Chilean Conglomerate Rescues Kawishiwi River Mine

Antofagasta PLC logo
Antofagasta PLC logo

After verging on financial failure, a massive copper-nickel mine proposed near the Boundary Waters Canoe Area Wilderness appears to be back in business.

Antofagasta PLC has acquired Duluth Metals, making the giant Chilean mining company the sole owner of the proposed Twin Metals mine near the South Kawishiwi River, Birch Lake, and the Boundary Waters. The move comes only four months after the company appeared to be backing out of the project.

Duluth Metals was verging on bankruptcy last week, as its stock fell to just $.07 per share (from a 52-week high of $1.25). Investors were concerned that the proposal’s  costs were too high to make it economical. A pre-feasibility study the company released in August said the project could be profitable, but anticipated it would take $2.77 billion just for initial construction.

Antofagasta is paying about $96 million for the company. The figure represents a share price of 45 cents. In a press release, Antofagasta’s CEO said his company would take another look at the proposal.

“We believe that the Duluth Complex is an attractive deposit and upon closing of the offer we will commence the process of re-evaluating the project’s design while also continuing with the permitting activities,” said Diego Hernandez.

The acquisition seemed to be Duluth Metals’ only option, according to the Timberjay newspaper. The company needed to repay a $12 million loan to Antofagasta by the end of the year, but didn’t have the cash to do it. “Under the acquisition, Antofagasta will provide approximately $2 million U.S. in working capital and will defer repayment of the bridge loan for another 12 months,” editor Marshall Helmberger wrote.

Now that Twin Metals will be wholly owned by the wealthy South American firm, it could be poised to weather uncertain times in metal mining.

“Antofagasta has deeper pockets. They have the ability to get through what is really turning out to be tough times for the industry, especially for some Canadian juniors like [Duluth Metals],” Mara Strazdins, Duluth Metals’ vice president of corporate relations, told the Duluth News Tribune.

In the Timberjay, Helmberger speculated that the move could represent an uncertain future for the proposal. By buying it cheap, Antofagasta might be doing nothing more than locking up mineral deposits as concerns rise about a surplus in the global copper market.

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