Arrangement Agreement; Consolidates Position in the Duluth Complex, Minnesota

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Integrates contiguous properties into a common ownership


Delivers significant project synergies


Adds qualified resources, surface rights and exploration lands


Provides increased upscaling potential and development optionality


Demonstrates strength of strategic partnership with Antofagasta plc



TORONTO, Dec. 20 /CNW/ - Duluth Metals Limited ("Duluth") (TSX: DM)
(TSX:DM.U), and Franconia Minerals Corporation ("Franconia") (TSX: FRA)
are pleased to announce today that they have entered into an
arrangement agreement (the "Arrangement Agreement") pursuant to which
Duluth will acquire 100% of the outstanding common shares in the
capital of Franconia by way of a plan of arrangement under the Business Corporations Act (Alberta) (the "Transaction"), the details of which are set forth in
the Arrangement Agreement.


Franconia shareholders will have the option to receive cash (on the
basis of C$0.90 per Franconia share), Duluth shares (on the basis of
0.328 Duluth shares per Franconia share) or any combination of cash and
Duluth shares, subject to pro-ration, with an aggregate maximum cash
consideration of C$37,979,189 and an aggregate maximum of 13,841,304
Duluth shares. Based on the December 17, 2010 closing prices and
trading on the Toronto Stock Exchange, the average value of the offer
is approximately C$0.91 per Franconia share, which represents a premium
of 46.6% to Franconia's last closing price of C$0.62 and a premium of
48.4% to Franconia's 20-day volume weighted average trading price of
approximately C$0.61. Based on Duluth's closing share price on December
17, 2010, the total value of this transaction would be approximately
C$77 million.


Franconia's principal assets are a 70% interest in the Birch Lake,
Maturi and Spruce Road deposits in northeastern Minnesota through the
Birch Lake Joint Venture ("BLJV"). Franconia announced in November 2010
its intention to increase its ownership at the Birch Lake Project to
82% under the terms of the BLJV agreement. As a result of the
Transaction, Franconia's assets are expected to be rolled into Twin
Metals Minnesota LLC ("TMM"), a Duluth (60%) and Antofagasta PLC
("Antofagasta") (40%) joint venture which includes the Nokomis deposit,
one of the world's largest undeveloped deposits of copper, nickel and
precious metals. Some of Franconia's deposits and their land holdings
are contiguous with those of TMM, and the acquisition will consolidate
TMM's position in the Duluth Complex region in northeastern Minnesota.
As such, Antofagasta will contribute approximately C$30,000,000 in cash
to Duluth's acquisition of Franconia in order to, in part, maintain the
60% and 40% interests of Duluth and Antofagasta, respectively, in TMM.


Fairness Opinion and Unanimous Board Approval


Prior to executing the Arrangement Agreement, the board of directors of
Franconia obtained an opinion from Gryphon Partners, Franconia's
financial advisors, that the consideration to be received by Franconia
shareholders pursuant to the Transaction is fair, from a financial
point of view, to the Franconia shareholders.


The board of directors of Franconia has unanimously approved the
transaction and all directors and senior officers of Franconia,
collectively holding approximately 3.8% of the issued and outstanding
shares of Franconia, have entered into support and voting agreements
and have agreed to vote their shares in favour of the Transaction at
the special meeting of Franconia shareholders.




Arrangement Matters


The Transaction is subject to the approval of at least two-thirds of the
votes cast by Franconia shareholders at a special meeting of Franconia
shareholders, which is expected to be held in February 2011. Completion
of the Transaction is also subject to the approval of the Court of
Queen's Bench of Alberta, the Toronto Stock Exchange, the receipt of
all other necessary regulatory and third party approvals, and other
customary conditions. In the event that the Transaction is not
completed under certain circumstances, Franconia has agreed to pay
Duluth a termination fee equal to C$3 million. Franconia has provided
Duluth with certain other customary rights, including a right to match
competing offers. Full details of the transaction will be included in
the management information circular of Franconia to be mailed to
Franconia securityholders in due course.


