News

Mesabi Daily News
January 14, 2010

TORONTO, Canada - The Duluth Metals Nokomis copper/nickel/precious metals project southeast of Ely took a big step forward on Thursday, arm-in-arm with a new mining partner headquartered in Chile.

And the deal with Antofagasta plc sent the Toronto-based Duluth Metals stock soaring on the Canadian Stock Exchange from $1 a share to $3.14.

“The agreement announced today with Antofagasta is an outstanding partnership for an outstanding deposit,” said Christopher Dundas, chairman of Duluth Metals.

“This joint venture provides three key benefits that will act as catalysts to the development and construction of Nokomis. First, it delivers near and longer-term project development financing that we expect will be sufficient to bring the project to production. Second, Antofagasta is providing a commitment to arrange project financing for the large capital cost requirements, which are projected to be $1.3 billion. Third, it brings outstanding execution capability and mitigates execution risks,” Dundas added.

Here are details of the partnership:

• Duluth Metals will have a 60 percent interest in the Nokomis project, which is part of the vast Duluth Complex non-ferrous deposit; Antofagasta will have a 40 percent interest.

• Antofagasta holds the option to acquire an additional 25 percent of Nokomis from Duluth.

• Antofagasta will put $130 million directly in the project.

• Antofagasta will pump an additional $30 million into the venture to cover Duluth Metals’ share of subsequent project expenditures.

“Nokomis is an excellent deposit and we are very pleased to enter into this agreement with Duluth,” said Marcelo Awad, CEO of Antofagasta Minerals SA, said in a news release. “This is a large deposit that has the potential to become one of the world’s premier low-cost copper-nickel producers. We are looking forward to working with Duluth to advance this very promising project.”

Dr. Henry J. Sandri, president and CEO of Duluth Metals, profoundly praised what Antofagasta brings to the Nokomis project.

“Antofagasta is one of the world’s premier major copper producers with an excellent pedigree and track record of success of this type of project.

“Antofagasta possesses proven expertise in planning, building and operating large-scale mining complexes and will apply its in-house capability to develop Nokomis. We believe this project is the mechanism required to unlock the tremendous value residing in the Nokomis deposit,” he said.

When operating, Nokomis could produce up to 40,000 tons of ore per day. Its initial mine life is estimated at 22 years.

Antofagasta, with most of its assets in Chile, is one of the largest copper producers in the world, producing more than 478,000 tons each year.

Duluth Metals, however, would not be the first non-ferrous mining project in Minnesota. The PolyMet copper/nickel/precious metals venture is now in the Draft Environmental Impact Statement hearing process after more than four years of environmental review. PolyMet officials hope to begin construction of the $600 million project during the second half of this year. Life of the mine is estimated at 20 years.

The PolyMet project will utilize a major portion of the old LTV Steel taconite plant to build a new closed-circuit hydrometallurgical portion for capturing copper, nickel, palladium and platinum for non-ferrous uses. Officials project it will create 400 permanent jobs, more than 500 spin-off jobs and more than 1.5 million hours of construction work.

PolyMet was linked to the Duluth Metals announcement on the ElyMinnesota.com site. The commenter saw the announcement as a victory for environmentalists.

“It was announced today that Duluth Metals, the company wanting to mine 6,000 ft. below Birch Lake on the edge of the Boundary Waters has signed an agreement with a Chilean company called Antofagasta. This is great news for all Minnesotans and BWCAW visitors and supporters. Proper financing for Duluth Metals should now permit adequate cash assurances (damage deposit) to be paid to Minnesota for any environmental problems caused by their mining.

“This should also influence our legislators to require cash assurances from PolyMet,” one person wrote on the site.”

All Range legislators, Minnesota’s two U.S. senators, Democrats Amy Klobuchar and Al Franken, Democratic 8th District U.S. Rep. Jim Oberstar and Gov. Tim Pawlenty-appointee Iron Range Resources Commissioner Sandy Layman have all given their unconditional support to the PolyMet project.