4th February 2013

The Duluth [nickel/copper/PGMs] monster – by John Chadwick (International Mining – February 2013)

posted in Chromium/Platinum Group Metals, Copper, Minnesota Duluth Complex and Iron Range, Nickel, United States Mining and History |


John Chadwick looks at the Duluth Complex and in particular the leading positions of PolyMet and Duluth Metals. Duluth has described the complex as holding “one of the world’s largest undeveloped strategic metals deposits of it’s kind”

Duluth Metals massive potential in Minnesota was described in the December 2012 Leader. Let’s take a more detailed look at what is there. The industry has perhaps not yet realised the magnitude of the work being done and discoveries made by Duluth Metals here.

Duluth Metals’ strategy is to “systematically explore and develop copper-nickel-PGM deposits in the north of the US State of Minnesota.” With its partner Antofagasta (which holds 40%, with Duluth holding 60%) it is progressing Twin Metals Minnesota’s project through feasibility into production.

Twin Metals is focused on three deposits, Spruce Road, Maturi and Birch Lake (running northwest to southeast) in the northern part of the Duluth Intrusive Complex. These deposits are located in a zone of copper-nickel-PGM mineralisation occurring near the base of the complex at depths of 130 m to 1,300 m. Bechtel will deliver a very detailed prefeasibility study (enabling fairly quick progress to a BFS) in 2014. Bechtel Engineering was instructed to prepare the NI-43-101 PFS on the Twin Metals (formerly known as Nokomis) project based on the following parameters:

■ A vertically integrated mining complex

■ Large scale phased underground mine plan and development

■ Evaluating different scenarios respecting to both on-site and off-site surface facility alternatives, including examining options in milling capacity up to approximately 80,000 t/d throughput

■ A hydrometallurgical plant with a minimum capability of producing copper cathode, nickel hydroxide and a PGM concentrate.

It is not really a question of whether this will be developed, but when? Up to 100 years of mining production is anticipated from this truly great deposit. It is amongst the world’s largest known Cu-Ni-PGM polymetallic sulphide deposits with contained metals. Using a base case 0.3% Cu cutoff, AMEC has estimated an Indicated Resource of 1,061 Mt (1.170 billion short tons) and 1,143 Mt (1.260 billion short tons) Inferred on the three deposits, which are approximately 11% of the Twin Metals property block. Within the three zones for which resources are estimated, there exists significant continuous mineralisation at higher grades than the global resource.

Antofagasta approached Duluth at the 2009 PDAC in Toronto, and followed that initial approach with very extensive due diligence. So, both partners are very confident that development of a significant mining operation will result.

In addition to the stated mineral resources, AMEC highlights additional exploration target areas surrounding Maturi estimating an additional potential of between 1,400 and 2,200 Mt. These exploration target areas represent an additional 12% of the Twin Metals property block.

In more detail (and tonnages converted to metric), using the 0.3% Cu cutoff throughout, Maturi contains 966 Mt of Indicated Mineral Resources grading 0.59% Cu, 0.19% Ni, 0.60 ppm TPM (TPM = Pt + Pd + Au), plus an additional 492 Mt Inferred grading 0.51% Cu, 0.17% Ni and 0.53 ppm TPM.

Birch Lake contains 90.4 Mt Indicated grading 0.52% Cu, 0.16% Ni, 0.86 ppm TPM, plus an additional 217 Mt Inferred grading 0.46% Cu, 0.15% Ni, 0.64 ppm TPM, while Spruce Road has 435 Mt Inferred grading 0.46% Cu and 0.16% Ni. Away from the Twin Metals and Bechtel Engineering offices, in-fill drilling has been the main PFS field activity to-date, and had involved up to 12 rigs turning on 400 holes, with 367,454 m of core processed. This has been the largest drilling program in Minnesota history. The core samples have been analysed to determine planning for mineral processing, environmental protections, mine engineering and other operations. No rigs are currently operating, but drilling activity could resume in early spring of 2013.

The mine planning is currently focused on the Birch Lake and Maturi deposits. The siting of various processing facilities is under continued study (e.g. crushers, concentrator, paste fill plant, mine access, ventilation shafts). The 2009 scoping study for a 40,000 t/d mine focused on blasthole open stoping with partially recoverable pillars and underground access by shaft and ramp. Underground ore handling would be by conveyor systems, with underground primary crushing.

