Duluth Metals (ticker: TSX: DM) is one of several companies which own land located in the "Duluth Complex" in Minnessota. The region has been extensively drilled and explored since the 1950s and has been found to have substantial deposits of Copper, Nickel and platinum-group-elements. Until recently however, the metallurgical process (called PLATSOL) was not developed and thus, could not properly or economically separate the metals into a usable form.
Things are different now. DM, along with Franconia, and Polymet are all moving towards economic reality. Polymet (Ticker: PLM) is furthest along in their plans and is awaiting their environmental impact study from the state of MN. Once approved (and although this would be the first non-ferrous mine approved in the state of MN, experts have strong reason that the economic and political support of mining these metals will enable a fairly rapid approval program), PLM can begin to progress towards permitting. The company seeks to begin processing ore in late 2009/2010.
The reason this is relevant to DM is that in my opinion, once PLM receives its permits, the "flood gates" of merger/acquisition activity will open in the state and DM will be a prime take-over candidate. Since PLM would be the first non-ferrous permitted mine, would-be acquirers of these companies likely want to wait to make sure everything progresses smoothly; that is, why buy something if there is any risk that it won't get permitted. We and other experts in the field believe quite strongly that it will be approved for permitting rather quickly.
DM has vast reserves and recently issued a resource update which expanded their resource to 449 million tonnes indicated and an additional 284 million tonnes inferred. This was a 30 percent increase on the indicated resource and a 162 percent increase in the inferred resource category. These are also very well-mineralized deposits, with high-grade copper and nickel.
DM is working towards a mine plan which would also contemplate its own processing facility. PLM is doing the same thing as is FRA. These companies also each have their own boards of directors, officers, managers, etc - there are certainly some "extra" costs in here which a large mining company could consolidate. In this author's opinion, DM is a prime takeover target due to their ample mineral resource - by bidding for the company now, an acquirer could conceivably get a "bargain." By waiting a lot longer (for instance after PLM gets their permits), they might have to pay a higher price.