On June 27, 2016, about 1430 eastern daylight time, an Enstrom 208FX helicopter, N518EG, experienced an engine fire while preparing for departure from the Ottawa Executive airport (Z98), Zeeland, Michigan. The flight instructor and student pilot were not injured and the helicopter sustained minor fire damage. The helicopter was registered to and operated by Blue Sun Air, LLC, Zeeland, Michigan, under the provisions of 14 Code of Federal Regulations Part 91 as an instructional flight. Day visual meteorological conditions prevailed at the time. The flight instructor reported that the student pilot was on his first flight. After a preflight inspection, they started the helicopter's engine and prepared for takeoff. Before increasing collective, the instructor noticed the lights on the panel flicker and smelled smoke. About the same time, the instructor also observed ground personnel running toward the helicopter. Both he and the student exited the helicopter and ground personnel were able to extinguish an engine fire. An examination by a Federal Aviation Administration (FAA) inspector noted that the exhaust pipe had separated from the engine turbocharger. The helicopter had sustained damage to the engine access door, electrical wires, and smoke/thermal damage to the engine compartment. The helicopter's turbocharger, exhaust clamp, and scavenge pump were sent to the National Transportation Safety Board (NTSB) Materials Laboratory in Washington, DC for further examination. The materials laboratory noted that the band clamp assembly contained a strap portion and two U-shaped retainers. The bottom end of each U-shaped retainer were joined by several spot welds to the inner side of the strap portion. Examination of the band clamp assembly revealed the two U-shaped retainer portions fractured at the spot weld locations. The NTSB's Materials Laboratory's Factual report is located in the public docket for this accident.