Duluth Metals (DM-T) July 3rd 2014 has received a formal 25-per-cent option termination notice from Antofagasta PLC under Section 6.4 of the second amended and restated participation and limited liability company agreement between Antofagasta and Duluth Metals on the Twin Metals Minnesota (TMM) project. With the receipt of this notice, the joint venture moves immediately to the "40/60 Phase" and Duluth Metals now has a 180 day buy-back right to purchase the Antofagasta 40% equity position at a price equal to Antofagasta's sunk costs (currently estimated to be approximately US$220m) plus approximately US$10m currently outstanding (plus accrued and unpaid interest) under the bridge loan Antofagasta provided to Duluth Metals. If Duluth Metals does not exercise its buy-back right, Antofagasta will continue to own 40% of TMM and Duluth Metals will be required to repay the bridge loan facility (plus accrued and unpaid interest), at its option, in either cash or Duluth Metals shares. By delivering the Notice, Antofagasta no longer has the right to acquire 25% of the TMM Project from Duluth after the delivery of the Bankable Feasibility Study and the permitting of the TMM Project. In addition, Duluth Metals becomes the operator of the project and controls the TMM Board and the TMM Technical Committee by having three members and Antofagasta having two members on each. "Duluth Metals is excited about moving the TMM Project through its next phase of project development and continuing to work together with Antofagasta.", stated Christopher Dundas, Executive Chairman of Duluth Metals. "We are looking forward to publishing highlights of the very comprehensive Pre-Feasibility ("PFS") Technical Report during the second half of July."
Antofagasta has delivered the "25% Option Termination Notice" to Duluth Metals as provided for under Section 6.4 of the Second Amended and Restated Participation and Limited Liability Agreement which effectively terminates Antofagasta's right to purchase an additional 25% equity interest in Twin Metals Minnesota LLC ("TMM") based upon an evaluation formula arising from the Bankable Feasibility Study The project has now moved into the "40/60 phase" whereby Duluth maintains its 60% ownership of TMM and Antofagasta owns 40% As a result, Duluth Metals assumes immediate control and operator status of the TMM Project In addition, this notice provides Duluth Metals a contractual buy-back right on the Antofagasta 40% equity position in the next 180 days for a price equal to Antofagasta's sunk costs (currently estimated to be approximately US$220m) plus approximately US$10m currently outstanding under the bridge loan facility If the buy-back right is not exercised, Duluth Metals is required to repay the bridge loan (plus accrued and unpaid interest), at its option, in either cash or Duluth shares Furthermore governance changes take effect with Duluth Metals having three members and Antofagasta having two members on both the TMM Board of Directors and the TMM Technical Committee Highlights of the AMEC NI 43-101 Pre-Feasibility Technical Report will be published by the end of July
Kelly Osborne, President and CEO of Duluth Metals and former Interim VP Project for TMM commented, "We believe the highlights of the PFS Technical Report to be published later this month will showcase the strengths of the TMM Project, namely a great mineral resource in a mining friendly jurisdiction with much of the required infrastructure existing to support a large scale mining operation. The TMM Project Team has done a great job towards completing the PFS and we look forward to advancing the Project through its next phase of activity." |