Transfer from mine to concentrator considered a 10 km slurry line. The PFS is looking at twice that mining rate. Modern processing technologies will use closed-loop water recirculation, minimise water use and exceed water quality standards. Following further crushing and grinding at the mill, the ore slurry will report to agitated holding tanks with a minimum capacity of 11,000m3

The flotation circuit would produce a bulk copper-nickel-cobalt-PGM-gold concentrate. The Platsol™ process would provide
hydrometallurgical processing. Production of saleable copper and nickel metal would be via standard EW, and production of cobalt and PGMgold products to be shipped to refineries for final processing to metal.

In addition to Platsol, a process developed at SGS Lakefield, extracting base metals and PGM/precious metals, the CESL™ process is also under consideration. The choice of processing technology will depend on a combination of metal recovery, capital cost, and operating cost.

Platsol uses high temperature (230 – 240°C) and elevated chloride in leach solution (10 – 20g/litre) and gives high copper, nickel, cobalt, and precious metal recoveries through total oxidation of the concentrate. Base and precious metals are leached from the concentrate and report to the leach solution. Precious metals are precipitated from solution; copper is recovered via conventional SX/EW; nickel and cobalt are recovered to an intermediate, high grade product, which can then undergo further refining to produce refined metal products. Typical extraction values for concentrates using Platsol are 99% for Cu, 99% for Ni, 90% for Pt, 90% for Pd, and 85% for Au.

CESL technology is medium temperature (150°C) with elevated chloride in leach solution (12 g/litre). Proprietary to Teck Resources, this process results in high copper, nickel, cobalt, and precious metal recoveries through selective, partial oxidation of the  concentrate. Base metals are leached from the concentrate and report to the leach solution, with copper recovery by SX/EW methods and nickel and cobalt reporting to an intermediate, high grade product that undergoes additional refining to produce refined metal products. Precious metals remain in the leach residue, and are recovered through a combination of gravity concentration and

Typical extraction values are 98% for Cu, 97% for Ni, and 70% for Pt, Pd, and Au. Twin Metals is narrowing the options on tailings management through a rigorous study using multiple criteria (e.g. watershed, wetlands, brownfield v. greenfield, environmental sensitivity, land ownership, transportation and energy corridors, etc.). It is seeking some 530 ha (920 m²) of land, within 3 km of the processing site, to hold 50% of the tailings produced at a mining rate of 80,000 t/d for 25 years. The primary focus is on dry stack
tailings because of its smaller footprint, better water conservation and the potential to re-use water. It is expected that 50% of the tailings will be backfilled in the underground mine, limiting surface impacts.

The Twin Metals project is based on a worldclass Cu-Ni-PGE ore deposit worth in excess of $100 billion. The deposit formed from multiple sub horizontal pulses of sulphidebearing, crystal-laden basaltic slurries into a growing sill-like intrusion. Fundamental knowledge of the physical magmatic processes is the key to understanding and thus exploring for magmatic (Cu-Ni-PGE) ore deposits. Duluth Metals is actively exploring the complex for previously unidentified ore deposits.

A little more than one year after moving into its Ely headquarters, Twin Metals Minnesota announced in December 2012 that it was expanding its facilities with a new core sample storage building.

At that time the past year had seen Twin Metals hard at work, drilling approximately 300 holes and collecting close to 305,000 m of core samples from its targeted mineral deposits. Each core sample is properly logged based on its location and depth of extraction. Core material not sent to laboratories for analysis (or to the state for geological records) is stored for future reference. The pure volume of Twin Metals’ core samples has resulted in the need for additional storage space.

The new 1,505 m² core storage building, located next to the Ely headquarters, will allow storage of core samples close to its geology experts, improving efficiency and reducing transport needs. Twin Metals anticipates the building will be completed and ready for use by spring 2013.

More for Duluth

Aside from the Twin Metals joint venture, Duluth retains a 100% position on some 12,500 ha of mineral interests on exploration properties adjacent to and nearby the joint venture project. The target for Duluth Metals’ Nor’East property is a nickel-rich massive sulphide body (similar to Voisey’s Bay) at the junction of the Nickel Lake Macrodike (NLM) and the South Kawishiwi Intrusion (SKI). Geologic evidence that a significant target exists includes:

■ Knowledge that SKI magmas are typical mantle melts and contained more nickel than copper

■ Knowledge that the SKI is 75 times larger in area than Voisey’s Bay

■ Confirmation (anisotropy of magnetic susceptibility) that magma flow in the NLM was sub-horizontal (flowing to the southwest)

■ Mapping confirmation that the SKI is funnelshaped and emanated from the NLM

■ Interpretation via detailed mapping that magma velocity slowed significantly where the NLM entered the SKI

■ Knowledge that the average metal tenor of sulphides at the Twin Metals project (~23% Cu, ~7% Ni, ~30 ppm TPM) are extremely fractionated (Cu-PGE-rich) and are similar to those found near and/or adjacent to “contact” type Ni deposits.

