Duluth Metals: QuickView

Duluth Metals has announced a significant 60% increase in the indicated mineral resource estimate for the Twin Metals project, in which it has a 60% stake. This will be incorporated into the pre-feasibility study (PFS) currently under way and the scale of the resource indicates potential for larger milling capacity options than the current range of 40ktpd to 80ktpd. An increase in the potential project scale should represent a material increase to the project valuation. A substantial higher-grade geological sub-unit has been identified that should allow mine plan optimisation to further enhance the project’s NPV. We will be initiating full coverage early in 2013.

60% Increase In Twin Metals Indicated Resource
The updated mineral resource estimate for the project represents a 60% increase in total indicated resource to 1.17bn tons, at 0.58% Cu and 0.19% Ni, from the June 2012 interim technical report. Grades of copper, nickel, platinum, palladium and gold have all increased while maintaining a 0.3% Cu cut-off grade, resulting in contained metal increasing by over 70%. A geological sub-unit of the enlarged total indicated resource has been identified, representing 622Mt at materially higher grades of 0.69% Cu and 0.22% Ni using a 0.5% Cu cut-off. An inferred resource of 1.26bn tons at 0.47% Cu and 0.16% Ni offers scope for further project expansion. Only 11% of the prospective portion of the property has been drilled to date and, beyond this, significant exploration targets have already been identified.

Twin Metals Project PFS Underway
This resource estimate is the final update to be incorporated into the PFS currently being prepared by Bechtel Engineering. The PFS aims to define a large-scale vertically integrated mining complex with a phased underground mine plan. Different scenarios are being evaluated in terms of on-site and off-site surface facility alternatives and conventional and hydrometallurgical processing options. The increased scale of the resource indicates potential for larger milling capacity options to be assessed than the 40ktpd to 80ktpd range being reviewed.

Positive Valuation Impact
The potential increase in the scale of the project under consideration as a result of the increased resource estimate should directly translate into a materially increased project valuation, assuming there are no overriding operational or financial constraints. In addition, the substantial higher-grade geological sub-unit should allow the mine plan to be optimised to generate stronger cash flows in the early years of the project and thus further enhance the project’s net present value.

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