Mr. Vern Baker reports
DULUTH METALS ANNOUNCES AN UPDATED MINERAL RESOURCE ESTIMATE CONFIRMING LARGE INCREASES TO TWIN METALS CONTAINED METAL, GRADE AND INDICATED TONNAGE
Duluth Metals Ltd.'s Twin Metals Minnesota LLC has received a draft National Instrument 43-101 technical report on the consolidated mineral resources for the Twin Metals Minnesota project in northeastern Minnesota prepared by an AMEC E&C Services Inc. team led by Dr. Harry Parker. This final study uses 867 drill holes and 308 wedge offsets to confirm the Twin Metals Minnesota project to be one of the largest base and precious metal deposits in the world of this type. In addition, the PGM resource estimate confirms the project to be one of the largest palladium and platinum resources outside of South Africa. The final National Instrument 43-101-compliant technical report will be delivered by AMEC and filed on SEDAR within 45 days from today's date. Highlights include:
- Among the world's largest copper-nickel-platinum group metals polymetallic sulphide deposits with contained metals (using a 0.3-per-cent-copper cut-off) of 13.7 billion pounds copper, 4.4 billion pounds nickel and 21.2 million ounces palladium plus platinum plus gold (TPM) in the indicated category, and 11.8 billion pounds copper, four billion pounds nickel and 12.8 million ounces TPM in the inferred category, representing an average 19-per-cent increase from the June, 2012, interim AMEC report;
- Using a base case 0.3-per-cent-copper cut-off, AMEC estimated an indicated mineral resource of 1.17 billion tons(1) and an inferred mineral resource of 1.26 billion tons on the three deposits (Birch Lake, Maturi and Spruce Road) occurring on approximately 11 per cent of the footprint of the prospective portion of the Twin Metals Minnesota property block, representing a 60-per-cent increase in indicated tons and a 9-per-cent increase in inferred tons from the June, 2012, interim report;
- The S3 subunit (which is a subset of the base case mineral resource estimate for the Maturi deposit), using a higher 0.5-per-cent-copper cut-off, contains 622 million tons in the indicated category and 198 million tons in the inferred category. This material may have potential to provide higher-grade mill feed for the early stages of any planned mining operation;
- Exploration target areas include additional potential resources of between 1.4 billion and 2.2 billion tons contiguous to the boundaries of the three deposits. These exploration target areas occur on approximately 12 per cent of the footprint of the prospective portion of the TMM property block;
- The AMEC updated mineral resource estimate highlights a growing platinum group metal and gold resource of 21.2 million ounces indicated and 12.8 million ounces inferred in the Maturi and Birch Lake deposits. A decline of three million ounces contained in the inferred resource from the June, 2012, interim report is offset by a 9.1-million-ounce (75-per-cent) increase in the indicated resource. The TMM project has one of the world's largest palladium and platinum resources outside South Africa.
Vern Baker, president of Duluth Metals, commenting on the report, stated: "This final AMEC report confirms the impressive nature of the deposits, with very large qualified resources on only 11 per cent of the Twin Metals Minnesota property. All key parameters, including grade, tonnage and contained metal, have grown substantially since the June, 2012, interim report. The updated resource statement provides greater clarity on continuous zones of higher-grade mineralization for TMM's ongoing prefeasibility study. Mine planning will focus on utilizing the higher-grade areas for initial mine sequencing, potentially improving the business/ economic model significantly."
(1) All tonnages are reported as short tons.
Significant increase in the TMM global resource
The study includes three mineral resources in close proximity to one another within the Twin Metals Minnesota project referred to as the Maturi, Birch Lake and Spruce Road deposits:
- Using a base case 0.3-per-cent-copper cut-off, the Maturi deposit** contains 1,065 million tons of indicated mineral resources grading 0.59 per cent copper, 0.19 per cent nickel and 0.60 part per million TPM (TPM equals Pt plus Pd plus Au), plus an additional 542 million tons of inferred mineral resources grading 0.51 per cent copper, 0.17 per cent nickel and 0.53 part per million TPM. (Maturi deposit tonnages do not include 139 million tons of mineralized material excluded from the underground resource in a safety pillar.)