Duluth now has four drills turning as part of its exploration program. The primary exploration focus on the Nor’East and East Shore Properties is for copper-nickel-PGM mineralisation, similar to other known deposits in the Duluth Complex, (e.g., the Maturi deposit and the deep portions of Teck’s Mesaba deposit). The three initial drilling target areas are:

Target Area 1 – The NLM area (currently two drill rigs on site)

Target Area 2 – Some 3 km south of the NLM (to be drilled in the near future)

Target Area 3 – The Harris Lake/Heart Lake area approximately 6.4 km south of the NLM (currently one drill rig on site).

It is the NLM and what it intruded that have exciting potential. So the NLM junction around Omaday Lake is the prime target. Vern Baker, President of Duluth explains that the drilling will “test the property for a magma conduit-hosted type target.” There are two drill rigs on the Nor’East property, targeting the centre of the NLM and coincident five milligal residual gravity anomaly. The other is in the Harris Lake/Heart Lake area some 6.5 km south of the NLM, targeting VTEM geophysical anomalies along the sulphide bearing, eastern basal contact zone of the South Kawishiwi Intrusion.

The fourth rig was added in late November and was positioned on the northern part of the East Shore property. “Having several good targets south of the NLM, we have decided to mobilise a fourth rig allowing us to target two drills on the southeast side of the contact,” Baker explained. “Our geological team is aggressively working on the exploration properties with four rigs.”

Current drilling program

Despite this being a wilderness area Duluth is spending extra money to ensure that the rigs operate and drill as quietly as possible. The IDEA Drilling rigs despatched to work for Duluth Metals are all drilling NQ2 size. Of the first three mobilised, one is an Atlas Copco CS 3001 with 1,605 kg hoist and the other two are Atlas Copco CT 20s with 18,140 kg hoist.

IDEA Drilling takes a proactive, hands-on approach to assure competent, consistent results, and client satisfaction. Duluth has certainly been pleased with the company’s work. Depending on the equipment needed for the job, IDEA has the capability to drill over 2,135 m of NQ2, and over 915 m of PQ.

At the time the third rig started turning, Vern Baker, President of Duluth Metals, commented: “Being a high value target area, we have decided to mobilise a third rig allowing us to target two drills on the heart of the feeder dike thought to be responsible for the copper-nickel-PGM mineralisation in the South Kawishiwi Intrusion.”

Duluth Complex

The Duluth Complex is a large (6,500 km2),composite mafic intrusion in northeast Minnesota that extends about 240 km northeast from Duluth, Minnesota to the Canadian border.

It is considered to be the largest known copper nickel field in the world after Sudbury and Norilsk. The complex hosts three distinct types of magmatic sulphide copper-nickel mineral deposits. These include:

■ Large, low-to-medium grade, disseminated Ni-Cu concentrations, some of which contain local zones enriched in PGMs

■ Localised high-grade lenses and zones of massive Ni-Cu sulphides, some of which are moderately enriched in PGMs

■ Stratabound PGM-enriched reefs associated with specific types of phase-layer transitions.

The first two deposit types occur only at or very near the basal contact of the complex, whereas the third occurs in the basal zone and also at higher levels. At this time, large resources of low-medium grade Cu-Ni sulphide mineralisation that locally contain anomalous PGM concentrations are well documented by drilling in the basal zones of the Partridge River and South Kawishiwi intrusions. At least nine deposits have been delineated in the basal 100 to 300 m of both intrusions.

The mineralisation consists predominantly of disseminated sulphides that collectively constitute over 4,000 Mt of material averaging 0.66% Cu and 0.20% Ni. So, Duluth Complex ores have three times more copper than nickel, which is unusual. Duluth Metals geologic team has advanced the understanding of the deposits it holds well beyond the norm, and has gained insight on the magmatic system and Cu-Ni-PGE deposits that rivals any company in the world. Dean Peterson, Duluth Metals’ Senior Vice President, Exploration, explains this fundamental understanding is the result of several factors:

■ Detailed geological mapping within the South Kawishiwi Intrusion
■ Comprehensive compilation of historic drill hole assay data
■ Drilling within the deposits
■ Fundamental research in other similar magmatic systems (Antarctica)
■ Integration of these data into exploration models
■ Questioning geologic thought and ore deposit models (most importantly).

