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Chilean mining company to buy Canada´s Duluth metals

Chilean mining company to buy Canada´s Duluth metals

Posted by José Peralta on November 03, 2014

Antofagasta Plc (ANTO) agreed to buy Duluth Metals Ltd. (DM) for C$96 million ($85 million) including the cost of paying off convertible debt issued by the Canadian explorer.

The friendly bid is a 284 percent premium to the average price on the Toronto Stock Exchange in the 20 days through Oct. 31, Toronto-based Duluth said today in a statement. The company owns and operates 60 percent of the Twin Metals copper and nickel project in Minnesota, with Antofagasta holding the rest.

Antofagasta, which already owns 10.4 percent of the explorer, will pay 0.45 Canadian cents a share, the copper producer controlled by Chile’s Luksic family said today in a separate statement. The cost includes Duluth’s outstanding convertible debenture and excludes an Antofagasta bridge loan.

Duluth officials and Wallbridge Mining Co., together owning about 11 percent of the company, have entered a lockup deal with Antofagasta, the Chilean company said. Antofagasta, seeking to diversify from its home operation, needs the backing of two-thirds of the target’s shareholders.

“During a difficult period for the mining industry, Duluth has been able to negotiate a significant premium to the current market share price,” Duluth Chief Executive Officer Kelly Osborne said in the company’s statement.

Duluth surged more than fivefold to 40.5 cents by 11:54 a.m. in Toronto after plunging 46 percent Oct. 31. Antofagasta declined 0.9 percent to 696 pence by the close in London.

“The acquisition of Duluth provides Antofagasta with a long-term option to develop a large polymetallic resource in a stable and proven mining region,” Antofagasta’s Chief Executive Officer Diego Hernandez said in the statement. “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.”

The complex contains one of the world’s largest undeveloped repositories of copper, nickel and platinum group metals, according to Duluth’s statement. Antofagasta will assume the full ownership of the Twin Metals project after the deal and gain Duluth’s control over 40,000 acres of mineral interests on exploration properties next to the project.

Barclays Plc is advising Duluth, while Antofagasta has BMO Capital Markets Ltd. and Rothschild as financial advisers, Duluth said.

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