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Property Location
The Nokomis Deposit is located in the western portion of the Nokomis Property (formerly known as the Maturi Extension Properties), and is situated southeast of the town of Ely, Minnesota, USA. The property is located in close proximity to major international ports and excellent mining infrastructure such as power, well developed roads, railway networks, supply-equipment centers and a local labor force. The Nokomis Property consists of approximately 3,000 acres (approx. 12.14 sq. km.) of land in a combination of State Leases, a private mineral lease and Federal Prospecting Permits.
Infrastructure
The Nokomis Property and surrounding areas have significant existing infrastructure which was developed to support the historic and current taconite mines, six of which are operational and supply over 70 percent of U.S. iron ore demand. Much of the equipment and infrastructure required for taconite processing is similar to that required for processing of the ore from the Duluth Complex including crushing and grinding facilities, transportation networks and tailings facilities. The iron ore industry’s need for roads, railroads and power for the last 100 years has resulted in the presence of extensive infrastructure and facility networks in this area.
Available infrastructure in the area include:
Two Coal Fired Power Stations with capacities of 125MW and 225MW; additional power facilities are being considered for the area.
Bulk Commodity Ports on western side of Lake Superior include Duluth, Taconite Harbor, Two Harbors, and Silver Bay. These ports have access to the Atlantic Ocean through the Great Lakes and the St. Lawrence Seaway. The ports have been used for the transport of iron ore and taconite, coal, and limestone/dolomite. Duluth is also used for the transshipment of grain, salt, cement, fuel, other bulk materials and general cargo.
Major Railroads that serve the area are the Burlington Northern/Sante Fe; the Duluth, Missabe and Iron Range Railway Company (CN), and the Northshore Mining Line. There are also more localized rail systems from taconite mine sites to the processing plants. Strategic Land Acquisitions
In early 2008, the Company entered into an exclusive option agreement to purchase the 1,845 acres Dunka Property brownfields site from Cleveland Cliffs. The Dunka Property consists of a former iron ore deposit that was mined from the 1960s through 1994. The site principally consists of a mined out iron ore pit (for tailings impoundment), water (for operational processing), access to rail, access to power, area for plant sites, and working active (treatment plant) and passive (wetlands) water treatment systems. The Dunka Property is approximately four miles southwest from the Nokomis Deposit.
In addition to the Dunka Property, the Company has been aggressive in the acquisition of several State leases and private land parcels adjacent to or near the Nokomis Deposit, or within unexplored minerals lands of the Duluth Complex, south of the Nokomis Deposit. These acquisitions of minerals and infrastructure lands have been both strategic and opportunistic, including properties with known mineralization (historic drill holes), those overlying known deposits, lands immediately adjacent to existing deposits, and/or properties that fit our geologic model for potential future discovery. In total, Duluth Metals now controls over 18,000 acres of mineral rights and 15,000 acres of surface rights.
Summary of Work
The Nokomis Property was initially evaluated by Wallbridge Mining Limited and then spun out as a new independent company “Duluth Metals Limited”. Wallbridge Mining Limited recognized the huge potential of the sparsely drilled mineralized zone, now known as the Nokomis Deposit, which is located at the north-eastern edge of the Duluth Complex Camp.
The Nokomis Deposit lies about 400 m (1,400 ft) below surface and extending to depths of about 1,200 m (4,000 ft), and extends for approximately 3.5 km (2.1 miles) along its known drilled off extent. The deposit forms a tabular sheet of copper-nickel-PGM mineralization, hosted in troctolitic rocks resting on the lower contact between the South Kawishiwi Intrusion and the Giants Range Batholith granitic rocks. Typically, the highest copper-nickel grades are concentrated in the upper 30 m (100 ft) of the main body.
Exploration / Drilling
In late 2005, Duluth Metals undertook an evaluation of the potential of the Nokomis Property (formerly known as the Maturi Extension Properties) based on historic drilling on the Properties and adjacent lands. This led to the decision that a number of exploration/confirmation holes were needed to be drilled in the more highly prospective areas identified, principally in the western portion and east/central portion of the Properties.
Initial funding from private placements was used to commence a Phase 1 drilling program. From March 14, 2006, to May 7, 2006, Duluth Metals diamond drilled 5,981 m (19,624ft.) in six holes. Holes were collared on the west portion of the Nokomis Property (MEX-2, 6 and 4) and the east/central portion of this block (MEX-1, 3, 5). Holes drilled in Phase 1 were widely spaced at distances ranging from 314 m (1,030 ft.) to 1,446 m (4,744 ft.). All holes intercepted significant copper-nickel-PGM mineralization, with a number of holes showing thicknesses in excess of 30 m (100 ft). This confirmed that the Nokomis Property was, indeed, a credible and large potential target, and led to the identification two high priority areas for further exploration.
