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| 1/16/2010 4:00:00 PM | Email this article • Print this article | Welcome to Ely, Antofagasta
Ely Echo Editorial
An Ely shareholder of Duluth Metals was excited to see his stock jump 42 percent by noon on Monday. The reason for the jump? Duluth Metals signed on a major partner to help them put together a project that would include a $1.3 billion copper-nickel mine southeast of Ely.
Antofagasta has agreed to put up a total of $227 million, including $130 million before Duluth Metals has to put in another penny. A major player has just accelerated the timeline for an underground copper-nickel mine to be built here.
Based in Chile, Antofagasta was founded in 1888 (the same year Ely was incorporated) and is well-known in the world of copper-nickel mining. The company had revenues of $3.4 billion in 2008 and employs over 4,000 people worldwide.
Not since Teck Cominco (now known as Teck Resources) was here actively looking to move forward have we had a company with the knowledge and resources available to put a new mine into production.
During a conference call with investors, Duluth Metals leaders were quizzed over the company's ability to pass Minnesota's permitting maze. The answer was simple: follow PolyMet.
Now in the final stages of the environmental impact statement (EIS) process, PolyMet has had the misfortune of being the first in line. After countless delays and $20 million spent on getting the EIS done, PolyMet has laid down a map for how to permit a copper-nickel mine in Minnesota.
Duluth Metals officials were quick to point out that their project has one major difference: the mine will be located underground whereas PolyMet is an open pit operation.
There are other differences as well. PolyMet is using much of what used to be LTV. That may have saved them millions from building new facilities, but they are also taking over whatever problems were left from the previous owners.
For Duluth Metals, the company now has the following in its favor:
• A resource that continues to expand at a near exponential rate;
• Underground mining instead of open pit operations;
• A partner who can work with the company to build a $1.3 billion mining facility.
You may want to check out Duluth Metals stock yourself, but the whole project is far from a done deal.
The company will now develop a pre-feasibility study and later a bankable feasibility study for the project. This will take time, likely around three years. A lot can happen in three years.
Within the last 12 months, Duluth Metals traded as low as $.42 per share. Thursday it topped out at $3.37 per share.
There will likely be more ups and downs for Duluth Metals. They may have passed a major milestone by signing an agreement with Antofagasta, but there is still a lot of work that needs to be done before mining becomes a reality.
We expect to see a local impact of this announcement shortly. Antofagasta said Thursday that $5 million of its monies will be spent on more drilling. That drilling could start any day.
Duluth Metals is going to have a significant impact on the Ely area's economy whether or not the Nokomis deposit ever becomes the Nokomis mine. The drilling work alone will put people to work. The company needs to follow through with plans to build an office and storage facility in Ely.
Whether you are a shareholder or someone who would like to see our school district have to deal with more students instead of declining enrollment, this is good news. Even if you just believe mining and clean water are not mutually exclusive, this is good news.
Welcome to Ely, Antofagasta.
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