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Rich mineral formation on Iron Range is luring developers

Minneapolis Star Tribune
July 20, 2008

DULUTH, Minn. (AP) – A rich nickel-copper-precious metals formation stretching from the outskirts of Babbitt toward Ely is drawing plenty of interest from mine developers.

Five different companies have projects in the works that could mean hundreds of new jobs.

Estimates of the ore body's size are growing larger as the results of test drilling are analyzed.

As of 2002, geologists estimated the deposit – dubbed the Duluth Complex – contained about 4.4 billion metric tons of ore laden with copper, nickel, platinum, palladium, gold and cobalt.

Now, the formation is believed to contain 5 billion to 6 billion tons of valuable ore produced in a magma extrusion millions of years ago.

"The value of that ore in the ground today is probably closing in on half a trillion dollars," said Henry "Rick" Sandri, CEO and president of Duluth Metals Ltd., a Toronto-based corporation sitting on top of rights to an estimated 733 million metric tons of mineable ore southeast of Ely.

Duluth Metals' exploration efforts continue, and Sandri said that by the time drilling is completed on the site, the company could uncover more than 1 billion metric tons of mineable ore, according to staff at the University of Minnesota's Natural Resources Research Institute.

Earlier this month, Franconia Minerals Corp. released the results of an independent consultant's analysis, nearly doubling the estimated size of an ore body it hopes to tap at Birch Lake. The site initially was expected to yield 100.4 million metric tons of ore; it now is forecast to produce 195.5 million metric tons.

The company also is exploring the Maturi Deposit, located farther northeast on the Kawishiwi River.

Metal commodity prices are soaring as a result of global demand, so companies are looking at hard work to recover the ore.

Franconia has stationed a barge on Birch Lake to drill rock samples from its bottom, 22 feet below. Based on the results of testing, the company is thinking about plans to sink a shaft into the shore and mine beneath the lake through tunnels. Most of the deposit is located between a depth of 1,600 and 3,000 feet.

With the environmental reviews and permitting requirements involved in the project, the company probably can expect to begin production by 2012 or 2013 at best, said Bill Brice, Franconia's director of government and community relations.

The project, which could cost Franconia more than $600 million, would provide employment for an estimated 800 construction workers, plus 550 permanent mining jobs upon completion.

Brice said about one-third of Franconia's profits probably would be evenly split between sales of copper, nickel and other mostly precious metals.

PolyMet Mining Corp. is furthest along with its plans to develop the Iron Range's first copper-nickel-precious metals mine. The company expects to complete work on a draft environmental impact study by mid-August, according to LaTisha Gietzen, PolyMet's vice president of government and environmental affairs.

A subsequent review before the preparation of a final Environmental Impact Statement probably will push back construction until early 2009, but Gietzen said the mine could begin operating as soon as 2010.

PolyMet already has acquired crushing and grinding facilities formerly used by LTV Steel Mining Co.

Before any of the projects can go ahead, would-be developers will need to successfully answer concerns that sulfides in the ore could contaminate water, resulting in acidic runoff.

But the potential economic benefits of these new mines remain enticing. PolyMet's proposed open pit mine is expected to cost about $600 million to develop and probably would provide jobs for about 400 people.

Rich returns possible in copper-nickel deposits

Duluth News Tribune
July 14, 2008

There's no shortage of interest on the part of mine developers eager to exploit a rich nickel-copper-precious metalsformation stretching northeast in a band from the outskirts of Babbitt toward Ely.

In all, five separate companies have projects in the works.

Initial estimates of the ore body's size were large, but they're getting bigger as the results of test drilling are analyzed. As of 2002, geologists estimated the deposit "dubbed the Duluth Complex" contained about 4.4 billion metric tons of ore laden with copper, nickel, platinum, palladium, gold and cobalt.

Now, the formation is believed to contain 5 billion to 6 billion tons of valuable ore produced as a result of a magma extrusion millions of years ago.

"The value of that ore in the ground today is probably closing in on half a trillion dollars," said Henry "Rick" Sandri, CEO and president of Duluth Metals Ltd., a Toronto-based corporation sitting on top of rights to an estimated 733 million metric tons of mineable ore southeast of Ely.

Duluth Metals' exploration efforts continue, and Sandri said that by the time drilling is completed on the site, the company could uncover more than 1 billion metric tons of mineable ore, according to staff at the University of Minnesota's Natural Resources Research Institute.

Last week, Franconia Minerals Corp., released the results of an independent consultant's analysis, nearly doubling the estimated size of an ore body it hopes to tap at Birch Lake. Where the site initially was expected to yield 100.4 million metric tons of ore, it now is forecast to produce 195.5 million metric tons.

The company also is actively exploring the Maturi Deposit, located farther northeast on the Kawishiwi River.

Going to great lengths

With metal commodity prices soaring as a result of global demand, companies are looking at going to great lengths to recover the ore.

Franconia has stationed a barge on Birch Lake to drill rock samples from its bottom, 22 feet below. Based on the results of testing, the company is contemplating plans to sink a shaft into the shore and mine beneath the lake via tunnels. Most of the deposit is located between a depth of 1,600 and 3,000 feet.

