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Chilean-based firm pulls back on Twin Metals mine ownership

Chilean-based mining giant Antofagasta today announced it is pulling back on its investment in the proposed Twin Metals underground copper mine near Ely.

The company said it has exercised its option to terminate its right to buy an additional 25 percent of Twin Metals, which it jointly owns with Toronto-based Duluth Metals.

Antofagasta will continue to own 40 percent of Twin Metals, with Duluth Metals owning 60 percent of what would be the state’s largest ever underground mine, and one of the state’s first ever copper-nickel projects.

Twin Metals was formed to develop the Ely-area mine early in 2010 when Antofagasta paid $130 million for a 40 percent interest in the project. The partnership had included an option for Antofagasta to contribute up to $227 million more and increase its holding to 65 percent.

But that will not happen, and in fact Antofagasta could soon be out of the project altogether.

After Thursday’s action “Duluth Metals assumes immediate control and operator status’’ of the Twin Metals project and will have control of the board of directors, the company said.

In addition, the announcement sets into play a 180-day window in which Duluth Metals can buy-out Antofagasta entirely.

The news comes just as Twin Metals will make public the results of a “pre-feasibility study’ that will show the potential of the mine, expected later this month.

“Despite our belief that (Twin Metals) and the Duluth Complex have potential long term geological attractions, we have taken the decision to terminate our option’’ now that the pre-feasibility study is nearing its completion, London-based Diego Hernandez, Antofagasta’s chief executive officer, said in a statement

Antofagasta said it is “evaluating its options with respect to its continued 40% interest’’ in Twin Metals and its relationship with Duluth Metals.

But Duluth Metals officials responded Thursday that the Twin Metals project will continue to move forward despite Antofagasta’s action.

“Duluth Metals is excited about moving the TMM Project through its next phase of project development and continuing to work together with Antofagasta,’’ Christopher Dundas, executive chairman of Duluth Metals, said in a prepared statement. “We are looking forward to publishing highlights of the very comprehensive Pre-Feasibility Technical Report during the second half of July.”

Kelly Osborne, president and CEO of Duluth Metals, said the pre-feasibility report proved to “showcase the strengths’’ of the Twin metals project, including “a great mineral resource in a mining friendly jurisdiction with much of the required infrastructure existing to support a large scale mining operation.”

The Twin Metals project would incorporate several apparently rich deposits north and south of Minnesota Highway 1, near the Kawishiwi River and Birch Lake areas. While the mine would be in the Boundary Waters Canoe Area Wilderness watershed, which has concerned environmental groups, the company said it plans to process the ore in developed areas to the south, in the Lake Superior watershed.

Twin Metals has not yet begun any formal environmental review process.