- The draft pre-feasibility study set out in the independent
National Instrument 43-101 Technical Report ("PFS Technical
Report") prepared by a multi-company team led by AMEC E&C
Services Inc. ("AMEC") for Duluth Metals Limited confirms that the
proposed underground copper, nickel and Platinum Group Metals
("PGMs") mining project (the "TMM Project") is supported by
financial fundamentals showing a competitive cost position, high
margins sustained over time, and capital efficiencies resulting
from outstanding regional and local infrastructure and competitive
advantages.
- The PFS Technical Report is based on a 30-year underground mine
plan focused on the part of the TMM Project known as the Maturi and
Maturi SW mineral deposits with an average production rate of
50,000 short tons (st) per day, producing copper and nickel
concentrates that are anticipated to be marketable to customers
across the world.
- Over the TMM Project's planned 30 years of operation, the PFS
Technical Report estimates the mine will produce approximately 5.8
billion pounds of copper, 1.2 billion pounds of nickel, 1.5 million
ounces of platinum, 4.0 million ounces of palladium, 1.0 million
ounces of gold, and 25.2 million ounces of silver.
- Low C1 cu cash cost of $0.31/lb
(net of byproduct credits) over the first 10 years of production
and 30 year Copper (C1) cash cost of $0.76/lb (net of byproduct credits).
- Strong 30 year Onsite Operating Margin of $36.54/short ton.
- The TMM Project's pre-tax base case, as calculated by AMEC,
shows a net present value ("NPV") of CDN $1.5billion @8% discount factor (US$1.4 billion @8% discount factor).
- The TMM Project's after tax base case, as calculated by
PricewaterhouseCoopers LLP, shows an NPV of CDN $0.9 billion @8% discount factor
(US$0.8 billion @8% discount
factor).
Analyst and Investor Conference Call
A conference call with senior management of Duluth Metals for
the investment community has been scheduled for Wednesday, August 20, 2014 at 10:30 a.m. EDT. Christopher Dundas, Executive Chairman, and
Kelly Osborne, President and CEO,
will be available to answer questions during the call. To
participate in the call, please dial-in five minutes prior to the
call:
Participant Dial-In Number(s):
*Operator Assisted
Toll-Free Dial-In Number: (888)
231-8191
*Local Dial-In #: (647)
427-7450
TORONTO, Aug. 20, 2014 /CNW/ - Duluth Metals Limited
("Duluth" or "Duluth Metals") (TSX: DM) (TSX:DM.U) today
announced that it has received the draft pre-feasibility study set
out in the independent National Instrument 43-101 Technical Report
("PFS Technical Report") prepared by a multi-company team led by
AMEC E&C Services Inc. ("AMEC") for Duluth Metals for the
proposed underground copper, nickel and platinum group elements
mining project located in northeastern Minnesota (the "TMM Project"). The full
PFS Technical Report will be filed within 45 days on
www.SEDAR.com.
"The PFS Technical Report validates the TMM Project to be one of
the most compelling greenfield copper-nickel development projects
in the world," stated Kelly Osborne,
President and CEO of Duluth Metals. "The foundations of the
TMM Project are its tremendous mineral resource, technically sound
engineering and test work, strong operating margins, and location
in a state that supports the mining industry and has ready-built
mining infrastructure and an experienced workforce to support a
large-scale mining operation. We look forward to the next
Phase of the TMM Project and continued efforts to improve the value
of the TMM Project."
The PFS Technical Report is based on a 30-year underground mine
plan with an average production rate of 50,000 short tons of ore
per day, generating marketable copper and nickel
concentrates. The mine plan is focused on the development of
the Maturi and Maturi SW mineral deposits, located approximately
nine miles southeast of the city of Ely,
MN, and 11 miles northeast of the city of Babbitt, MN. Some properties of the TMM
Project are owned jointly by TMM and the Birch Lake Joint Venture
(see "About Birch Lake Joint Venture" below). The TMM Project
has the potential to create approximately 850 full time jobs when
the mine is in operation and generate some 12 million labor hours
during an approximate three-year construction period.
The PFS Technical Report indicates a C1 cash cost/lb. of copper
(Cu) ("life of mine" or LOM) of $0.76
(net of all byproduct credits) and a C1 cash cost/lb. of
copper-equivalent (CuEq.) LOM of $1.64. Duluth believes that the PFS Technical Report
confirms that the TMM Project has:
- a competitive cost position whereby the TMM Project would be in
the first quartile of C1 cash costs per pound of Cu produced over
the mine's 30 years of operation when benchmarked against other
producing copper mines throughout the world,
- strong operating margins sustained over time, and
- capital efficiencies resulting from outstanding local
infrastructure and workforce.
"The PFS Technical Report confirms that the TMM Project offers
an extraordinary long-term economic opportunity for the state of
Minnesota, local communities, and
TMM Project stakeholders," stated Christopher Dundas, Executive Chairman of Duluth
Metals. "The TMM Project enjoys many advantages including
excellent infrastructure, a mining friendly jurisdiction and
upsides for future expansion and potential down-stream
processing."