Peterson further explains that “Duluth Complex Cu-Ni-PGE deposits consist of disseminated mineralisation because the magmas are intruded with abundant phenocrysts. Such magmatic slurries can carry along an extensive amount of sulphide liquid, thus the billions of tonnes of resources. Although the deposits are homogeneous on the large scale, specific bounding geometries and channelised flow can create very large (>100 Mt), higher-grade zones.”

PolyMet production expected first

Immediately southwest of Mesaba, PolyMet controls 100% of the NorthMet ore deposit and owns the nearby Erie Plant, a large 90,000 t/d crushing and milling facility with associated infrastructure including water, power, roads and tailings basins. PolyMet is the most advanced project in the Duluth Complex. Having completed its definitive feasibility study, it is nearing the end of a long environmental review process. Located at the western end of the Duluth Complex away from the sensitive Boundary Waters Canoe recreation area, the 250 Mt NorthMet orebody is near surface and will be mined by open-pit methods at an initial 29,000 t/d. A supplemental draft Environmental Impact Statement (EIS) scheduled for mid-2013 is expected to demonstrate compliance with state and federal environmental standards, including Minnesota’s stringent water quality standards for the protection of wild rice.

PolyMet recently appointed Jon Cherry President and CEO. An environmental engineer by training, Cherry spent most of his career with Rio Tinto, successfully permitting the Eagle nickel mine in Michigan before transferring to Arizona to oversee permitting and governmental relations of the Resolution Copper project. In his mid-40s, Cherry is determined to repeat his permitting success in Michigan and bring NorthMet into production.

Whereas Duluth Metals partnered with Antofagasta through a joint venture, PolyMet’s largest shareholder, Glencore, has invested $105 million directly into PolyMet Mining, and bought an additional $13 million of PolyMet shares from Cliffs Natural Resources in 2011. Glencore will market PolyMet’s products – concentrates, semi finished products or metals.

Since completion of a definitive feasibility study, PolyMet has simplified the project, which will be developed in two phases:

■ Phase I: produce and market concentrates containing copper, nickel, cobalt and precious metals

■ Phase II: process the nickel concentrate through a PLATSOL plant, resulting in production and sale of high grade copper
concentrate, value added nickel-cobalt hydroxide, and precious metals precipitate.

Based on capital and operating costs estimated in 2008, the total capital cost is estimated at $475 million, including approximately $100 million of expenditures on measures to protect the environment. A total of $77 million for mining equipment has been incorporated as an operating lease in operating costs.

Selling concentrate during the construction and commissioning of new hydrometallurgical facilities shortens the initial construction period, makes the project less sensitive to the delivery schedule for long lead time equipment such as autoclave vessels, and means that PolyMet can commence operations of the mine, the existing crushing and milling plant, the existing tailings disposal facilities, and the new flotation circuit, before starting the new metallurgical plant.

The feasibility study and permitting contemplate the use of approximately one-third of the Erie Plant’s historic capacity, suggesting future potential to expand production – especially given the fact that the 20-year mine plan represents only about one-third of measured and indicated resources.

The Erie Plant was built in the mid-1950s, when things were built to last. It was owned by LTV Steel but operated by Cliffs Natural Resources when it went bankrupt and the plant closed in early 2001. Cliffs acquired the plant and other assets from the bankruptcy court. PolyMet entered the scene in 2003 when it secured the right to acquire the bulk of the Erie Plant assets for $3.4 million cash and approximately $8 million of PolyMet shares.

The facility, shown on the front cover,includes four-stage crushing and a huge milling facility comprising 34 parallel circuits of rod and ball mills. It also includes vast tailings facilities, power, rail, a three-storey office building, and work shops. PolyMet plans and has budgeted for replacement pumps, motors, controls systems but the basic equipment, the buildings and the heavy crushing and grinding systems are in good shape.

Re-using this iconic facility will save PolyMet hundreds of millions of dollars, reduces the environmental impact of the project, and will save months of construction time. The modular capacity will enable PolyMet to start off using just one-third of the plant capacity. As a result, based on its 2008 estimates, PolyMet expects to be able to commence concentrate production with capital expenditures of $312 million, with future developments such as the PLATSOL plant and expansion of capacity funded from cash flow.

