Joint Venture With Antofagasta plc; Antofagasta Provides Execution Capability and Financing Required to Advance Nokomis Project

- Brings a US $16 billion market cap major global mining partner with proven expertise in planning, building and operating large mining projects;

- Provides funding and financing commitments of up to US $227 million to advance one of the world's largest undeveloped copper-nickel-PGM development projects;

- Antofagasta commitment to pursue a common project financing with Duluth to bring the project to production;

- Provides Duluth shareholders with potential upside valuation on 60% of Nokomis project; and

- Duluth will retain 100% of its approximately 15,000 acres of high value grassroots exploration assets in the Duluth Complex

Duluth Metals Limited ("Duluth") (TSX: DM.TO) (TSX: DM-U.TO) announced today it has signed a binding heads of agreement with Antofagasta plc ("Antofagasta") (LSE: ANTO-GB.L) on a joint venture development of the large scale Nokomis Project in northeast Minnesota, USA. The joint venture provides the execution and financing capabilities required to aggressively advance this promising copper-nickel-PGM (platinum, palladium and gold) development project to production.

    Under the heads of agreement:

    Joint Venture Terms

    -   Duluth will contribute the Nokomis Project and approximately 5,000
        acres in the Duluth Complex for a 60% interest in the joint venture,
        with Antofagasta to acquire an initial 40% interest;
    -   Antofagasta holds the option to acquire an additional 25% of Nokomis
        from Duluth at an exercise price calculated on a pro rata share of
        1.0x Net Asset Value, which will be determined by the Bankable
        Feasibility Study;

    Funding and Financing Commitments

    -   Antofagasta will provide US $130 million in direct funding to the
        project for its 40% interest in the joint venture;

    -   Thereafter, if Antofagasta elects to proceed with the further funding
        of the project and to maintain its 25% Option, Antofagasta will
        disproportionately fund 65% of the joint venture expenditures and
        Duluth will fund 35%;

    -   Additionally, Antofagasta has agreed to provide Duluth with up to US
        $30 million in additional funding to cover Duluth's share of
        subsequent project expenditures, which will ultimately be repayable
        in cash, Duluth shares or offset against the 25% Option exercise
        price;

    -   Antofagasta will also subscribe to a private placement of Duluth
        shares for approximately US $11.6 million;

    -   The combination of the initial funding commitment, private placement
        and incremental funding from Antofagasta ensures that up to US $ 227
        million of funding will be available to advance the project with
        Antofagasta involvement, before any additional funding would be
        required from Duluth;

    -   Antofagasta has also committed to pursue project financing, on a
        common basis with Duluth in respect of the large development capital
        cost financing requirements of the project.

"The agreement announced today with Antofagasta is an outstanding partnership for an outstanding deposit," said Christopher Dundas, Chairman of Duluth. "This is a significant step forward for Duluth. This joint venture provides three key benefits that will act as catalysts to the development and construction of Nokomis. First, it delivers near and longer-term project development financing that we expect will be sufficient to bring the project to production. Second, Antofagasta is providing a commitment to arrange project financing for the large capital cost requirements, which are projected to be US $1.3 billion by the latest Scott Wilson RPA 43-101 Preliminary Assessment. Third, it brings outstanding execution capability and mitigates execution risk."

"Nokomis is an excellent deposit and we are very pleased to enter into this agreement with Duluth," said Marcelo Awad, CEO of Antofagasta Minerals SA. "This is a large deposit that has the potential to become one of the world's premier low-cost copper-nickel producers. We are looking forward to working with Duluth to advance this very promising project."

"Antofagasta is one of the world's premier major copper producers with an excellent pedigree and track record of success on this type of project," said Dr. Henry J. Sandri, President and CEO of Duluth Metals. "Antofagasta possesses proven expertise in planning, building and operating large-scale mining complexes and will apply its in-house capability to develop Nokomis. We believe this partnership is the mechanism required to unlock the tremendous value residing in the Nokomis deposit."

Duluth expects development activities at Nokomis to proceed on an accelerated basis, and anticipates pre-feasibility and bankable feasibility studies to be completed within 36 months.

Antofagasta's funding and financing commitments are subject to certain terms and conditions, including the execution of a definitive participation and shareholder agreement. Duluth anticipates these conditions to be satisfied during the second quarter of 2010.

Duluth will complete the private placement of 6 million shares of its common stock, or approximately 7% of outstanding shares, to Antofagasta plc at a price of CDN $2.00 per share, resulting in gross proceeds to the company of CDN $12 million (approximately US $11.6 million).

