intergeo] to make the company more transparent and understandable, including for the upcoming placement.”

To follow up, Intergeo was asked four questions:

— Are the newspaper stories correctly reporting what Prokhorov and Finsky say?
— Does Intergeo have reserve/resource estimates for its mineable assets which are authorized by the Russian State Reserves Committee, or are they yet to be approved?
— What is Intergeo’s operating result for 2010 — what output of what minerals, and what rate of change since 2009?
— What is Intergeo’s financial statement for 2010? what revenues, what costs, what operating profit, what net income (loss)?

Finsky’s transparency has apparently not yet been restructured, and the company declined to reply.

In the newspaper advertisements, Intergeo claims to hold 12 licenses for mineral fields with estimated reserves and resources of 15 million tonnes of copper, 9 million tonnes of nickel, 1 million tonnes of molybdenum, 750 tonnes (24.1 million ounces) of platinum group metals, and 90 million tonnes of titanium. It appears that most of the numbers are claimed from a prospect in the Irkutsk region, which Norilsk Nickel bought at auction in 2008. Payment was Rb726 million (then worth $29.2 million). This prospecting licence for what is called the Iisko-Tagulskaya area is reported by Finsky to have been let go by Vladimir Potanin when Prokhorov and he divided their jointly held assets, and Prokhorov sold his Norilsk Nickel shareholding to Oleg Deripaska.

Quite a different version of how Intergeo came by the assets from Norilsk Nickel was charged by the Potanin side three years ago. On July 25, 2008, Norilsk Nickel announced: “In connection with the information that appeared yesterday in mass media that Onexim Group intends to establish Intergeo company for the development of some deposits, MMC Norilsk Nickel is starting an internal investigation. The investigation will take place within the process of taking over the duties of Mr. M. Finsky, in order to clarify the legal grounds on which the deposits acquired within the framework of projects run by Mr. Finsky when he served at MMC Norilsk Nickel, are mentioned as the projects to be developed by Intergeo company.” Nine mineral prospects or deposits were identified as targets of the investigation: Ak-Sugsky; Arbinsky; Iisko-Tagulsky; Isakovsky; Bolshoi Seyim; Orekitkansky; Togunassky; Uronajsky; and Chernogorskoye.

No outcome of the Norilsk Nickel investigation was ever published. Finsky went to work for Intergeo, and his company appears to have grown richer by three more deposits.

But what value can be put on this lot, especially if no authorized reserve count exists, there is no hole in the ground, and no production? A leading Moscow mining analyst comments: “To my knowledge, none of the assets is producing; or at least none of the assets located in Russia are. [Regarding the] reserves audit – my guess is that they are not booked as Russian reserves, but most probably as resources.”

Last week’s tale of White Tiger Gold reveals that Finsky has already tried the reverse takeover and private placement strategy for getting a market value for the mining shares he controls on the Toronto Stock Exchange. But without an audited reserves count, either according to Russian rules or Canadian , no certain basis for the share pricing has been released to the market. Finsky’s chief executive at White Tiger Gold, Geoffrey Cowley, has said “we had no control [over the share pricing]. We had no idea, no significant idea of why the price shot up.”

The big footnote to that story is whether Prokhorov and Finsky are trying the same thing over again. “If Intergeo will implement its plan,” they told the Moscow newspapers, “it will be the first Russian metallurgical company with a listing in Canada.” And if the Canadians turn them down, Intergeo will be the second Russian mining company to be rejected by the Toronto Stock Exchange. The first was GV Gold, an Irkutsk goldminer owned by Sergei Dokuchayev, the Lanta Bank proprietor, who went to Toronto in 1998, and came back empty-handed.

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