All dollar amounts in this press release are shown in US
dollars, unless otherwise stated.
PFS Technical Report Highlights
The independent PFS Technical Report was prepared at the request
of Duluth by AMEC, and therefore
the conclusions and opinions expressed in the PFS Technical Report,
and those contained in this new release, are those of AMEC arrived
at independently of Duluth Metals, Antofagasta P.l.c.
("Antofagasta") and TMM. The estimations set out in the
PFS Technical Report and summarized in this news release for
operating costs, commercial terms and metal price parameters are a
result of AMEC's independent evaluation of the TMM Project.
1. NPV:
In the PFS Technical Report, AMEC has calculated a range of TMM
Project pre-tax and after-tax net present values ("NPVs") based on
discount factors of six, eight (base case) and 10 percent.
The NPV calculation represents cash flows discounted to the
beginning of the first year when construction expenditures are made
and represented in 2014 constant dollars.
- Base Case* Pre-tax NPV (@8% discount) = $1.36 billion
- Base Case After-tax NPV (@8%) = $0.75
billion
- Pre-tax NPV (@6%) = $2.22
billion
- After-tax NPV (@6%) =$1.45
billion
- Pre-tax NPV (@10%) = $0.73
billion
- After-tax NPV (@10%) = $0.26
billion
(* "Base Case" calculations use projected metal prices of
$3.50/lb copper, $9.50/lb nickel, $1,300/oz gold, $1,680/oz platinum, $815/oz palladium, and $21.50/oz silver.)
2. Low 30-year Cash Cost Position:
The C1 cash costs in the PFS Technical Report are as
follows:
- C1 Cash Cost/lb. of Cu (LOM) = $0.76 (net of all byproduct credits)
- C1 Cash Cost/lb. of CuEq. (LOM) = $1.64
where CuEq is derived by adding the lbs. of Cu plus the Ni
Revenue/price of copper.
3. Strong Operating Margins:
The PFS Technical Report margins include:
- Revenue/ton milled (LOM) = $58.27
- Onsite operating costs/ton milled (LOM) = $21.73
- Onsite Operating Margin/ton milled (LOM) = $36.54
- Total operating costs/ton milled (LOM) = $30.58
- Total operating margin/ton milled (LOM) = $27.69
4. Efficient Capital Investment:
The PFS Technical Report capital cost estimates are:
- Initial Capital = $2.77
billion
- Pre-tax Payback Period = 6.4 years from start of
production
- Capital Intensity1 = $6.24 /annual lb CuEq produced
- LOM Capital = $5.41 billion
- Internal Rate of Return Pre-tax (IRR) = 13.6 %
(Note 1: Capital Intensity equals Initial Capital divided by
Average Annualized pounds of CuEq produced for the first 10
years.)
5. A Strong Economic Engine during the First 10
Years:
The TMM Project is focused on maximizing project economics from
startup. The PFS Technical Report estimates that, in the
first 10 years of production, the total TMM Project will generate
the following average annual financial measures:
- Revenue (years 1-10) = $12.11billion
- Earnings before Interest, Taxes, Depreciation and Amortization
(EBITDA) = $6.19 billion
- Free Cash Flow (pre-tax) = $4.60
billion
- Free Cash Flow (after-tax) = $3.87
billion
- Production of Payable Cu = 2.11 billion lbs.
- Production of Payable Ni = 378.55 million lbs.
- C1 Cash Cost/lb of CuEq = $1.36
- C1 Cash Cost/lb of Cu = $0.31
- Operating Margin = $37.18 per ton
milled
A summary of the TMM Project economics, as set out in the PFS
Technical Report, is shown in Table 1, and TMM Project capital cost
is shown in Table 2.
Table 1 - TMM Project Economics
|
Valuation
Indicators
|
Pre
Tax
|
UNITS
|
LOM
|
|
Cumulative Cash flow
Pre Tax
|
$M
|
7,913
|
|
NPV 6%
|
$M
|
2,231
|
|
Base Case NPV
8%
|
$M
|
1,358
|
|
NPV 10%
|
$M
|
732
|
|
Payback period from
start of production
|
Years
|
6.4
|
|
IRR before
tax
|
%
|
13.6%
|
After
Tax
|
UNITS
|
LOM
|
|
Cumulative Cash flow
After Tax
|
$M
|
6,003
|
|
NPV 6%
|
$M
|
1,449
|
|
Base Case NPV
8%
|
$M
|
753
|
|
NPV 10%
|
$M
|
257
|
|
Payback period from
start of production
|
Years
|
7.2
|
|
IRR after
tax
|
%
|
11.4%
|
Table 2 - TMM Project Capital Cost
|
TMM Project
Capital Cost
|
|
UNITS
|
VALUE
|
Initial
Capital
|
$M
|
2,775
|
Sustaining
Capital
|
$M
|
2,636
|
LOM
Capital
|
$M
|
5,410
|
Capital
Intensity1
|
$/lb CuEq
year
|
6.24
|
(Note 1: Capital Intensity equals Initial Capital divided by
Average Annualized pounds of CuEq produced for the first 10
years.)
