Duluth Metals Ltd DULMF

Congratulations Duluth ;-)

[smilewithme]

Congratulations to both Duluth Metals and Polymet Mining, both of whom have outperformed Franconia Minerals over the last six months - see chart at bottom.

DM now have a market cap of around Cdn $250m (sp $3.60) compared to FRA around $100m (sp $1.80). Both companies have similar shares outstanding.

DM are now over double the size of Franconia! Well done to recent DM investors!

That's amazing - both companies are in the Duluth Mineral Belt - with similar world class resources. (Polymet too have a great resource but will not consider them further here - their share price is justified based on them being much closer to production)

So what magic do DM have?

Looking at the two companies, I can see that:

-Resource sizes are similar
-DM grades slightly better but their resource is deeper
-DM use higher metal prices, FRA being more conservative
-DM seem to have superior promotion skills eg. compare both companies web sites, although FRA are upgrading
-DM seem to have a lot more Retail interest, perhaps due to Greg McCoach tip sheet coverage (FRA are mainly institutional with no tip sheet coverage)
-DM are on the main Toronto Exchange TSX

Perhaps FRA will see some magic again (their year high was $4.20):

They are about to list on the TSX which will make it easier for US citizens to invest and may attract even more institutional interest. Understand, also, that the company are going to be going on the road to several US cities - this has helped FRA in the past.

A lot of Franconians, including myself were expecting the Spruce Road 43-101 to give a boost to the stock price. This showed that Franconia had an extra 124.4 million tonnes grading 0.59% copper and 0.21% nickel as an Underground Resource (or 376 million tonnes tons as an Open Pit Mine)

The 376 million tonnes as an Open Pit Mine is massive - indeed its similar to the 350 million tonnes on which Polymet has based its initial mine plan.

ie. Spruce Road (just one of FRA's three properties) is equivalent to Polymet.

However, when Comark looked at Spruce Road 43-101, in their update they gave no credit saying "We currently do not attribute any value for the Spruce Road Deposit, but we will consider revising our estimate with the release of a scoping study"

Amazing! DM still don't have a Scoping Study for any of their resource showing that it can actually be mined. So why penalise FRA?

Since Comark have not helped, I have taken FRA's independent Scoping  figures and given some credit for Spruce Road.

"Birch Lake and the nearby Maturi deposit are the subjects of an independent preliminary economic assessment (see Franconia news release of October 3, 2006) prepared by Scott Wilson RPA to NI 43-101 standards (available at www.SEDAR.com). The preliminary economic assessment contemplates that a combined Birch Lake-Maturi operation would have, over a 26-year mine life, an average annual production of 74 million pounds (lbs) of copper, 19 million lbs of nickel, 2.9 million lbs of cobalt, 68,000 ounces (oz) of palladium, 33,000 oz of platinum and 7,300 oz of gold."

Spruce Road as an Underground mine (124m), may be equivalent to Birch Lake (100m)  so have simply added on another 50% - and also included some PGM credits although these are not mentioned in the 43-101. Apologies that this rough, but is the best I can do, and anyway - is probably conservative (just like FRA) 

 

This shows an in-situ value of US$ 27 Billion at today's prices.

And look how the three companies have peformed, so come on FRA - catch up!

 

smilewithme

 
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