- Using a base case 0.3-per-cent-copper cut-off, the Birch Lake deposit** contains 99.7 million tons of indicated mineral resources grading 0.52 per cent copper, 0.16 per cent nickel and 0.86 part per million TPM, plus an additional 239.2 million tons of inferred mineral resources grading 0.46 per cent copper, 0.15 per cent nickel and 0.64 parts per million TPM.
- Using a base case 0.3-per-cent-copper cut-off, the Spruce Road deposit** contains 480 million tons of inferred mineral resources grading 0.43 per cent copper and 0.16 per cent nickel.*
* Note: The Spruce Road resource was estimated using Inco legacy assay data. Platinum, palladium and gold were not assayed by Inco, and the core is not available for reassay.
** Note: These mineral resource estimates include 100 per cent of the estimated resource in each deposit, and include mineral resources acquired as a part of TMM's acquisition of Franconia Minerals Corp. in 2011. Franconia's principal assets are a 70-per-cent interest in the Birch Lake, old Maturi and Spruce Road deposits in northeastern Minnesota through the Birch Lake joint venture. Franconia announced in November, 2010, its intention to increase its ownership at the Birch Lake joint venture to 82 per cent; see Franconia's company profile on SEDAR for technical reports. TMM's ownership of the resource will be factored by these percentages where applicable.
Higher-grade core delineated in the Maturi deposit -- potential earlier economic mining opportunities
The current Maturi deposit resource estimate is based on a refined geological model. One geological subunit within the Maturi deposit, known as the S3, hosts a higher-grade area that is a subset of the base case mineral resource estimate that may have potential as an early start-up area. AMEC estimated that the S3 subunit in the Maturi deposit, using a 0.5-per-cent-copper cut-off, contains 622 million tons grading 0.69 per cent Cu, 0.22 per cent Ni and 0.76 ppm TPM of indicated mineral resources and 198 million tons grading 0.65 per cent Cu, 0.21 per cent Ni and 0.82 ppm TPM in the inferred category. This material is a higher grade subset of the global resources estimated for Maturi. Within the Maturi deposit, the bulk of mineralization is hosted by two subunits of the Basal mineralized zone. The S2 and S3 subunits are stratiform, with the S3 subunit overlying the S2 subunit. Both subunits are laterally extensive, and are present over the vast majority of the deposit footprint. Within the indicated mineral resource areal footprint, the S3 subunit ranges in vertical thickness from zero to 355 feet, averaging 108 feet thick (zero to 276 feet, average 91 feet true thickness) and within the indicated mineral resource areal footprint, the S2 subunit ranges in vertical thickness from zero to 423 feet, averaging 72 feet thick (zero to 329 feet, averaging 59 feet true thickness).
MATURI DEPOSIT S3 SUBUNIT SENSITIVITY CASE
INDICATED AND INFERRED MINERAL RESOURCES
MATURI DEPOSIT -- S3 SUBUNIT
Cu% Cu Ni Pt Pd Au TPM
cut-off Mt % % ppm ppm ppm ppm
Indicated
0.2 643 0.68 0.22 0.20 0.45 0.11 0.75
0.3 643 0.68 0.22 0.20 0.45 0.11 0.75
0.4 641 0.68 0.22 0.20 0.45 0.11 0.75
0.5 622 0.69 0.22 0.20 0.45 0.11 0.76
0.6 500 0.72 0.23 0.21 0.47 0.11 0.78
Inferred
0.2 234 0.62 0.20 0.21 0.46 0.10 0.77
0.3 232 0.62 0.20 0.21 0.47 0.10 0.78