Mineral Reserves
The mine plan is based on the Mineral Reserves converted from
1.233 billion short tons of Measured + Indicated Mineral Resources
within the Maturi and Maturi SW deposits.
The Mine Plan, including dilution, estimates total proven and
probable reserves, as set out in the PFS Technical Report, of
527 Mst over the LOM as shown in
Table 3. The total contained metal is shown in Table 4.
Table 3 – Mineral Reserve Estimates
|
|
|
|
|
|
|
|
|
Area
|
Classification
|
Ore
Tons
|
Cu
|
Ni
|
Pt
|
Pd
|
Au
|
Ag
|
(Mst)
|
(%)
|
(%)
|
ppm
|
ppm
|
ppm
|
ppm
|
Maturi
|
Proven
|
130
|
0.65
|
0.21
|
0.152
|
0.354
|
0.086
|
2.31
|
Probable
|
351
|
0.59
|
0.19
|
0.163
|
0.367
|
0.087
|
2.15
|
P&P
|
482
|
0.61
|
0.19
|
0.160
|
0.363
|
0.087
|
2.19
|
Maturi
SW
|
Proven
|
0
|
0.00
|
0.00
|
0.000
|
0.000
|
0.000
|
0.00
|
Probable
|
43
|
0.48
|
0.16
|
0.083
|
0.192
|
0.048
|
1.60
|
P&P
|
43
|
0.48
|
0.16
|
0.083
|
0.192
|
0.048
|
1.60
|
Total
|
Proven
|
130
|
0.65
|
0.21
|
0.152
|
0.354
|
0.087
|
2.31
|
Probable
|
397
|
0.58
|
0.19
|
0.154
|
0.348
|
0.083
|
2.09
|
P&P
|
527
|
0.59
|
0.19
|
0.154
|
0.349
|
0.084
|
2.14
|
Table 4 – Contained Metal in Mineral Reserve
Estimates
|
|
|
|
|
|
|
Contained
Metal
|
Area
|
Classification
|
Ore
Tons
|
Cu
|
Ni
|
Pt
|
Pd
|
Au
|
Ag
|
(Mst)
|
Blbs
|
Blbs
|
Moz
|
Moz
|
Moz
|
Moz
|
Maturi
|
Proven
|
130
|
1.7
|
0.5
|
0.6
|
1.4
|
0.3
|
8.8
|
Probable
|
351
|
4.2
|
1.3
|
1.7
|
3.8
|
0.9
|
22.2
|
P&P
|
482
|
5.8
|
1.9
|
2.3
|
5.1
|
1.2
|
31.0
|
Maturi
SW
|
Proven
|
0
|
0.0
|
0.0
|
0.0
|
0.0
|
0.0
|
0.0
|
Probable
|
43
|
0.4
|
0.1
|
0.1
|
0.2
|
0.1
|
2.0
|
P&P
|
43
|
0.4
|
0.1
|
0.1
|
0.2
|
0.1
|
2.0
|
Total
|
Proven
|
130
|
1.7
|
0.5
|
0.6
|
1.4
|
0.3
|
8.8
|
Probable
|
397
|
4.6
|
1.5
|
1.8
|
4.0
|
1.0
|
24.2
|
P&P
|
527
|
6.2
|
2.0
|
2.4
|
5.4
|
1.3
|
33.0
|
Notes to Mineral Reserve Estimates Table
- The Qualified Person for the Mineral Reserve estimate is
Joanna Poeck, an employee of SRK
Consulting (U.S.), Inc. The Mineral Reserves have an
effective date of 1 July 2014.
- Mineral Reserves are contained within mine designs based on
Measured and Indicated Mineral Resources, and assume a mining rate
of 50,000 st/d of mineralized material over a 30 year mine
life. Underground mining will utilize conventional
post-pillar cut-and-fill and long-hole open stoping methods.
Paste backfill will be employed. The mine plan includes the
mining of remnant mineralized material, which is mineralized
material that is above the marginal cut-off grade, but is left
behind during the first pass mining of higher-grade material.
- Mineral Reserves are contained within Measured and Indicated
mine designs using the following net smelter return (NSR)
calculation inputs. Recovery assumptions used in the
calculations were 94.0% for Cu, 60.8% for Ni, 82.3% for Au, 36.1%
for Pd and 42.5% for Pt. Payability assumptions were 76.4%
for Cu, 70.8% for Ni, 45% for Au, 68.6% for Pd and 69.3% for
Pt. Metal price assumptions were $3.00/lb for Cu, $9.50/lb for Ni, $1,200/oz for Au, $700/oz for Pd and $1,650/oz for Pt. Operating cost
assumptions used in the NSR equations total $23.53/st mined and include mining costs of
$13.80/st, process costs of
$5.02/st, paste backfill costs of
$1.28/st, water management costs of
$0.21/st, tailings costs of
$0.06/st, general and administrative
costs of $2.44/st; technical services
costs of $0.45/st and financial
assurance costs of $0.27/st.
- Mineral Reserves are reported using an NSR cut-off of
$25.00/st.
- Mineral Reserves are reported according to CIM Definition
Standards for Mineral Resources and Mineral Reserves (May 10, 2014).
