TORONTO, Jul 22 -- Duluth Metals Limited ("Duluth") (TSX: DM) (TSX:DM.U) is pleased to announce that it has signed the formal definitive participation agreement ("PA") with Antofagasta plc ("Antofagasta") (LSE: ANTO.GB), which implements the previously announced Heads of Agreement (see SEDAR filing and press release dated January 14, 2010) on the joint venture development of the Nokomis Project in northeast Minnesota, USA. The signing of the PA allows the ramp-up of activities, which will see US $130 million spent over the next three year period to advance the project towards a bankable feasibility study, subject to all applicable government and regulatory approvals.
The joint venture brings in a major global mining partner with financial capability and proven expertise in building and operating large mining projects to aggressively accelerate the development of this large scale copper-nickel-platinum-palladium-gold project. The new joint venture company, Twin Metals Minnesota LLC ("Twin Metals"), is 60% owned by Duluth and 40% by Antofagasta. A new management team is currently being formed. Both Antofagasta and Duluth are appointing three representatives to the Board of Directors of Twin Metals.
Under the terms of the PA, Antofagasta will provide US $130 million in direct funding to the project as its initial contribution to the joint venture. Upon making such contribution and completing a bankable feasibility study, Antofagasta has the option to acquire an additional 25% equity interest in Twin Metals based on an exercise price calculated in a pro-rata share of 1.0 times Net Present Value of the project, which will be determined by the bankable feasibility study. Under the terms of the PA, Antofagasta has agreed to provide Duluth additional loan and financing facilities of up to US$30 million to cover Duluth's share of subsequent project expenditures, which will ultimately be repayable in cash, Duluth shares or offset against the 25% option exercise price. Full draw down by Duluth of the additional loan and financing facilities totaling US$30 million, together with the commensurate Antofagasta spending contribution, would make available an additional US$85 million of potential funding to the project for expenditures beyond the $130 million commitment by Antofagasta. In addition, Antofagasta has undertaken to organize a common project financing for the large capital cost financing requirements of the project. Duluth expects development activities at Nokomis to proceed on an accelerated basis and anticipates pre-feasibility and bankable feasibility studies to be the focus of activities over the next 24-36 months.
As part of the PA, Duluth Metals is retaining approximately 31,000 acres of mineral interests on exploration properties adjacent to and near-by the joint venture holdings. In addition to actively participating in the joint venture on Nokomis, Duluth Metals will undertake a large scale exploration program on its retained exploration properties.
Currently, the Nokomis deposit is estimated to contain 550 million tonnes of Indicated Resources grading 0.639% copper, 0.200% nickel and 0.660 grams per tonne TPM (platinum-palladium-gold) for a copper equivalent (CuEq) grade of 1.51%, plus an additional 274 million tonnes of Inferred Resources grading 0.632% copper, 0.207% nickel and 0.685 grams per tonne TPM for a CuEq grade of 1.53% (See Dec 9, 2009 NI 43-101 "Technical Report on the Mineral Resource Estimate for the Nokomis Deposit" and press release dated Dec. 11, 2009 available at www.Duluthmetals.com).
Minnesota is a mining friendly state which has more than a century of mining history. The mining district in northeastern Minnesota has excellent mining infrastructure, including power, well-developed roads, railway networks, equipment-supply centers, a highly productive local labor force and proximity to three deep water ports on the north shore of Lake Superior.
David Oliver, P. Geo. is the Qualified Person and Project Manager for Duluth, in accordance with NI 43-101 of the Canadian Securities Administrators, and is responsible for the technical content of this press release and quality assurance of the exploration data and analytical results.
On the Antofagasta transaction, Duluth's financial advisor is UBS Securities Canada Inc. and Canadian legal advisor is Fraser Milner Casgrain LLP.
About Duluth Metals
Duluth is committed to acquiring, exploring and developing copper, nickel and platinum group metal (PGM) deposits. Duluth's principal property is the Nokomis Property located within the rapidly emerging Duluth Complex mining camp in northeast Minnesota. The Duluth Complex hosts one of the world's largest undeveloped repositories of copper, nickel and PGMs, including the world's third largest accumulation of nickel sulphides, and one of the world's largest accumulations of polymetallic copper and platinum group metals.
About Antofagasta plc
Antofagasta has three business divisions: Mining, Transport and Water. Antofagasta Minerals S.A., the mining division, is one of the world's largest copper producers. Its activities are mainly concentrated in Chile where it owns and operates three copper mines with a total production of 442,500 thousand tonnes of copper and 7,800 tonnes of molybdenum in 2009. Antofagasta has recently commissioned a brownfield expansion at its Los Pelambres mine and a new mine development, Esperanza, is expected to enter into production at the end of 2010. Together, these are expected to increase group copper production by approximately 60% to over 700,000 tonnes from 2011. A feasibility study is also in progress at Antucoya in Northern Chile. In Pakistan, a feasibility study is at its final stages at the Reko Diq joint venture. Antofagasta also has exploration programs in Africa, Europe and the Americas.