In October 2012, PolyMet filed an updated Technical Report which set out Proven and Probable mineral reserves of 250 Mt grading 0.28% Cu, 0.08% Ni and 0.01 oz/t of precious metals (palladium, platinum and gold). Reserves and resources were calculated using a copper price of $1.25/lb, nickel at $5.60/lb, and precious metal prices of $210, $800, and $400/oz respectively for palladium, platinum and gold with refining, insurance and transport cost, recovery ore to concentrate and recovery concentrate to metal taken into account.

The reserves lie within Measured and Indicated mineral resources of 630 Mt grading 0.27% Cu and 0.08% Ni at a Net Metal Value (NMV) cutoff of $6.70/t. The potential size of the deposit is indicated by total Measured, Indicated and Inferred resources of 1,100 Mt at a 0.1% Cu cutoff – containing some 15,000 Mlb of copperequivalent. The orebody sub-outcrops beneath a few metres of glacial till – there will be no significant overburden before accessing ore. The fairly flatlying deposit results in a life-of-mine strip ratio of 1.4:1. The rock is competent, although a little less hard than the iron ore for which Erie Plant was built.

The company is focused on finishing the environmental review and permitting – see World Prospects article on page 4. Once permits are issued, PolyMet expects to be in initial production within about 15 months, heralding a new era of mining in the Mesabi Iron Range district.

Local support

Minnesota’s Chamber of Commerce and local unions are mounting a combined campaign to try to ensure that mining of these very significant mineral deposits is given the go ahead by state and federal bodies. According to a report in the Duluth News Tribune, The Minnesota Chamber of Commerce, the state’s largest business group, and the Minnesota Building and Construction Trades Council have formed “Jobs for Minnesotans” to promote development of the state’s first-ever massive base and precious metals mining operations on the Duluth Metallurgical Complex. Large scale mining for the next century would of course offer great employment and tax benefits for the state and federal economies.

There is a huge infrastructure benefit in the area, especially because of its long history of iron ore mining. As Peterson says: “What other emerging district has such important resources available? Easily accessible mining infrastructure (power, rail, ports) and human capital abound in Minnesota’s mining region.” The extent of those facilities is well documented in the map above.

Midcontinent Rift

Looking at the larger picture of the Midcontinent Rift as in the diagram provided by Magma Metals (taken over by Panoramic Resources last year), there are more interesting projects. Starting southwest of the Duluth Complex, Rio Tinto has the Tamarack project, 75 km west of Duluth. This was located by geophysics and reconnaissance drilling within the northern portion of a plus 15 km long Proterozoic maficultramafic intrusion concealed beneath 20-30 m of glacial cover. Rio reports that “most of the larger intrusive system remains untested.

Tamarack mineralisation comprises disseminated, semi-massive and massive sulphides within a late gabbroic phase. Massive
sulphide lenses occur in country rock metasediments peripheral to the intrusion.” This is a nickel-copper deposit with cobalt and PGMs.

Panoramic Resources owns 100% of the Thunder Bay North (TBN) project, lying some 50 km north-northeast of Thunder Bay in northwest Ontario, Canada. In addition, the Company also owns or has options to acquire interests in regional exploration projects.

A TBN scoping study completed in February 2011 focusing on mining, metallurgy and process engineering and environmental and permitting requirements concluded the project was economic with considerable potential to enhance economics and increase mineral resources available for mining and reduce capital and operating costs for processing minerals.

This considered an open pit and underground operation producing 60,000-70,000 oz/y PGMs from resources of 9.8 Mt at 2.3g/t Pt-Eq. Finally, to the east of Duluth in Michigan’s Upper Peninsula, Rio Tinto started a $469 million development project on the Kennecott Eagle underground nickel and copper mine in 2010, following receipt of final environmental approvals. First production is expected in late 2013.

Eagle will be the first primary nickel mine in the US, and is the first new mining operation to be built in Michigan in decades, under some of the most stringent environmental permitting rules in the US. It will produce separate nickel and copper concentrates containing an average of 17,300 and 13,200 t/y of nickel and copper metal respectively over six years. Rio Tinto says “the Upper Peninsula of Michigan is a highly prospective region for nickel and copper exploration and [it] is actively exploring for additional resources in the immediate area. IM

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