- Mineralization that was either not classified or assigned to
the Inferred Mineral Resource category was set to waste within the
above NSR cut-off mining shapes. Mine design incorporates
geotechnical and hydrogeological considerations that take into
account paste and hanging wall dilution. Dilution is
allocated in the mine design based on the mining method, and ranges
from 3–5%. Mining recovery is assumed at 95%.
- Tonnage figures are reported as million US short tons (st);
grade figures as parts per million (ppm) or percent (%); contained
copper and nickel are reported in billion pounds (B lb), contained
platinum, palladium, gold and silver are reported in million troy
ounces (M oz). Contained metal is reported as in situ metal
content and does not include any adjustments for
recoverability.
- Rounding as required by reporting guidelines may result in
apparent summation differences between tons, grade and contained
metal content.
- Antofagasta uses different
parameters in its calculation of Mineral Reserves.
Mineral Resources
The PFS Technical Report provides an updated resource estimate
for the TMM Project, which includes four deposits known as the
Maturi, Maturi SW, Birch Lake and Spruce Road deposits. The
PFS Technical Report mine plan and financial estimates for the TMM
Project are based on Mineral Resource estimates from the Maturi and
Maturi SW deposits that have been updated from the
previously-disclosed January 2014
resource estimates. Maturi Measured, Indicated, and Inferred
Mineral Resources incorporate assay results from 57 drill holes
totaling 65,635.5 ft drilled between September 2012 and January 2014. In
addition, the resource estimate tabulates silver grades for the
first time, estimating a Maturi Measured + Indicated grade of 2.14
ppm Ag (0.063 oz/st Ag), and Maturi SW Indicated grade of 1.58 ppm
Ag (0.046 oz/st), for a total of 75.4 Moz of silver contained in
the Maturi and Maturi SW Measured + Indicated Mineral
Resources.
Current resource estimates for Maturi, Maturi SW, Birch Lake and
Spruce Road deposits are presented in Table 5, below:
Table 5 – Mineral Resource Estimates
|
|
|
|
|
|
|
|
|
|
Deposit
|
Category
|
Tons
(M st)
|
CuEq
(%)
|
Cu
(%)
|
Ni
(%)
|
Pt
(ppm)
|
Pd
(ppm)
|
Au
(ppm)
|
Ag
(ppm)
|
Maturi
|
Measured
|
308
|
1.02
|
0.63
|
0.20
|
0.146
|
0.339
|
0.083
|
2.26
|
Indicated
|
822
|
0.96
|
0.58
|
0.19
|
0.155
|
0.350
|
0.083
|
2.10
|
Inferred
|
531
|
0.81
|
0.49
|
0.16
|
0.138
|
0.314
|
0.070
|
1.81
|
|
|
|
|
|
|
|
|
|
|
Maturi
SW
|
Indicated
|
103
|
0.77
|
0.48
|
0.17
|
0.080
|
0.185
|
0.048
|
1.58
|
Inferred
|
32
|
0.70
|
0.43
|
0.15
|
0.065
|
0.157
|
0.041
|
1.43
|
|
|
|
|
|
|
|
|
|
|
Subtotal Maturi
and
Maturi
SW
|
Measured
|
308
|
1.02
|
0.63
|
0.20
|
0.146
|
0.339
|
0.083
|
2.26
|
Indicated
|
924
|
0.94
|
0.57
|
0.19
|
0.147
|
0.332
|
0.079
|
2.04
|
Measured +
Indicated
|
1,233
|
0.96
|
0.58
|
0.19
|
0.147
|
0.334
|
0.080
|
2.10
|
Inferred
|
563
|
0.81
|
0.49
|
0.16
|
0.134
|
0.305
|
0.068
|
1.79
|
|
|
|
|
|
|
|
|
|
|
Birch
Lake
|
Indicated
|
100
|
1.02
|
0.52
|
0.16
|
0.233
|
0.511
|
0.114
|
—
|
Inferred
|
239
|
0.88
|
0.46
|
0.15
|
0.180
|
0.370
|
0.087
|
—
|
Spruce
Road
|
Inferred
|
480
|
0.66
|
0.43
|
0.16
|
—
|
—
|
—
|
—
|
|
|
|
|
|
|
|
|
Deposit
|
Category
|
Contained
Cu
(B lb)
|
Contained
Ni
(B lb)
|
Contained
Pt
(M oz)
|
Contained
Pd
(M oz)
|
Contained
Au
(Moz)
|
Contained
Ag
(M oz)
|
Maturi
|
Measured
|
3.9
|
1.2
|
1.3
|
3.0
|
0.7
|
20.3
|
Indicated
|
9.5
|
3.1
|
3.7
|
8.4
|
2.0
|
50.3
|
Inferred
|
5.2
|
1.7
|
2.1
|
4.9
|
1.1
|
28.0
|
|
|
|
|
|
|
|
|
Maturi
SW
|
Indicated
|
1.0
|
0.3
|
0.2
|
0.6
|
0.1
|
4.7
|
Inferred
|
0.3
|
0.1
|
0.1
|
0.1
|
0.0
|
1.3
|
|
|
|
|
|
|
|
|
Subtotal Maturi
and
Maturi
SW
|
Measured
|
3.9
|
1.2
|
1.3
|
3.0
|
0.7
|
20.3
|
Indicated
|
10.5
|
3.5
|
4.0
|
8.9
|
2.1
|
55.1
|
Measured +
Indicated
|
14.4
|
4.7
|
5.3
|
12.0
|
2.9
|
75.4
|
Inferred
|
5.5
|
1.8
|
2.2
|
5.0
|
1.1
|
29.4
|
|
|
|
|
|
|
|
|
Birch
Lake
|
Indicated
|
1.0
|
0.3
|
0.7
|
1.5
|
0.3
|
—
|
Inferred
|
2.2
|
0.7
|
1.3
|
2.6
|
0.6
|
—
|
Spruce
Road
|
Inferred
|
4.1
|
1.5
|
—
|
—
|
—
|
—
|
Notes to Mineral Resource Estimates Table
- The Mineral Resource estimates have different effective dates
as follows: Maturi: 4 February
2014; Maturi SW: 15 June
2013; Birch Lake: 15
September 2012; Spruce Road: 15 September 2012.
