Nokomis copper/nickel/pgm mine - surely not if but when?

Canadian junior Duluth Metals is sitting on one of the world's largest polymetallic copper/nickel/pgm deposits right in the U.S. but the problem is to keep the project moving forward without losing control.

LONDON - 

Canadian junior Duluth Metals (TSX: DM.U) is surely sitting on one of North America's great mineral deposits, the huge polymetallic Nokomis deposit on the volcanic origin Duluth Metallurgical complex in eastern Minnesota, U.S., where the latest NI 43-101 resource is put at 449.4 million tonnes indicated grading 0.624% copper, 0.199% nickel, and 0.6 g/t TPM (which would be called 3PGE in some places being a combination of platinum, palladium and gold).  There is a further Inferred resource of 284.2 million tonnes grading 0.645% copper, 0.18 percent nickel and 0.697 g/t TPM.  There is also extractable cobalt - and probably a few other metals beside. True, this is low grade material, but the copper equivalent taking all the metals into account is 1.46% on the indicated tonnage and 1.5% on the inferred which would make it a significant deposit in global terms. 

And, to date, Duluth Metals has only drilled about half of its land holdings with the same mineralised structure thought to extend substantially into ground held to the northeast and southwest of the drilled areas.  Indeed a recent drillhole 900 metres southwest of the currently defined mineralised zone also hit similar calibre material and this, in conjunction with four historic drill holes in this area seems to confirm this premise.

The Nokomis is one of several known deposits in this area of Minnesota - others being held by Polymet (which has done a huge amount of successful metallurgical testwork already and is awaiting clearance of its Environmental Impact Study from the authorities), Teck and Franconia Minerals, but the tonnage controlled by Duluth Metals is bigger and higher grade than the others.  Indeed in an assessment of the word's polymetallic copper/nickel/pgm deposits, that of Duluth Metals is the second largest after Norilsk.

Duluth Metals was, like most other juniors, decimated by the big stock downturn which accelerated from around this time last year when many lost 90% or more of their value.  In recent months Duluth's stock price has picked up very substantially indeed, but is still nowhere near its previous highs which suggests it may yet have some way to go.

Nokomis would also be an underground mine which would have a smaller environmental impact on the area.  This should be helpful in gaining the necessary clearances from a state government which is friendly to mining and is facing a big unemployment problem in the region due to a huge contraction in taconite mining there.

Talking to Mineweb in London today on the side of Objective Capital's very well-attended Global Mining Conference, Duluth chairman Chris Dundas, admitted that the downturn had slowed down activity on the project, as well as making capital raising difficult, if not impossible for a time.  But, with cash in hand still at some $6 million plus as of the mid-year, and financing options improving this enables the company to forge ahead with its continued exploratory and assessment programmes.  As a financier by background, Dundas is looking at ways and means of raising the capital for moving the project forward while maintaining control and keeping shareholder dilution to the minimum possible.  When asked if the company's much lower stock price as compared with a little over a year ago would affect this Dundas said they would probably only try and raise additional equity capital as needed to move the feasibility study process forward in stages and rely on a continued stock price pick-up to improve this as the project progresses.  Meanwhile Dundas is also looking at other financing options including forward metal sales and nsr royalties as other options (Chinese investment included) to keep the project advancing.

Long term though, to bring the project to fruition will probably need comfortably over $1 billion to put a full scale mine into production at the proposed production rate of around  40,000 tonnes a day.

A scoping study carried out by Scott Wilson Roscoe Postle Associates which reported in January this year called the project robust at the selected long term metals prices - even at metals prices pertaining at that time, which were much lower than they are today - and recommended moving ahead to the pre-feasibility study stage.

Looking ahead Dundas feels there are options available which will improve the environmental aspects making the project even more attractive to the authorities, as well as others which may improve early cashflows.  Currently he feels that the running of a decline from a purchased brownfields site (old taconite mine), constructing the plant there and using the old taconite pits for tailings and waste disposal in the initial stages of the mine will make economic sense and reduce any environmental opposition.  The identification and early mining of higher grade pods would also help project economics.

So, even though Duluth faces huge challenges ahead in maintaining progress on the project and retaining control as the huge development costs start coming into play, it is a junior which wants to become a significant miner - and has a Board with the expertise to give guidance to do so - rather than offload at a big price to a major at some future date.  But whatever route lies ahead Nokomis is almost certain to be developed by someone some day in the reasonably near future.  The huge strategic metal content, and its location in a relatively mining friendly, and low political risk area,  should make this inevitable.

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MINEWEB is an interactive publication, with rolling deadlines through each day, commencing in the Sydney morning,  and concluding, 24 hours later,  in the Vancouver evening.  If you believe your side of an issue deserves inclusion, but has failed to meet one of our deadlines, you are invited to notify the Editor in Chief in Johannesburg, and we will include you in our editing and expanding on our stories. Email him at alechogg@gmail.com

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responses to this article

Get in line The author is great at his words on this one, however he is OFF BASE and must live in a box far from Minnesota as well as this Mineweb....Duluth Metals is at least 4-5 years from first shovel...there is a sister one of their's that is ALOT . .more closer...and ready for permits...I am not to happy when I search your site and do not see PLM, POLYMETMINING.COM If you would like they can give you a tour if you can jump off the island for awhile . .less by jj on September 30 2009, 22:43 Find this comment inappropriate? Report it

Get in line POLYMETMINING.com willl be a mine alot sooner (1 year)than Duluth Metals(4-5years) how about some true press alittle more up to date by jj on September 30 2009, 22:46 Find this comment inappropriate? Report it

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