0.4 225 0.63 0.20 0.21 0.47 0.10 0.78
0.5 198 0.65 0.21 0.22 0.50 0.11 0.82
0.6 129 0.70 0.22 0.25 0.55 0.12 0.92
CONTAINED METALS IN THE TMM RESOURCE*
Metal Indicated resource Inferred resource
Copper 13.7 billion lb 11.8 billion lb
Nickel 4.4 billion lb 4.0 billion lb
Platinum 5.6 million oz 3.5 million oz
Palladium 12.6 million oz 7.6 million oz
Gold 3.0 million oz 1.7 million oz
PRECIOUS METALS CONTAINED IN INDICATED AND INFERRED MINERAL RESOURCES
Indicated Inferred
Metal resource resource
Platinum (million troy ounces) Maturi 4.9 2.2
Birch Lake 0.7 1.3
---- ---
Total 5.6 3.5
---- ---
Palladium (million troy ounces) Maturi 11.1 5.1
Birch Lake 1.5 2.6
---- ---
Total 12.6 7.6
---- ---
Gold (million troy ounces) Maturi 2.6 1.1
Birch Lake 0.3 0.6
---- ---
Total 3.0 1.7
---- ---
Updated mineral resources
Twin Metals Minnesota LLC is the joint venture company between Duluth Metals (60-per-cent ownership interest) and Antofagasta PLC (40-per-cent ownership interest). In 2011, Twin Metals Minnesota acquired Franconia Minerals. Franconia's principal assets are a 70-per-cent interest in the Birch Lake, old Maturi (not including former Nokomis property) and Spruce Road deposits through the Birch Lake joint venture, with Beaver Bay Resources owning the remaining 30 per cent. Franconia announced in November, 2010, its intention to increase its ownership at the Birch Lake joint venture to 82 per cent upon commencement of production. All of the forgoing indicated and inferred mineral resources, and exploration target tonnages are expressed as a 100-per-cent ownership position.
The mineral resource estimate for the Maturi deposit incorporates assay data from 444 drill holes and 154 wedge offset holes totalling 1,328,000 feet drilled on the Maturi deposit between 2006 and 2012, in addition to information from 99 legacy holes also in the geologic database. The Birch Lake deposit resource estimate incorporates assay data from 97 drill holes and 146 wedge offset holes totalling 297,000 feet drilled between 2000 and 2012, and information from an additional 17 legacy drill holes and eight wedge off-set holes. The Spruce Road deposit resource estimate incorporates assay data from 210 legacy holes. The effective date of the mineral resource estimate is Sept. 15, 2012.
Detailed resource tabulations
Tables of the updated resource tons and grades for various cut-offs are shown for each deposit. The base case is 0.3-per-cent-copper cut-off. The remaining cases are included to show the sensitivity of the estimates to changes in cut-off grades.
MATURI DEPOSIT INDICATED AND INFERRED
MINERAL RESOURCES(1)
Cu% Cu Ni Pt Pd Au TPM(3)
cut-off Mt % % ppm Ppm ppm ppm
Indicated (2)
0.2 1,137 0.57 0.18 0.15 0.34 0.08 0.58
0.3 1,065 0.59 0.19 0.16 0.36 0.09 0.60
0.4 936 0.63 0.20 0.17 0.38 0.09 0.64
0.5 739 0.67 0.21 0.19 0.42 0.10 0.70
0.6 538 0.72 0.23 0.20 0.45 0.11 0.76
Inferred
0.2 782 0.43 0.14 0.12 0.27 0.06 0.44
0.3 542 0.51 0.17 0.14 0.32 0.07 0.53
0.4 383 0.57 0.19 0.16 0.38 0.08 0.62
0.5 256 0.63 0.20 0.20 0.44 0.10 0.74
0.6 141 0.70 0.22 0.24 0.53 0.12 0.88
Notes:
1. Maturi deposit tonnages do not include 139 million
tons of mineralized material excluded from the
underground resource in a safety pillar.
2. CIM Definition Standards (2010) were followed for
mineral resource estimation and classification.