- The Qualified Person for the estimates is Dr. Harry Parker, RM SME, who is a Professional
Geologist licensed in Minnesota.
- Mineral Resources are reported inclusive of Mineral
Reserves. Mineral Resources that are not Mineral Reserves do
not have demonstrated economic viability.
- Mineral Resources were estimated assuming underground bulk
mining methods and are reported at a cut-off grade of
0.3% Cu.
- Maturi and Maturi SW copper equivalent (CuEq) grades are based
on the following assumptions: CuEq = Cu + 1.459*Ni + 0.265*Au
+ 0.101*Pd + 0.228*Pt + 0.004*Ag; where global metallurgical
recoveries are 93.4% (Cu), 61.4% (Ni), 78.5% (Au), 74.9% (Pd), and
63.2% (Pt) and 76.5% (Ag); smelter returns are 94.3% (Cu), 77.1%
(Ni), 54.9% (Au), 35.0% (Pd), and 45.2% (Pt) and 47.6% (Ag), and
long-term consensus metal prices are $3.50/lb Cu, $9.50/lb Ni, $1,300/troy oz Au, $815/troy oz Pd and $1,680/troy oz Pt and $21.50/troy oz Ag. The Birch Lake CuEq
formula is based on November 2012
parameters: CuEq = Cu + 1.58*Ni + 0.285*Au + 0.219*Pd +
0.435*Pt, where concentrate metallurgical recoveries are 94.3%
(Cu), 60.0% (Ni), 85.0% (Au), 90.0% (Pd), and 93.0% (Pt); CESL
metallurgical recoveries are 96.3% (Cu), 95.6% (Ni), 74.5% (Au),
70.7% (Pd), and 59.4% (Pt); smelter returns are 100% (Cu), 80%
(Ni), 80% (Au), 80% (Pd), and 80% (Pt); long-term consensus metal
prices of $3.00/lb Cu, $9.38/lb Ni, $1,050/troy oz Au, $805/troy oz Pd and $1,840/troy oz Pt. The Spruce Road CuEq
formula is based on the Maturi parameters, and restricted to Cu and
Ni: CuEq = Cu + 1.459*Ni; where global metallurgical
recoveries are 93.4% (Cu), 61.4% (Ni); smelter returns of 94.3%
(Cu), 77.1% (Ni); long-term consensus metal prices of $3.50/lb Cu, and $9.50/lb Ni.
- Silver is not included in the 2012 resource estimate for Birch
Lake as QA/QC results had not been reviewed at the time of the
estimate. Silver is not a contributor to either the NSR
calculation or the CuEq grade for Birch Lake. Gold, platinum,
palladium and silver assays were not available to support
estimation in the 2012 Spruce Road resource model. Gold, Ag,
Pt and Pd do not contribute to either the NSR calculation or the
CuEq grade for Spruce Road.
- No allowances for mining recovery and external dilution have
been applied. Mineral Resources for Maturi assume a
400-foot-thick safety pillar above the Mineral Resource.
Mineral Resources for Maturi SW are tabulated based on a 15 foot
allowance for overburden and no safety pillar. Mineral
Resources for Birch Lake do not have a safety pillar allowance
since the mineralization is located 600 feet below ground
surface. Mineral Resources at Spruce Road assume a
164-foot-thick safety pillar.
- Tonnage figures are reported as million US short tons (st);
grade figures as parts per million (ppm) or percent (%); contained
copper and nickel are reported in billion pounds (B lb), contained
platinum, palladium, gold and silver are reported in million troy
ounces (M oz). Contained metal is reported as in situ metal
content and does not include any adjustments for
recoverability.
- Rounding as required by reporting guidelines may result in
apparent summation differences between tons, grade and contained
metal content.
TMM Project Description
Duluth believes that the TMM
Project is expected to be one of the world's largest
development-stage polymetallic projects and that Minnesota offers worldwide competitive
advantages through extensive modern infrastructure such as easily
accessible roads, rail lines, ports, power and water supplies, as
well as a highly-experienced mining labor force.