Based on these results, an updated independent engineer’s report by Roscoe Postle Associates Inc. divided the main portion of the Nokomis Porperty (formerly Maturi Extension Properties) into: (1) a Western Area, which indicated the potential for a large continuous zone of mineralization; (2) an Eastern Exploration Area, showing some of the best drill results with potential mineralization open to the east and north, and: (3) a Southern Exploration Area, which was mainly untested.
Initial funding from the IPO was used to commence a Phase 2 Drilling Program, focusing on infill drilling in the Western Area and step-out drilling in the Eastern Exploration Area.
Drilling of the Phase 2 Program began in December 2006 with two drills and by January 2007, Duluth Metals had employed four drills full time (24/7). The continuation of drilling in the Phase 2 Program brought the drill spacing in the Western Area to 200 m (660 ft) centers to confirm the grade and continuity of the mineralization. Drilling continued through mid-May 2007, with the completion of MEX-45. All holes intercepted significant copper-nickel-PGM mineralization, with a number of holes showing thicknesses in excess of 150 m (500 ft).
Initial 2007 NI 43-101 Resource Estimate
In June 26, 2007, Duluth Metals received an independent NI 43-101 compliant resource estimate completed by Scott Wilson RPA on its Nokomis Deposit, situated in the western portion of their Nokomis Property. This initial resource estimate for the Nokomis Deposit consists of 347 million tonnes of the higher classification resource category of Indicated Resources grading 0.62% copper, 0.20% nickel, and 0.52 grams per tonne of total precious metals (TPM = Platinum+Palladium+Gold), plus an additional 108 million tonnes of Inferred Resources grading 0.64% copper, 0.18% nickel, and 0.70 grams per tonne of TPM. The full NI 43-101 compliant report completed by Scott Wilson RPA entitled “Technical Report on the Resource Estimate for the Nokomis Deposit on the Nokomis Property, Minnesota, USA, prepared for Duluth Metals Limited” is available on www.sedar.com or this website. Richard E. Routledge, M.Sc., P.Geo. of Scott Wilson Roscoe Postle Associates Inc., Toronto Canada, is the Independent Qualified Person who prepared the resource estimate and the Technical Report. For the 2006-2007 winter drill program, half core samples were prepared at ALS Chemex Ltd. Laboratories in Thunder Bay and then shipped to its analytical facilities in Vancouver. Samples were analyzed for Au, Pt, Pd using a standard fire assay with an ICP finish and for 27 other elements using a four acid (near total) digestion and a combination of ICPMS and ICPAES. ICP over limits were re-analyzed using sodium peroxide fusion, acid dissolution followed by ICPAES. The remaining half core samples are being stored in Minnesota.
For the Initial June 2007 Nokomis Resource Block, Scott Wilson RPA reviewed data for the Nokomis Deposit to provide and an independent Mineral Resources estimate in accordance with the requirements of NI 43-101 and the definitions set out by the CIM Definition Standards on Mineral Resources and Mineral Reserves. The initial resource estimate was based on diamond drilling and core sampling data by Duluth Metals and historical drilling by Inco, Kennecott, Duval, Newmont and others on and adjacent to the property. The reserve calculation methodology employed 3D computer block modeling and a combination of ordinary kriging for base metals and inverse distance squared (ID2) for PGE and precious metal grade interpolation constrained by wireframe models of the deposit constructed at a cut-off of 0.8% copper equivalent.
The Cu-Ni-PGE mineralization in the Nokomis Deposit extends in part, onto property that adjoins the Company’s properties on the northwest. As such, the Cu-Ni PGE mineralization was modelled using drilling and assay data from the Company’s Nokomis Property as well as drill hole information from historic drill holes both on and off the property located along its northwest boundary. Resources have been estimated from the northwest boundary of the Nokomis Property at a minimum depth of approximately 130 m to a depth of approximately 1,300 m on the properties. The initial JUne 2007resource estimate is based entirely on diamond drilling and core sample assays.
The Indicated and Inferred Resources were calculated using incremental block copper cut-off grades up to 0.8% copper and at the wireframed copper equivalent cut-off grade of 0.8%. Based on Scott Wilson RPA’s evaluation of potential bulk underground mine operating costs, metallurgical recovery indicated for nearby properties, long term metals price forecasts, current economic factors and revenue criteria, the resources at the 0.8% CuEq cut-off grade were deemed to be reasonable for resource estimation.
Duluth Metals completed 45 NQ2 (51 mm core diameter) drill holes totaling 36,747 m (120,562 ft.) on the property from March 2006 to May 2007. In 2006, holes were collared on the west portion of the Nokomis Porperty, formerley known as the Maturi Extension block, (MEX-2, 6 and 4) and the east portion of this block (MEX-1, 3, 5). Drill holes drilled in 2006 were widely spaced at distances ranging from 314 m (1,030 ft.) to 1,446 m (4,744 ft.). In 2007, drilling was focused in the western part of the Nokomis Property with the intention of filling in to a 200 m by 200 m spacing.