3. TPM is defined as Au plus Pt plus Pd.
BIRCH LAKE DEPOSIT INDICATED AND INFERRED
MINERAL RESOURCES
Cu% Cu Ni Pt Pd Au TPM
cut-off Mt % % ppm Ppm ppm ppm
Indicated
0.2 111.9 0.49 0.15 0.22 0.48 0.11 0.80
0.3 99.7 0.52 0.16 0.23 0.51 0.11 0.86
0.4 85.4 0.55 0.17 0.25 0.54 0.12 0.91
0.5 54.9 0.60 0.18 0.27 0.59 0.13 0.99
0.6 22.8 0.67 0.21 0.29 0.63 0.14 1.06
Inferred
0.2 313.1 0.41 0.13 0.16 0.32 0.08 0.55
0.3 239.2 0.46 0.15 0.18 0.37 0.09 0.64
0.4 158.4 0.51 0.16 0.20 0.42 0.10 0.72
0.5 76.8 0.58 0.18 0.23 0.48 0.11 0.82
0.6 23.5 0.66 0.20 0.27 0.57 0.13 0.97
SPRUCE ROAD DEPOSIT INFERRED
MINERAL RESOURCE
Cu% Cu Ni
cut-off Mt % %
Inferred
0.2 674 0.38 0.14
0.3 480 0.43 0.16
0.4 254 0.50 0.18
0.5 101 0.57 0.21
0.6 24 0.66 0.24
Exploration target area tonnage and grade ranges
Similar to the June, 2012, interim report, AMEC has again highlighted additional potential resources outside of the three mineral resources which occur on an additional 12 per cent of the footprint of the Twin Metals Minnesota property. In addition to the TMM global resource, exploration targets have been outlined for four areas surrounding and adjacent to the Maturi and Birch Lake deposits. The grade and tonnage ranges of the four exploration targets are based on limited drill hole results. The potential quantity and grade of the exploration targets are conceptual in nature, and there has been insufficient exploration to define the target as a mineral resource, and it is uncertain if further exploration will result in the target being delineated as a mineral resource.
Maturi
The area inside the Maturi model perimeter surrounding the boundary of the mineral resource estimate was divided into two exploration targets, Maturi North and Maturi South. An additional exploration target, Maturi West, lies outside and to the west of the current model area. The tonnage and grades of the Maturi North exploration target could range from 290 million to 435 million tons grading 0.41 to 0.61 per cent Cu, 0.14 to 0.21 per cent Ni, 0.10 to 0.14 ppm Pt, 0.24 to 0.34 ppm Pd and 0.07 to 0.07 ppm Au. The tonnage and grades of the Maturi South exploration target could range from 330 million to 500 million tons grading 0.42 to 0.62 per cent Cu, 0.13 to 0.19 per cent Ni, 0.14 to 0.21 ppm Pt, 0.31 to 0.45 ppm Pd and 0.07 to 0.10 ppm Au. The tonnage and grades of the Maturi West exploration target could range from 600 million to 980 million tons grading 0.41 to 0.52 per cent Cu, 0.15 to 0.18 per cent Ni, 0.10 to 0.14 ppm Pt, 0.27 to 0.31 ppm Pd and 0.07 to 0.07 ppm Au. The ranges of PGE values stated for Maturi West are based on regression formulas.
Birch Lake
The Birch Lake exploration target includes the area inside the Birch Lake model perimeter surrounding the indicated and inferred mineral resources. The tonnage and grades of the Birch Lake exploration target could range from 222 million to 334 million tons grading 0.33 to 0.50 per cent Cu, 0.11 to 0.16 per cent Ni and 0.39 to 0.58 ppm TPM.
About the resource estimates
The figures for resources presented herein, including the anticipated tonnages and grades that may be achieved or the indicated level of recovery that may be realized, are estimates, and no assurances can be given that they will be realized during production. Such estimates are, in large part, based on interpretations of geological data obtained from drill holes and other sampling techniques. Actual mineralization or favourable host rock units may be different from those predicted. It may also take many years from the initial phase of drilling before production is possible, and during that time the economic feasibility of exploiting a deposit may change.
The company's business of mineral exploration has a high level of inherent risk. Although the company is optimistic about the potential of many of its projects, there is no guarantee that any mineral deposits will be economically feasible and that these deposits will be put into production. The company's exploration and development activities may also be affected by a number of risks, including environmental, metallurgical, financing, permitting, approval, legislative and other government risks which are normal to the industry and are referenced in greater detail in the company's annual information form.
For the purposes of assessing reasonable prospects of economic recovery and appropriate cut-off grade, the following assumptions were used:
- Average mining costs: $16 per ton (all underground mining; long-hole open stoping with backfill);
- Average process costs: $12 per ton (flotation concentrate followed by hydrometallurgical processing using Teck Resources Ltd. CESLA process (2));
- General and administrative costs: $2 per ton.