The TMM Project comprises four major areas: the
Underground Mine Site, Concentrator Site, Tailings
Storage Facility Site and the Utility Corridors, as
shown in Figure 2. The Mine Site is located at the
Maturi and Maturi SW deposits. The TMM Project has two
declines that involve non-ore development, with the portals located
on and near the Concentrator Site. The Concentrator
Site includes the primary portal, temporary ore stockpiles
(lined with leachate collection), and a process water pond.
The Tailings Storage Facility located south of the city of
Babbitt, would store tailings that
are not returned to the underground mine as paste backfill.
The Tailings Storage Facility also includes a concentrate
filtration plant, intermediate pond, electrical substation, and
rail load-out facility. The TMM Project will use multiple
Utility Corridors for infrastructure needs including
concentrate, tailings and water pipelines, service and contact
roads, and an extension of the existing railroad.
Mining Methodology
The TMM Project is based on an underground mining operation with
a throughput capacity of 50,000 st per day, or 18.25 Mst per
year. The underground operation would utilize a combination
of post-pillar cut-and-fill and long-hole stoping mining methods
(PPCF and LHS, respectively). These methods were selected for
their ability to accommodate specific geometries of the deposit, to
allow for a relative low cost, high ramp-up rate, and high
productivity.
The mine plan estimates a LOM production of 527 Mst of mineralized material at 0.59 percent
copper and 0.19 percent nickel. Mine infrastructure covers a wide
variety of fixed facilities to be constructed underground (e.g.,
primary crushers, conveyors, pumping stations, explosives magazine,
and electrical substations). Mine equipment has been selected
to satisfy high productivities and low costs, and all selected
equipment is considered well suited for mass mining and appropriate
for a modern operation.
Mining will occur in mining units or panels separated by barrier
pillars. These panel areas are a maximum of 1,700 ft along
strike by 1,700 ft along dip. Mining recoveries inside the
panels varies between 75 to 82 percent depending on the depth, dip,
width, and mining method selected.
Mine construction and pre-production development will take place
in years -3 through -1. Mineralized material will be
stockpiled until year 1, when ore production ramps up and is fed
directly to the processing plant. The mine achieves peak
sustainable production of 50,000 st per day in year 2, which is
sustained through year 26. Initial mine construction is
estimated to take approximately three years.
The TMM Project has been designed to minimize the waste
impact. The underground mining methods generate little waste
rock in comparison to surface mining, and when in production, all
waste rock will be used as underground backfill. Similarly,
approximately half of the tailings produced by the concentrator
will be placed back into the mine in the form of paste backfill,
with the remainder being held in surface storage at the Tailings
Storage Facility (TSF).
Mineral Processing
Extraction and processing of the valuable minerals is centered
upon sequential flotation where a copper concentrate is first
produced from the mineralized material, followed by production of a
nickel concentrate. The tailings produced from the flotation
process will be very low in sulfur, with approximately half
contained in a conventional lined tailings impoundment, and the
remainder combined with cement and fly ash and returned to the mine
as paste backfill.
The copper and nickel concentrate process flowsheet was mainly
developed through an investigative pilot plant program conducted at
ALS Metallurgy in Kamloops,
B.C. Following that program, an optimization bench-scale
program was undertaken at Blue Coast Research in Parksville, B.C.
The concentrator facilities proposed for the TMM Project
comprise a process plant with an ore treatment capacity of 50,000
st per day, a single process line using SAG and ball milling with
sequential copper and nickel flotation, high-rate tailings
thickening, concentrate receiving system, filter plant, concentrate
storage, and rail loadout.
Extensive work on mineral processing and metallurgy for the PFS
Technical Report was carried out between 2012 and 2014 on a variety
of samples obtained through major drilling programs conducted
between 2010 and 2012. Key projected recovery results over
the Life-of-Mine are presented in Table 6 below:
Table 6 – LOM Process Recovery Estimates
|
Life Of Mine
Recovery
|
Metal
|
Cu Concentrate
(%)
|
Ni Concentrate
(%)
|
Cumulative
(%)
|
Copper
|
85.75
|
7.99
|
93.74
|
Nickel
|
6.71
|
55.50
|
62.21
|
Gold
|
64.69
|
13.32
|
78.01
|
Palladium
|
38.84
|
35.99
|
74.83
|
Platinum
|
23.90
|
39.20
|
63.10
|
Silver
|
64.43
|
12.46
|
76.89
|
The key characteristics expected in the TMM Project's copper and
nickel concentrates are presented in the following Table 7:
Table 7 – TMM Concentrate Grades
|
|
|
|
Element
|
Unit
|
Typical
Assay
|
Expected
Range
|
Copper Concentrate
Grade
|
|
|
|
Copper
|
Cu
|
%
|
25.4
|
23.5 to
25.5
|
Nickel
|
Ni
|
%
|
0.64
|
0.57 to
0.66
|
Gold
|
Au
|
ppm
|
2.7
|
1.9 to 4.1
|
Palladium
|
Pd
|
ppm
|
6.8
|
4.4 to
10.6
|
Platinum
|
Pt
|
ppm
|
1.9
|
1.1 to 2.9
|
Silver
|
Ag
|
ppm
|
69.1
|
66.0 to
73.1
|
Nickel Concentrate
Grade
|
|
|
|
Copper
|
Cu
|
%
|
4.7
|
4.4 to 7.8
|
Nickel
|
Ni
|
%
|
10.5
|
8.4 to
13.4
|
Gold
|
Au
|
ppm
|
1.1
|
0.9 to 1.6
|
Palladium
|
Pd
|
ppm
|
12.6
|
9.2 to
18.4
|
Platinum
|
Pt
|
ppm
|
6.1
|
4.3 to 9.0
|
Silver
|
Ag
|
ppm
|
26.4
|
23.8 to
42.3
|
|
|
|
|
|
There are not expected to be any deleterious or penalty elements
in the concentrate.
