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.
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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.
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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.
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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,
Dave Forest
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