Underground potentially minable shapes were constrained by geology and the mine modelling software used was Vulcan. The Maturi resource was estimated using ordinary kriging with a maximum block size of 25 by 25 by 15 feet. Indicated mineral resources generally extend 250 feet from well-drilled areas showing continuity in NSR values and geological geometry. Areas defined by only legacy drilling are not included within the indicated mineral resource outline. The inferred mineral resource boundary typically extends 500 feet from well-drilled areas showing continuity in NSR values and geological geometry. A variable tonnage factor was used, but the average tonnage factor was 10.5 cubic feet per ton. The metal prices used in the NSR calculation were mutually agreed upon by TMM, Antofagasta and AMEC on Dec. 7, 2011, and have not changed for this estimate.
NSR CALCULATION PARAMETERS
Recovery Recovery Recovery
Metal Price (U.S.$) concentrate CESL global Payable
Maturi
Copper $3/lb 94.3% 96.3% 90.8% 100.0%
Nickel $9.38/lb 72.0% 95.6% 68.8% 80.0%
Platinum $1,840/troy oz 93.0% 59.4% 55.2% 80.0%
Palladium $805/troy oz 90.0% 70.7% 63.6% 80.0%
Gold $1,050/troy oz 85.0% 74.5% 63.3% 80.0%
Birch Lake
Copper $3/lb 94.3% 96.3% 90.8% 100.0%
Nickel $9.38/lb 60.0% 95.6% 57.4% 80.0%
Platinum $1,840/troy oz 93.0% 59.4% 55.2% 80.0%
Palladium $805/troy oz 90.0% 70.7% 63.6% 80.0%
Gold $1,050/troy oz 85.0% 74.5% 63.3% 80.0%
(2) Teck has developed a hydrometallurgical process named CESLA , that effectively recovers copper, nickel and PGMs from bulk copper-nickel-PGM concentrates, which Duluth and Twin Metals are considering as a concentrate processing alternative. Concentrate from the Maturi group of deposits has been successfully processed at bench and pilot scale at Teck's hydrometallurgical facility in Richmond, B.C., with average recovery of metal from concentrate into saleable product form as reported in the NSR table.
For the non-legacy assay data used in these resource estimates, half core samples were prepared at ALS Minerals laboratories in Thunder Bay and then shipped to the ALS analytical facilities in Vancouver. Samples were analyzed for Au, Pt, and Pd using a 30-gram standard fire assay with an ICP-AES finish. An additional 33 elements were analyzed for using a four-acid (near total) digestion and a combination of ICP-MS and ICP-AES. ICP overlimits for copper and nickel are reanalyzed using dissolution four-acid (near total) digestion followed by ICP-AES or AAS. The remaining half core samples are being stored in Minnesota. A system of blanks, standards and quarter-core duplicates were added to the sample stream by Twin Metals Minnesota to verify accuracy and precision of assay results, supplementing and verifying a variety of internal QA/QC tests performed by ALS Minerals.
All data verification and quality assurance/quality control procedures of Twin Metals Minnesota were applied specifically to the results contained in this press release, and the data herein have been verified by Phillip Larson, PGeo, senior geologist with Duluth Metals, and a qualified person under National Instrument 43-101, in accordance with the procedures of the company. The data verification procedures and quality assurance/control procedures adopted by the company and applied to the work being reported in this press release can be found in Section 11 of the "NI 43-101 Technical Report on the Maturi, Birch Lake, and Spruce Road Copper-Nickel-PGE Projects, Ely, Minnesota, USA," with an effective date of June 15, 2012, and dated July 27, 2012. The technical report was filed on SEDAR under the company's profile on July 27, 2012.
Dr. Harry Parker, SME, registered member, technical director of AMEC, is the independent qualified person who prepared the resource estimate and is responsible for the mineral resource estimates summarized in this press release. Dr. Parker is a licensed professional geologist in the state of Minnesota. Phillip Larson, PGeo, is the qualified person for Duluth Metals and senior geologist for Duluth Metals, in accordance with National Instrument 43-101 of the Canadian Securities Administrators, and reviewed and approved the technical content of this press release.
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