Capital and Operating Costs
A summary of the average cost per metric tonne Total Annual
Operating Costs for LOM in the Duluth business model is shown in the
following Table 8:
Table 8 – TMM Operating Cost Estimates
|
|
|
Operating Costs
onsite
|
|
|
|
Mining Cost / st
milled
|
$/st
|
12.56
|
|
Process Cost / st
milled
|
$/st
|
3.99
|
|
G&A / st
milled
|
$/st
|
2.69
|
|
Surface operating
costs/ st milled
|
$/st
|
2.49
|
Operating Costs
onsite / st milled
|
$/st
|
21.73
|
|
|
|
Operating Costs
off site
|
|
|
|
Treatment charges
/ st milled
|
$/st
|
5.13
|
|
Freight costs / st
milled
|
$/st
|
3.71
|
Operating Costs
off site / st milled
|
$/st
|
8.85
|
|
|
|
Total Operating
cost / st milled
|
$/st
|
30.58
|
The capital cost estimate for the TMM Project is an Association
for the Advancement of Cost Engineering (AACE) class 4 (PFS)
estimate with a ± 25 percent accuracy. The summary of capital costs
estimates is shown in Table 9 below.
Table 9 – TMM Capital Cost Estimates
|
|
Description
|
Initial
Capital
(Millions)
|
Mine
|
$793
|
Concentrator
|
$956
|
Tailings
Management
|
$547
|
Surface
Infrastructure and Utilities
|
$379
|
Owner's
Costs
|
$100
|
Total Capital
Cost
|
$2,775
|
The PFS Technical Report will be authored by Mr. John Barber,
P.E., Dr. Ted Eggleston,
RM SME, Dr. Harry Parker, RM
SME, Mr. David Frost, FAusIMM, Mr.
Simon Allard, P.Eng., and Ms. Janine
Hartley, P.E., of AMEC, Mr Chris Martin C.
Eng., of Blue Coast Group, Mr. Tom Radue, PE, of Barr
Engineering, Dr. Mathew Pierce, PE and Dr. Robert Sterrett, PG of Itasca, Mr. Matthew Malgesini, P.E. of Golder,
and Ms. Joanna Poeck, RM SME of
SRK.
The Qualified Persons will be responsible for the preparation of
the PFS Technical Report. These Qualified Persons have
verified the data in this news release that pertain to the PFS
Technical Report.
Phillip Larson, P. Geo. is the
Qualified Person for Duluth Metals, in accordance with National
Instrument 43-101 of the Canadian Securities Administrators, and
reviewed and has approved the technical content of this press
release.
About Duluth Metals Limited
Duluth Metals is committed to acquiring, exploring and
developing copper, nickel and PGM deposits. Duluth Metals has
a joint venture with Antofagasta
on the TMM Project, located within the rapidly emerging Duluth
Complex mining camp in north-eastern Minnesota. The Duluth
Complex hosts one of the world's largest undeveloped repositories
of copper, nickel and PGMs, including the world's third largest
accumulation of nickel sulphides, and one of the world's largest
accumulations of polymetallic copper and platinum group
metals. Aside from the TMM Project, Duluth Metals retains a
100% position on approximately 30,000 acres of mineral interests on
exploration properties adjacent to and nearby the TMM Project.
About Twin Metals Minnesota LLC
TMM is a limited liability company, 60 percent owned by
Duluth and 40 percent owned by
Antofagasta. TMM was formed in 2010 to pursue the development
and operation of a copper, nickel and PGM (strategic metals)
underground mining project within the Duluth Complex in
northeastern Minnesota. TMM holds mineral and land assets of
approximately 40,000 acres of leased, leased applications and
permitted land.
About Birch Lake Joint Venture
In 2011, TMM acquired Franconia Minerals Corporation
("Franconia"). Franconia's principal assets were a 70%
interest in the Birch Lake, "old Maturi" (not including the former
Nokomis property), Maturi
Southwest and Spruce Road deposits through the Birch Lake Joint
Venture ("BLJV"), with Beaver Bay,
Inc. owning the remaining 30%. Franconia announced in
November 2010 its intention to
increase its ownership in the BLJV to 82% upon the commencement of
production.
