Very interesting M&A deal this week in the mining space. For a couple of reasons.
The transaction is being carried out by major Chilean copper miner Antofagasta. Which announced it will buy junior developer Duluth Metals, for approximately $85 million.
The target here is Duluth's Twin Metals project. A copper-nickel deposit that also comes with significant credits of platinum, palladium, gold and silver.
On one hand, the transaction is notable simply because of its timing. Coming when most major mining firms have sworn off M&A deals--and many majors are in fact divesting exploration and development assets.
It's interesting then to see Antofagasta bucking this trend. And an encouraging sign for the industry that a company like this is keeping an active eye on the junior space.
Perhaps more interesting is the target destination for this deal. With the Twin Metals project being located in a somewhat off-the-map location for mining development: Minnesota.
Of course, Minnesota has historically been home to a great deal of mining activity. Particularly in sectors like iron ore.
But in recent years, there has been little exploration or development activity here--despite the proven prospectivity of the geology.
Some of that inactivity has stemmed from a sense that this is a difficult place to permit and develop a mine. But that sentiment has been challenged of late by a number of projects being advanced in the state, and in the wider region.
Polymet Mining, for example, has been moving forward with its NorthMet copper-nickel mine in northeastern Minnesota. With the company expecting a final environmental impact statement on the project in early 2015.
Next door in Michigan, mining activity has also been picking up. With Lundin Mining having recently commissioned its Eagle copper-nickel mine, which is now ramping up to full production.
We may thus be witnessing the beginning of a mining renaissance for this area--which is certainly ripe for new discoveries, given its proven geology and its under-explored nature through recent decades.
Watch for more exploration activity here. And any movement on existing development projects, a number of which have been held inactive by major companies across this area.
Here's to things heating up,
More Top Reads From Oilprice.com:
- Falling Coal Prices Wreaking Havoc With Corporate Balance Sheets
- This Copper Major is Staking a New District
- Mick Davis has now almost $5 billion to build new mining empire