EVELETH, Minnesota – The Iron Range Resources and Rehabilitation Board (IRRRB) is benefiting from a Duluth Metals acquisition of Franconia Minerals Corporation and the agency’s early-stage investment in the company.
“The IRRRB’s goal in supporting early-stage development of this project has been to create good-paying jobs capable of sustaining families,” said IRRRB Commissioner Tony Sertich. “Today our loan has been paid back in full, we are realizing additional revenue for our investment that can be used for future projects on the Range, and this mining project has momentum for success. The acquisition of Franconia by Duluth Metals will make it a stronger company and put it in better position to initiate a major mining project. We look forward to working with Duluth Metals in the future as they move this project forward.”
With the acquisition, the $1.25 million loan to Franconia was paid back with interest to IRRRB. The payback was approximately $1.34 million.
In addition, the agency recently purchased Franconia stock for $937,500 through warrants it received as further consideration for the loan made to Franconia in 2009. The IRRRB will receive $580,300 of cash, plus 198,728 shares of Duluth Metals Corporation common stock in exchange for its Franconia stock. The stock is currently trading at $2.70 per share.
The Minnesota Department of Employment and Economic Development (DEED), another financing partner in the transaction, receives an identical amount of cash and stock in the stock transaction.
DEED also will receive repayment totaling $800,000 on the loan transaction. Both agencies gained when they were able to exercise the warrants and purchase Franconia stock in advance of Duluth Metals’ acquisition of Franconia. Franconia shareholders on March 3, 2011, approved an acquisition by Duluth Metals.
Most of the return on this investment will go back into the agency budget to provide future loans and grants for economic rehabilitation projects within the IRRRB’s 13,000 square-mile Taconite Assistance Area.