Duluth Metals Ltd DULMF

RE:RE:RE:RE:RE:RE:Why is this trading at 90 cents

[oceaneleven]

I went back to the original jv agreement in 2010....here it is........Joint Venture Terms

• Duluth will contribute the Nokomis Project and approximately 5,000 acres in the Duluth Complex for a 60% interest in the joint venture, with Antofagasta to acquire an initial 40% interest;
• Antofagasta holds the option to acquire an additional 25% of Nokomis from Duluth at an exercise price calculated on a pro rata share of 1.0x Net Asset Value, which will be determined by the Bankable Feasibility Study;

Funding and Financing Commitments

• Antofagasta will provide US $130 million in direct funding to the project for its 40% interest in the joint venture;
• Thereafter, if Antofagasta elects to proceed with the further funding of the project and to maintain its 25% Option, Antofagasta will disproportionately fund 65% of the joint venture expenditures and Duluth will fund 35%;
• Additionally, Antofagasta has agreed to provide Duluth with up to US $30 million in additional funding to cover Duluth's share of subsequent project expenditures, which will ultimately be repayable in cash, Duluth shares or offset against the 25% Option exercise price;
• Antofagasta will also subscribe to a private placement of Duluth shares for approximately US $11.6 million;
• The combination of the initial funding commitment, private placement and incremental funding from Antofagasta ensures that up to US $ 227 million of funding will be available to advance the project with Antofagasta involvement, before any additional funding would be required from Duluth;
• Antofagasta has also committed to pursue project financing, on a common basis with Duluth in respect of the large development capital cost financing requirements of the project.

"The agreement announced today with Antofagasta is an outstanding partnership for an outstanding deposit," said Christopher Dundas, Chairman of Duluth. "This is a significant step forward for Duluth. This joint venture provides three key benefits that will act as catalysts to the development and construction of Nokomis. First, it delivers near and longer-term project development financing that we expect will be sufficient to bring the project to production. Second, Antofagasta is providing a commitment to arrange project financing for the large capital cost requirements, which are projected to be US $1.3 billion by the latest Scott Wilson RPA 43-101 Preliminary Assessment. Third, it brings outstanding execution capability and mitigates execution risk." 

"Nokomis is an excellent deposit and we are very pleased to enter into this agreement with Duluth," said Marcelo Awad, CEO of Antofagasta Minerals SA. "This is a large deposit that has the potential to become one of the world's premier low-cost copper-nickel producers. We are looking forward to working with Duluth to advance this very promising project." 

"Antofagasta is one of the world's premier major copper producers with an excellent pedigree and track record of success on this type of project," said Dr. Henry J. Sandri, President and CEO of Duluth Metals. "Antofagasta possesses proven expertise in planning, building and operating large-scale mining complexes and will apply its in-house capability to develop Nokomis. We believe this partnership is the mechanism required to unlock the tremendous value residing in the Nokomis deposit." 

Duluth expects development activities at Nokomis to proceed on an accelerated basis, and anticipates pre-feasibility and bankable feasibility studies to be completed within 36 months.

Antofagasta's funding and financing commitments are subject to certain terms and conditions, including the execution of a definitive participation and shareholder agreement. Duluth anticipates these conditions to be satisfied during the second quarter of 2010.

Duluth will complete the private placement of 6 million shares of its common stock, or approximately 7% of outstanding shares, to Antofagasta plc at a price of CDN $2.00 per share, resulting in gross proceeds to the company of CDN $12 million (approximately US $11.6 million).

"The private placement provides immediate liquidity, on very attractive terms to Duluth," said Dundas. "This funding will allow Duluth to accelerate on all fronts".

Located in northeast Minnesota, USA, Nokomis is an underground, copper-nickel sulphide deposit. In size, the total resource is comparable to the Sudbury Basin and Voisey's Bay, among the world's largest copper-nickel-PGM mining complexes. 

Currently the NI 43-101 compliant Nokomis deposit contains 550 million tonnes of Indicated Resources grading 0.639% copper, 0.200% nickel, 0.660 grams per tonne PGM (platinum-palladium-gold) for a copper equivalent (CuEq) grade of 1.51%, plus an additional 274 million tonnes of Inferred Resources grading 0.632% copper, 0.207% nickel, 0.685 grams per tonne TPM for a CuEq grade of 1.53% (more information available at www.Duluthmetals.com). Minnesota has more than a century of mining history and the Nokomis development project is located near major international ports and excellent mining infrastructure such as power, well-developed roads, railway networks, supply-equipment centers and a local labor force. When in operation, Nokomis could produce up to 40,000 tonnes of ore per day, based on an initial 22-year mine life. This estimate is based on utilizing only approximately one-third of the currently identified resource, with 40% of the Nokomis property yet to be explored.

Antofagasta plc is listed on the London Stock Exchange and is a constituent of the FTSE-100 index with interests in mining, transport and water distribution. Antofagasta Minerals, the mining division, is one of the world's largest copper producers. Its activities are mainly concentrated in Chile where it owns and operates three copper mines with a total production of more than 478 thousand tonnes of copper per annum. Its principal mining assets include the Los Pelambres, El Tesoro and Michilla mines and the Esperanza and Antucoya projects in Chile and the Reko Diq joint venture in Pakistan. Antofagasta' s Esperanza Project is expected to add around 200 thousand tonnes of copper and 230 thousand ounces of gold to production from 2011 onward. It also has exploration programmes in Chile (mainly in the Sierra Gorda district), Latin America, Europe and Africa.

David Oliver, P. Geo. is the Qualified Person and Project Manager for Duluth, in accordance with NI 43-101 of the Canadian Securities Administrators, and is responsible for the technical content of this press release and quality assurance of the exploration data and analytical results.

Duluth's financial advisor is UBS Securities Canada Inc. and legal advisor is Fraser Milner Casgrain LLP.