Antofagasta acquires Duluth Metals for $85 million

November 4, 2014

Chilean-based mining company, Antofagasta, will take 100 percent ownership of the Twin Metals copper project near Ely, MN with its acquisition of Duluth Metals.

The $85 million deal appears to buoy the Twin Metals project after Duluth Metals' corporate value continued to shrink without a major investor to help the so-called Canadian junior mining company at a time when metal values are declining, reported.

Twin Metals was Duluth Metals' only project. Antofagasta is an established mine owner and operator.

"From the Minnesota point of view, I think this is a good thing. They're going to develop that mine and employ a lot of people," said Mara Strazdins, Duluth Metals' vice president of corporate relations. "Antofagasta has deeper pockets. They have the ability to get through what is really turning out to be tough times for the industry, especially for some Canadian juniors like" Duluth Metals.

"During a difficult period for the mining industry, Duluth has been able to negotiate a significant premium to the current market share price," said Kelly Osborne, Duluth Metals chief executive officer, in a statement announcing the deal.

Antofagasta owned 40 percent of the project but announced previously that it would not exercise an option to expand that investment.

"The acquisition of Duluth provides Antofagasta with a long-term option to develop a large polymetallic resource in a stable and proven mining region," Diego Hernandez, Antofagasta's chief executive officer, said in a statement. "The Duluth complex is an attractive deposit and upon closing of the offer we will commence the process of re-evaluating the project's design while also continuing with the permitting activities."

Twin Metals has not yet applied for any state or federal permits for the copper project. But in August, Duluth Metals released the results of a "pre-feasibility" study on the mine saying the project has substantial reserves, would have a low cost of production and could turn a solid profit.
The report said the proposed mine would take about three years to build at a cost of $2.8 billion and eventually would employ about 850 people mining some 50,000 tons per day, reported.

The August report also predicted the mine would have $12.1 billion in revenue over the first 10 years, and profits would pay off the cost of building the mine in just 6.4 years.

The project has been criticized by environmental groups for its location, abutting the Boundary Waters Canoe Area Wilderness.

Twin Metals was formed in 2010 to develop the Ely-area mine when Antofagasta paid $130 million for its initial 40 percent interest in the project.

The Twin Metals project would incorporate several rich deposits on either side of Minnesota 1, near the Kawishiwi River and Birch Lake areas. While the mine would be in the BWCAW watershed, the company said it plans to process the ore in developed areas to the south, in the Lake Superior watershed.

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