Bill Brice, Franconia's director of government and community relations, said that with the environmental reviews and permitting requirements involved in the project, the company probably can expect to begin production by 2012 or 2013 at best.

The project could cost Franconia more than $600 million. It would provide employment for an estimated 800 construction workers, plus 550 permanent mining jobs upon completion.

Brice said about one-third of Franconia's profits probably would be evenly split between sales of copper, nickel and other mostly precious metals.

PolyMet mine by 2010?

PolyMet Mining Corp. is furthest along with its plans to develop the Iron Range's first copper-nickel-precious metals mine. The company expects to complete work on a draft environmental impact study by mid-August, according to LaTisha Gietzen, PolyMet's vice president of government and environmental affairs. A subsequent review before the preparation of a final Environmental Impact Statement probably will push back construction until early 2009, but Gietzen said the mine could begin operating as soon as 2010.

PolyMet has a leg up on other prospective mine developers in that it already has acquired crushing and grinding facilities formerly used by LTV Steel Mining Co.

Before any of the projects can progress, however, would-be developers will need to successfully address concerns that sulfides in the ore could contaminate water, resulting in acidic runoff.

Yet the potential economic benefits of these new mines remain alluring. PolyMet's proposed open pit mine is expected to cost about $600 million to develop and probably would provide jobs for about 400 people on an ongoing basis.

Many of the other prospective mines boast similarly impressive numbers, though their timelines are far less certain.

Sandri said it would be premature to speculate about any completion date for Duluth Metals' mine. But the underground mine probably would cost about $800 million to develop and provide ongoing jobs for about 500 people.

Representatives of Teck Cominco and Encampment Resources " two other companies with mining rights for projects that would tap the Duluth Complex" also balked at offering any likely start dates for operations.

"We're still actively exploring the site," Dave Godlewski, Teck Cominco vice president of environmental and public affairs, said about property directly east of PolyMet for which his company controls the mining rights.

"We're trying to determine the grade of the ore there and the attendant mineralogy. And we're working toward finalizing a plan to determine whether we can economically extract it," Godlewski said.

Harry Noyes, president of Encampment Resources LLC, considered it premature to talk about his company's prospective future copper-nickel operations at a site on South Filson Creek. Nevertheless, he acknowledged that Encampment, based in Golden, Colo., continues its efforts to assess the mineral reserves on the property.

COLLABORATION AMONG MINES?

It also remains to be seen if all companies eyeing mine operations on the Duluth Complex will seek to develop the processing capacity to convert ore to readily marketable commodities.

Given the cost of processing equipment and the environmental challenges of permitting a facility, Brice asked: "Why would you have five separate processing plants? It doesn't make sense to me."

Yet Franconia continues to press ahead with its own plans to process ore from its future mines at the nearby Dunka Pit.

Brice expects to see collaboration among some of the copper-nickel mines in the future but said: "At the moment, people aren't far enough along to have those conversations yet."

Sandri said publicly traded companies, such as his own, need to be careful in speculating about the future but agreed that a strong case probably could be made for area mines working together to process ore.

"If it saves money, makes money and helps in the permitting process, of course companies are going to look at this, of course they're going to look at it," he said. "Otherwise you're as dumb as the rock you're moving."

PolyMet, USFS land deal makes lots of sense

Mesabi Daily News
July 8, 2008

Support of Rep. Oberstar, Sen. Klobuchar applauded

A proposed piece of legislation that would allow PolyMet Mining to execute its mineral lease rights in the mining area near Hoyt Lakes while providing money for the United States Forest Service to purchase other land more conducive to the Superior National Forest just makes sense.

And we are pleased that both U.S. Rep. James Oberstar, D-Minn., and U.S. Sen. Amy Klobuchar, D-Minn., have the same view and are working in support of a federal resolution of the issue.

The mining company, which plans to extract nonferrous copper, nickel and precious metals from a site near the former LTV Mining Co., has exclusivity to mine the deposit. But the surface rights to the property were sold in 1935 by U.S. Steel Corp. to the USFS. A sale of the surface land of the 6,700-acre site by the USFS to PolyMet would then provide the money for a land purchase to replace the Superior National Forest acres that PolyMet would own. Thus PolyMet would own both the mineral and surface rights of mining area, while the USFS would have replacement land in the federal forest. That's a good deal all around.

Rep. Oberstar has been supportive and working in the House on the federal legislation required.

And a call last week to Sen. Klobuchar's Washington office confirmed her support.

A spokesman for the senator said she was supportive of the legislation if:

· PolyMet's Environmental Impact Statement is complete. The draft EIS of the Department of Natural Resources, which is being paid for in full by PolyMet, is expected to be done in the next month or two.

· If the proceeds of the sale will go toward USFS land to replace the acreage sold, which is already a given as part of the deal.

We applaud the efforts of both the congressman and senator to support a reasonable federal land sale that will pave the way for a new era of mining on the Iron Range, generating hundreds of jobs while also mined-in-the-USA minerals that are critical to everyday life in this country and also to our national security.