BASE METALS

Duluth Franconia acquisition paves way for huge Twin Metals mine project

Duluth has completed its acquisition of Franconia thus consolidating a huge area on the enormous Duluth Metals complex where it is looking to develop a major mining operation in a 60:40 venture with Antofagasta.

TORONTO - 

The acquisition of Franconia Minerals by Duluth Metals has now passed its final hurdle with the approval of the deal by Franconia's shareholders thus paving the way for the next stage in the development of what could be North America's biggest mine.  This is the Twin Metals Minnesota (TMM) base metals/pgms project in Minnesota where Duluth, partnered by copper major, Antofagasta is looking to mine an enormous orebody containing copper, nickel, platinum, palladium, cobalt, gold and silver among others.  Bringing together the Duluth and Franconia ground makes for a potential mineable resource in the billion tonne category and the companies are looking for an eventual mine life in excess of 70 years.

The path to production is unlikely to be an easy one as the potential mine borders on an environmentally sensitive wilderness area and the environmentalists are already spreading scare stories about the potential for sulphide mining polluting the area.  However Minnesota's politicians and mines department will be favourably disposed towards the project as the process facilities can be emplaced on old brownfield mining sites, the area is depressed economically with the decline of the Minnesota taconite mining industry, and much of the orebody can be extracted by large-scale underground means for which the impact on the visual environment is considerably reduced.  With the engineers looking at a paste technology underground fill process, much of the waste material from the plant can be taken back underground to fill mined out areas.

The acquisition brings together Duluth's Nokomis and Franconia's Birch Lake and Maturi projects, as well as a considerable amount of other ground holdings on the Duluth Complex.  The ground is to be vested into Twin Metals Minnesota - a joint venture company 60% owned by Duluth and 40% by Antofagasta which is tasked with developing the prospective mining operation.  Duluth's Nokomis project and Franconia's Birch Lake one between them control an indicated and inferred  resource currently put at over 1 billion tonnes grading in the region of 1.5% copper equivalent - a combined resource has not yet been calculated - but even with this huge potential much of the prospective orebody has not yet been drilled out suggesting the deposit is, in reality, considerably larger.  The metals prices on which these copper equivalents were calculated, by independent consultants Roscoe Postle Associates, are also considerably below current price levels for all the metals likely to be extracted.

Duluth Chairman and CEO, Chris Dundas,  stated: ""The merger between Duluth and Franconia will provide TMM the platform to plan the development of one the world's largest nickel-copper-PGM deposits. This merger potentially creates a stronger development project of much larger size, scale and mine life for TMM. Our partnership with Antofagasta will provide the financing and execution capability necessary to develop this high economic impact project for Northern Minnesota."

Speaking at an acquisition announcement reception alongside this year's PDAC event, Antofagasta's Alejandro Rivera commented that the Twin Metals project would provide yet another step on the way to Antofagasta becoming a 1 million tonne a year copper producer, with the company already seeing explosive growth in copper output from its Chilean operations.