Duluth Metals And Franconia Minerals Corp

In a deal that creates a potentially giant underground copper-nickel mining operation that is valued at seventy-six million dollars, Duluth Metals Minnesota announced that it is acquiring Franconia Minerals Corporation. The deal, which still needs two-thirds approval from shareholders in February, was unanimously approved by Franconia’s Board of Directors. The Canadian government still has not approved the merger.

The two companies have completed the environmental studies, and have progressed the second farthest in regulatory spade work behind PolyMet Mining, in pre-mining phase. The deal is simple, at least as far as the land is concerned; two adjoining areas become one large operation. However, the structure of deal is complex because Duluth Metals partner/subsidiary, Antofagasta PLC, the Chilean mining giant, is also involved in the deal and will invest thirty million dollars toward the acquisition. They have also agreed to purchase another twenty million dollars worth of Duluth Metals stock.

Christopher Dundas, CEO and Chairman of Duluth Metals, said in a conference call that the projects with common borders would easily combine. The combination will create a mining platinum, group metals that will operate more efficiently. The combined operations of these contiguous properties will hold mineral rights as well as surface rights, and promising exploration lands to one of the largest emerging undeveloped [platinum group metals] deposits in the world covering about 56,000 acres, in a 10-mile stretch along the Kawishiwi River and Birch Lake from south of Ely. Underground mining is the goal in a formation called the Duluth Complex. Along with precious metals like platinum, palladium and gold, platinum group metals include copper and nickel.

Vern Baker, Duluth Metals President, stated that not only will this merger create a smaller impact on the environment, but, will be easier for both state and federal regulators to issue needed permits. Even though the goal is to move as quickly as possible, the operations still lack permits to conduct mining, and Mr. Baker did not want to give a timeline on when they would be seeking permits.

Tony Barrett, an economist with the College of St. Scholastica said that Antofagasta is not messing around, and they are a strong vote of confidence for the new mining venture in Minnesota. The fact that they are willing to spend that kind of money just to set the table says that the project makes sense.

Environmental groups will likely give opposition to the plan because platinum group metals are found in sulfide bearing rock. In some western states, poor mining practices have created severe pollution from acidic runoff. Polymet’s open pit mining proposal has been criticized by environmentalists as a serious threat to the Boundary Waters Canoe Area Wilderness and the St. Louis River. Much of the waste trailing will be returned to the mine for the Duluth Metals-Twin Metals projects, it will involve underground mining. Some of the waste trailing will be left in surface storage.