This press release contains forward-looking statements
(including "forward-looking information" within the meaning
of applicable Canadian securities legislation and "forward-looking
statements"within the meaning of the US Private Securities
Litigation Reform Act of 1995) relating to, among other things, the
results of drilling operations of Duluth Metals and exploration and
mine development. Generally, forward-looking statements can
be identified by the use of words such as "plans", "expects" or
"does not expect", "is expected", "budget", "scheduled",
"estimates", "forecasts", "intends", "anticipates" or "does not
anticipate", or "believes", or variations of such words and phrases
or statements that certain actions, events or results "may",
"could", "would", "might" or "will be taken", "occur" or "be
achieved". Duluth Metals has relied on a number of
assumptions and estimates in making such forward-looking
statements, including, without limitation, the prices of copper,
nickel and platinum group metals (PGMs) and the costs associated
with continuing exploration and mining development. Such
assumptions and estimates are made in light of the trends and
conditions that are considered to be relevant and reasonable based
on information available and the circumstances existing at this
time. A number of risk factors may cause actual results,
level of activity, performance or outcomes of project development
and exploration programs to be materially different from those
expressed or implied by such forward-looking statements including,
without limitation, the following: the economic and feasibility
parameters of the pre-feasibility study; assumptions with respect
to exchange rates, future metal prices, and concentrate sales
contracts; the estimation of Mineral Reserves and Mineral Resources
and the realization of Mineral Reserve
estimates; possible variations in Mineral Reserves,
grade or recovery rates; changes in the geotechnical and
hydrogeological parameters used in development of mine plans;
changes in project parameters as mine and process plans continue to
be refined; the timing and amount of estimated future production;
the basis for and estimation of capital and operating cost
estimates, and any future requirements for additional capital; the
net present value (NPV) and internal rate of return (IRR) and
payback period of capital; cash costs and all-in sustaining costs;
changes to tax rates; assumed permitting time lines for
development; the timing of the environmental assessment process;
modifications to assumptions in the permitting process and
allocation of reclamation expenses so as to comply with any future
permit conditions that may be imposed by the appropriate regulator;
risks and uncertainties with respect to obtaining necessary surface
rights and permits or delays in obtaining same; risks associated
with maintaining and renewing permits and complying with permitting
requirements; environmental risks; obtaining the social licence to
operate; delays in obtaining regulatory approval; changes to
government regulations of mining operations; accidents, labor
disputes and other risks of the mining industry; title disputes or
claims; political risks; the need for additional funding to
continue development, permitting and exploration efforts; and
general business, market and economic conditions, and those other
risks set forth in Duluth Metals' most recent annual information
form under the heading "Risk Factors" and in its other
public filings. Statements related to "reserves" and
"resources" are deemed forward-looking statements as they involve
the implied assessment, based on realistically assumed and
justifiable technical and economic conditions, that an inventory of
mineralization will become economically extractable.
Forward-looking statements are not guarantees of future performance
and such information is inherently subject to known and unknown
risks, uncertainties and other factors that are difficult to
predict and may be beyond the control of Duluth Metals.
Although Duluth Metals has attempted to identify important risks
and factors that could cause actual actions, events or results to
differ materially from those described in forward-looking
statements, there may be other factors and risks that cause
actions, events or results not to be as anticipated, estimated or
intended. Consequently, undue reliance should not be placed
on such forward-looking statements. In addition, all
forward-looking statements in this press release are given as of
the date hereof. Duluth Metals disclaims any intention or
obligation to update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise,
save and except as may be required by applicable securities
laws. The forward-looking statements contained herein are
expressly qualified by this disclaimer.
Cautionary Note to United States Investors Concerning
Estimates of Indicated and Inferred Mineral Resources
This press release uses the terms "Indicated Mineral
Resources" and "Inferred Mineral Resources" in accordance with the
Canadian Institute of Mining, Metallurgy and Petroleum (CIM)
Definition Standards. While such terms are recognized under
Canadian securities legislation, the United States Securities and
Exchange Commission does not recognize these terms. The term
"Inferred Mineral Resource" refers to a mineral resource for which
quantity and grade or quality can be estimated on the basis of
geological evidence and limited sampling and reasonably assumed,
but not verified, geological and grade continuity. These
estimates are based on limited information and it cannot be assumed
that all or any part of an "Inferred Mineral Resource" will be
upgraded to a higher classification resource, such as "Indicated"
or "Measured", as a result of continued exploration. Accordingly,
an estimate relating to an "Inferred Mineral Resource" is
insufficient to allow meaningful application of technical and
economic parameters or to enable an evaluation of economic
viability. Under Canadian securities legislation, estimates
of an "Inferred Mineral Resource" may not form the basis of
feasibility or other economic studies. Investors are cautioned not
to assume that all or any part of an "Inferred Mineral Resource" is
economically or legally mineable. Investors are also cautioned not
to assume that all or any part of "Indicated" will ever be
converted into "Mineral Reserves" (being the economically mineable
part of an "Indicated" or "Measured Mineral Resource").
SOURCE Duluth Metals Limited