Replies to post #13 on IDM Mining Ltd. (fka IDMMF)

[High_Profits]

NEW PRICE TARGET (BUY $0.45) IDM MINING LTD. (IDM - TSXV, $0.21)

IDM MINING LTD. (IDM - TSXV, $0.21) NEW PRICE TARGET (BUY $0.45) OLD PRICE TARGET (BUY $0.40)

NEW SHOWING UNEARTHED AT SITE VISIT HIGHLIGHTS UPSIDE

We have adjusted our estimates following our recent site visit. Our target has increased primarily as a result of an increased multiple and exploration upside. IDM currently trades at 0.47x NAV and $62/oz, a discount to peers at 0.67x and $82/oz.


Summary: On August 24, we attended an analyst tour of the Red Mountain gold

project near Stewart, B.C. The visit coincided with the discovery of high-grade

mineralization in the Lost Valley area, one that was coincidentally augmented by a

similar showing unearthed higher up in the system. We also visited the Marc Zone

discovery outcrop and walked the underground decline. Overall, we left with a greater

appreciation of management’s immediate strategy of proving up a 5-year mine life and

of the project’s exploration potential to go from there.

? Anda’adala’a Lo’op Showing: The showing lies 4km SW and 800m lower than the

developing Marc zone, in a recently exposed multiphasic monzodiorite pluton. Mapping

and sampling began earlier this year, having been made possible by the retreating

Cambria icefield, the area has since returned an average of 18.7 g/t Au and 61.4 g/t Ag

across an average width of 0.84m. Channel samples were taken on seven lines spread

over a strike length of 33m, that, as well as the width, being the extent of the exposure

at surface. Mineralization is associated with what is believed to be shallow dipping thrust

faults characterized by sulphide-quartz veins overprinting vertical sets of porphyry-style

sulphide-quartz veins clearly visible at surface (see Fig 2 on next page). A second

structure is exposed higher up in the system, and what may be a third one was exposed

under scree material during our site visit. A drill program is planned for the system,

which measures 1.2km long by 1km wide, with a vertical relief of 300m. Rhenium,

copper and bismuth are present, suggesting an intrusive-related mineralizing system.

We would add that the surface logistics are favorable to drilling from surface, hence

expect a quick turnaround time after drilling begins.

? Marc Zone: Results from two shallower, infill holes are pending from grid section

1075N, where the portal accesses the southern limit of the Marc zone. Hole U16-1182,

announced on Aug. 16, cut 9.91 g/t Au and 53.52 g/t Ag over 6.3m, suggested the

possibility of extending that zone to the south. Minor faulting occurs in the Marc zone

and may explain its 30m-deep offset. If successful, we would expect the holes to

provide immediate upside to current resources and possibly enhance project economics.

AV and JW Zones: Underground access was not possible at the time of our visit. That

said, management noted that part of the ongoing Phase I drill program is focused on

upgrading Indicated and Inferred Resources for the Feasibility Study, particularly in the

case of the JW zone, given its ~50-50 split between the two categories. Longer-term,

the Company plans to follow up historic drilling results that suggest that mineralization

extends for 800m beyond the JW zone. Among the historic results are 9.67 g/t Au over

1.39m, 4.7 g/t Au over 6.2m and 5.88 g/t over 15.3M.

141 Zone: Current resources are relatively small for this zone, but that’s mainly a

reflection of data constrains. Mineralization is associated with dykes and sills in the

sediments, with a total strike potential of 2.2km, plunging underneath the mountain.

IDM plans to drive the haulage ramp underneath the zone, providing for more efficient

drill setups. Re-logging of the historic drill holes is planned as well.

We continue to recommend IDM as a BUY and have increased our 12-month

target price to $0.45/share from $0.40. Our target is based on a 1.0x multiple (was

0.75x) to our NAV, which now incorporates project debt financing and $25M

($0.08/share) for exploration. That said, for every additional year of mine life, our NAV

increases by $0.06-$0.07/share, underscoring the project’s leverage to resource

expansion. A sensitivity table is provided in Fig. 1 on the next page and includes our

NAV’s sensitivity to gold grade, as well. In our view, both underscore the stock’s upside

to current levels of 0.47x NAV and $62/oz, vs the North American developer peer

averages of 0.67x and $82/oz (consensus), respectively.

POTENTIAL CATALYSTS AND EVENTS

? 2016 – Ongoing drill results

? Q4/16 – Submission of environmental assessment

? Q4/16 or Q1/17 – Completion of feasibility study

? H2/17 – Start of construction

M PARTNERS
Research
E: [e-mail]
www.mpartners.ca
70 York Street Suite 1500
Toronto, ON Canada M5J 1S9