The initial June 2007 resource estimation database contains 64 holes (50,114 m; 164,417 ft.) drilled on the property including the historic holes by other companies. There are also 122 other drill holes (39,096 m; 128,268 ft.) located off the properties that were brought into the resource estimation database from NRRI and Maturi Property databases. This was for the purpose of wireframe modeling the Nokomis Deposit up dip and for the interpolation of grades near the margins of the property.
Updated 2008 NI 43-101 Resource Estimate
An updated Interim Resource Estimate was received on June 4, 2008 from Scott Wilson Roscoe Postle Associates Inc. which is based on drilling completed to April 2008. The Updated Nokomis Resource Estimate defines 449 million tonnes Indicated Resources grading 0.624% copper, 0.199% nickel, 0.600 grams per tonne TPM (copper equivalent grade of 1.46%), plus an additional 284 million tonnes of Inferred Resources grading 0.627% copper, 0.194% nickel, 0.718 grams per tonne TPM (copper equivalent grade of 1.50%). (Note – Copper Equivalent is based on US metal prices of: Copper – $1.75/lb, Nickel – $7.00/lb, Cobalt – $10.00/lb, Gold – $600/oz, Platinum – $1,100/oz, Palladium – $350/oz and Silver – $8.50/oz, and the methodology with metallurgical recoveries, refining costs and other charges being considered for all metals in accordance with the Net Smelter Return Factors contained in the January 22, 2008, NI 43-101 Scoping Study produced by Scott Wilson RPA.) A full report is available on our website under “Technical Reports”.
Third October 2009 NI 43-101 Resource Estimate
A new Resource Estimate has been received on October 26, 2009 from Scott Wilson Roscoe Postle Associates Inc. This October 2009 Resource Estimate incorporates assay data from 96 additional holes from what was largely an infill drilling program completed during the 2008-2009 period. All vertical and wedge holes drilled in the Nokomis Deposit were used in this analysis. The october 2009 Nokomis Resource Estimate defines 550 million tonnes of Indicated Resources grading 0.639% copper, 0.200% nickel, 0.660 grams per tonne TPM (TPM = Pt + Pd + Au) for a copper equivalent (CuEq) grade of 1.51%, plus an additional 274 million tonnes of Inferred Resources grading 0.632% copper, 0.207% nickel, 0.685 grams per tonne TPM for a CuEq grade of 1.53% . (Note – Copper Equivalent is based on US metal prices of: Copper – $1.75/lb, Nickel – $7.00/lb, Cobalt – $10.00/lb, Gold – $600/oz, Platinum – $1,100/oz, Palladium – $350/oz and Silver – $8.50/oz, and the methodology with metallurgical recoveries, refining costs and other charges being considered for all metals in accordance with the Net Smelter Return Factors contained in the January 22, 2008, NI 43-101 Scoping Study produced by Scott Wilson RPA.)
This Scott Wilson RPA Estimate also includes multiple higher grade areas. The three highest grade areas have a cumulative total of 92 million Indicated tonnes of 1.80 CuEq% (at a 1% CuEq cut-off grade) and 22 million Inferred tonnes of 1.81 CuEq% (also at a 1% CuEq cut-off grade). Duluth Metals notes that definition of these higher grade areas is important for mine planning and initial operations in order to enhance rapid payback of capital investment. Scott Wilson RPA has also reported on silver in this estimate, and the Nokomis Deposit contains 37 million ounces of silver within the Indicated Resource outline (550 million tonnes at 2.116 g/t Ag) and 18 million ounces of silver within the Inferred Resource outline (274 million tonnes at 2.056 g/t Ag).
Initial Scoping Study
On January 22, 2008, DML announced the receipt of its initial Scoping Study on the Nokomis Deposit entitled “Technical Report on the Preliminary Assessment on the Nokomis Project, Minnesota, U.S.A.”, completed by Scott Wilson RPA. Graham G. Clow, P.Eng. of Scott Wilson RPA is the Independent Qualified Person who is responsible for the report. The engineering parameters of the Study included 20,000 tonnes of ore per day being mined from underground operations, which would be crushed and ground, concentrated, hydrometallurgically extracted, and the copper and nickel would be recovered by electro-winning, and the PGMs, gold and silver would be shipped to a third party precious metals refinery. The Study also included costs associated with production royalties, site infrastructure, utilities, material handling, tailings, and final project reclamation.
New Scoping Study
On January 12, 2009, Duluth Metals announced the receipt of of a new independent NI 43-101 Preliminary Assessment on its Nokomis Project from Scott Wilson Roscoe Postle Associates. The full report has now been filed on SEDAR. This report provides an updated Preliminary Assessment of the Nokomis Project, based on the June 2008 Mineral Resource Estimate, and is based on an expanded 40,000 tonne per day production rate scenario, doubling the January 2008 PA production rate case. The report confirms positive economics for the Nokomis Deposit even at today’s lower metal prices with the potential to be one of the world’s low cost copper-nickel producers.