"The private placement provides immediate liquidity, on very attractive terms to Duluth," said Dundas. "This funding will allow Duluth to accelerate on all fronts."

Located in northeast Minnesota, USA, Nokomis is an underground, copper-nickel sulphide deposit. In size, the total resource is comparable to the Sudbury Basin and Voisey's Bay, among the world's largest copper-nickel-PGM mining complexes.

Currently the NI 43-101 compliant Nokomis deposit contains 550 million tonnes of Indicated Resources grading 0.639% copper, 0.200% nickel, 0.660 grams per tonne PGM (platinum-palladium-gold) for a copper equivalent (CuEq) grade of 1.51%, plus an additional 274 million tonnes of Inferred Resources grading 0.632% copper, 0.207% nickel, 0.685 grams per tonne TPM for a CuEq grade of 1.53% (more information available at www.Duluthmetals.com). Minnesota has more than a century of mining history and the Nokomis development project is located near major international ports and excellent mining infrastructure such as power, well-developed roads, railway networks, supply-equipment centers and a local labor force. When in operation, Nokomis could produce up to 40,000 tonnes of ore per day, based on an initial 22-year mine life. This estimate is based on utilizing only approximately one-third of the currently identified resource, with 40% of the Nokomis property yet to be explored.

Antofagasta plc is listed on the London Stock Exchange and is a constituent of the FTSE-100 index with interests in mining, transport and water distribution. Antofagasta Minerals, the mining division, is one of the world's largest copper producers. Its activities are mainly concentrated in Chile where it owns and operates three copper mines with a total production of more than 478 thousand tonnes of copper per annum. Its principal mining assets include the Los Pelambres, El Tesoro and Michilla mines and the Esperanza and Antucoya projects in Chile and the Reko Diq joint venture in Pakistan. Antofagasta's Esperanza Project is expected to add around 200 thousand tonnes of copper and 230 thousand ounces of gold to production from 2011 onward. It also has exploration programmes in Chile (mainly in the Sierra Gorda and district), Latin America, Europe and Africa.

David Oliver, P. Geo. is the Qualified Person and Project Manager for Duluth, in accordance with NI 43-101 of the Canadian Securities Administrators, and is responsible for the technical content of this press release and quality assurance of the exploration data and analytical results.

Duluth's financial advisor is UBS Securities Canada Inc. and legal advisor is Fraser Milner Casgrain LLP.

Investor Call

A conference call with senior management of Duluth for the investment community has been scheduled for January 14, 2010 at 11:00 a.m. EST. Christopher Dundas, Chairman and Dr. Henry J. Sandri, President and CEO will be available to answer questions during the call.

    To participate in the call, please dial five minutes prior to the call:

    US/Canada Dial-in No.: (888)231-8191
    Int'l/Local Dial-In No.: (647)427-7450


    Webcast URL:
    http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID(equalsign)2930620

An archived recording of the webcast will also be available on the Duluth Metals website at http://www.duluthmetals.com.

About Duluth Metals

Duluth is committed to acquiring, exploring and developing copper, nickel and platinum group metal (PGM) deposits. Duluth's principal property is the Nokomis Property located within the rapidly emerging Duluth Complex mining camp in northeast Minnesota. The Duluth Complex hosts one of the world's largest undeveloped repositories of copper, nickel and PGMs, including the world's third largest accumulation of nickel sulphides, and one of the world's largest accumulations of polymetallic copper and platinum group metals.

This document may contain forward-looking statements (including "forward-looking statements" within the meaning of the US Private Securities Litigation Reform Act of 1995) relating to Duluth's operations or to the environment in which it operates. Such statements are based on operations, estimates, forecasts and projections. They are not guarantees of future performance and involve risks and uncertainties that are difficult to predict and may be beyond Duluth's control. A number of important factors could cause actual outcomes and results to differ materially from those expressed in forward-looking statements, including those set forth in other public filings . In addition, such statements relate to the date on which they are made. Consequently, undue reliance should not be placed on such forward-looking statements. Duluth disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, save and except as may be required by applicable securities laws.

For further information: Mara Strazdins, Director of Corporate Communications, +1-416-369-1500, This email address is being protected from spambots. You need JavaScript enabled to view it.; Dr. Henry J. Sandri, President and CEO, +1-651-389-9990, This email address is being protected from spambots. You need JavaScript enabled to view it.; Web Page: http://www.Duluthmetals.com