Minesite UK - FRA, DM and PolymetThanks to gwalker - article about FRA which also mentions DM and Polymet
https://www.minesite.com/nc/minews/singlenews/article/franconia-minerals-expects-good-newsflow-from-the-duluth-complex-this-year/1.html
January 29, 2008
Franconia Minerals Expects Good Newsflow From the Duluth Complex This Year
By Rob Davies
Franconia Minerals is one of three companies exploring the Duluth Complex in north-eastern Minnesota close to the iron ore mines. This complex has been known for a long time and its plentiful combination of copper, nickel, and platinum group metals gives some credibility to its claim to be the largest undeveloped mining district in North America. This year, the news-flow for the area was kicked off by Duluth Metals when it announced a $792m NPV (net present value) on its Nokomis deposit. As this is an eastern extension of Franconia’s Maturi deposit the announcement sparked a degree of neighbourly rivalry. Greg Taylor, investor relations consultant for Franconia, points out that Franconia’s $365m NPV for all three of its deposits uses much lower metals prices that that of its rival. Using Duluth’s metals assumptions, would, he says increase Franconia’s total NPV to $770m. Moreover, if Franconia made the same assumptions on recovery as Duluth does, then its NPV would rise still more, to $880m.
Clearly these numbers will matter enormously to both parties going forward, and Polymet, the third player in the area, will be taking a keen interest too. Underlying Franconia’s confidence is a 43-101 resource of 100 million tonnes grading 0.59% copper, and 0.19% nickel, with over a gramme per tonne of gold and PGMs on flagship Birch Lake property. The Maturi deposit is only three kilometres away, and that contains an additional 83.1 million tonnes at a grade of 0.70% copper, 0.26% nickel, 0.02% cobalt and about half a gramme of gold and PGMs per tonne. Both these are inferred resources and drilling is underway now to upgrade them. Recent results have been encouraging with one hole returning 246 feet at 0.77% copper and 0.21% nickel. These data were retrieved from an area not yet included in the resource estimate, so Greg is expecting a big upgrade later this year when the revised resource is announced. Furthermore, there is another 65,000 metres of drill data from campaigns in 2006/7 that has yet to be included in the data. And there’s a third property at Spruce Road containing another 124 million tonnes at 0.59% copper and 0.21% nickel that takes the total resource in all three up to 307 million tonnes.
There is a small problem with these deposits though and that is the recovery process. Teck Cominco is a shareholder in Franconia but its process does not recover the PGMs. It seems likely that all three companies will licence the Platsol technology and use a combination of flotation and hydrometallurgy to extract the complex suite of metals from these rocks. Franconia’s capital cost estimate of $616m is based on starting mines at Birch Lake and Maturi with a combined output of 18,000 tonnes per day. But, by delaying the start of Maturi and running Birch Lake alone at 18,000 tpd the company thinks it can reduce capital costs by $109m further improving the NPV. An additional option is to toll process ore at the Erie plant owned by Polymet that would again cut capital costs, albeit at the expense of higher operating costs.
In any event the news flow from these three companies looks set to speed up in 2008 as Polymet seeks an operating licence and Franconia will announce a new resource statement and revised feasibility study. Franconia moved to the TSX last year and has C$13m in the treasury as well as a potential due C$5-10m from warrants so is well placed to capitalise on its commanding position in the area.