No Ni-rich zone has been identified. Duluth’s management continues to believe that significant Ni-rich mineralization could be found at depth and the exploration team is currently following up with down-hole EMPgeophysical surveys.

Two new mineralized areas identified that appear to be different from the known Maturi resource: one with elevated Cu:Ni ratio (Nickel Lake Macrodike) and another with elevated PGE:Cu ratio (East Shore). In total, four holes were highlighted, two from each of the new zones.

Nickel Lake Macrodike (“NLM”): The results confirmed the presence of the sulphide-bearing magmas in the feeder conduit and suggested sulphide fractionation may have taken place within the area. The two highlighted holes returned relatively shallow and thick zones with sub-0.40%-Cu grades and elevated Cu:Ni ratio of 5:1, compared to a more common 3:1 ratio in the known Maturi resource (Exhibit 1). The system may still contain Ni-rich zones at depth, and the company intends to focus its future drilling efforts within deeper sections of the zone, with one rig scheduled to commence drilling soon. However, Duluth noted that drilling the most prospective area at the mouth of the NLM should require summer road building, planned to commence in the spring.

IPO timeline now looks more condensed. With the deeper drill results from the potential Ni-rich feeder conduit zone likely not out until later in 1H13, Duluth’s timeline to pull together an NI43-101 resource and IPO its subsidiary that may earn in 80% of these 100%-owned properties now looks a lot more condensed ahead of the July-31-2013 TSX listing deadline. We continue to believe that a discovery of a high-grade feeder zone on Duluth’s 100%-owned lands may substantially increase the acquisition cost of the company and these properties, thus preserving a take-out potential for Duluth in the near-term, with Antofagasta, its partner at Twin Metals Minnesota JV (“TMM”), and Teck, owner of the CESL process that now appears to be the processing option of choice for the TMM project, the two most likely acquirers, in our view.

We continue to target a financing in 1H13. With $19 mln in cash as at 3Q12-end, drilling on its 100%-owned lands continuing, and $30 mln in capital calls from the Twin Metals JV in 2013 (our estimates), we believe Duluth may look to raise money in 1H13. The company continues to target the June-July 2013 period for the IPO of its subsidiary, which may provide further financing for the company.

East Shore Property: Two highlighted holes returned a shallow sulphidebearing section with the PGE grades well above the average grades for the known resource (Exhibit 2). Although more drilling will have to be done to confirm the extent of the mineralization, the company noted that such type of PGE-rich mineralization is new to the Duluth Complex and has not been previously recognized in the area.