Duluth Private Placement


In connection with the Transaction, Antofagasta has subscribed for
7,604,563 subscription receipts issued by Duluth, by way of private
placement, at a price of C$2.63 per subscription receipt for aggregate
gross proceeds of C$20,000,000, with each such receipt entitling the
holder thereof to one common share of Duluth upon receipt of the final
court order approving the Transaction.


Franconia Private Placement


In addition, Duluth and Franconia have entered into a subscription
agreement pursuant to which Duluth has subscribed for and will purchase
3,906,250 common shares of Franconia representing approximately 5.3% of
Franconia's outstanding common shares at a price of C$0.64 per share in
a private placement for total gross proceeds to Franconia of
C$2,500,000, of which C$1,000,000 will be provided to Duluth by
Antofagasta. In the event that the Transaction is not completed, Duluth
has agreed with Antofagasta that Duluth will transfer 40% of such
Franconia common shares to Antofagasta. The proceeds of the private
placement will be used to fund a land purchase option with Minnesota
Power, as well as for general working capital purposes. The closing of
the private placement is subject to the approval of the Toronto Stock
Exchange and is expected to be completed on or about December 23, 2010.
The common shares, when issued, will be subject to a trading
restriction of four months from the date of issuance.


"The addition of Franconia's assets to those of TMM creates the
potential for significant synergies and represents the logical
consolidation of contiguous deposits along the same mineral trend,"
said Christopher C. Dundas, Chairman and CEO of Duluth and Chairman of
TMM. "In addition to creating a development project of larger size,
scale and mine life, we will be able to generate considerable
efficiencies through shared infrastructure, including milling and
processing facilities."


"Further, this transaction demonstrates the strength and upside of the
strategic partnership between Duluth and Antofagasta. Through our joint
venture, we are consolidating within the Duluth Complex and bringing
both the financing and execution capability necessary to develop these
promising projects," said Dundas.


"We are very pleased to enter into this agreement with Duluth," said
Brian Gavin, President and CEO of Franconia. "With the proximity of our
properties, the Duluth and Antofagasta joint venture of TMM is the
natural partner for Franconia. As a result of this transaction,
Franconia shareholders will benefit from immediate liquidity at an
attractive premium, and will also gain future upside potential as
shareholders of Duluth, a company which provides a strong platform for
growth both from a financial and project development perspective. The
Board of Franconia unanimously supports and recommends that Franconia
shareholders approve this transaction."


"Franconia's assets are an excellent fit with the Nokomis deposit and we
are very pleased to enter into this agreement through TMM, our joint
venture with Duluth," said Marcelo Awad, CEO of Antofagasta Minerals
SA. "We are looking forward to advancing the development of these
promising assets."


A map showing the land consolidation is found on the Duluth Metals
website at
of TMM and share similar geology. The Birch Lake deposit1 consists of 176.8 million tonnes of Indicated Resources grading 0.528%
copper, 0.169% nickel, 0.101% cobalt, 0.239 g/t platinum, 0.515 g/t
palladium, 0.117 g/t gold for a copper equivalent (CuEq*) grade of
1.177%, plus an additional 39.9 million tonnes of Inferred Resources
grading 0.496% copper, 0.157% nickel, 0.009% cobalt, 0.210 g/t
platinum, 0.431 g/t palladium, 0.103 g/t gold for a CuEq* grade of
1.083%. The Maturi deposit2 contains an Inferred Resource of 119.9 million tonnes grading 0.67%
copper, 0.25% nickel, 0.02% cobalt, 0.25 g/t palladium, 0.09 g/t
Platinum and 0.04 g/t gold; and the Spruce Road deposit3 contains an Inferred (underground) Resource of 124 million tonnes
grading 0.59% copper and 0.21% nickel. Franconia also has a 15,000-acre
land package. (See footnotes at end of release.)


Currently the NI 43-101 compliant Nokomis4 deposit contains 550 million tonnes of Indicated Resources grading
0.639% copper, 0.200% nickel, 0.660 grams per tonne TPM
(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
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 its legal advisor is Stikeman Elliott LLP.


Brian Gavin, P. Geo., President and CEO of Franconia, is the Qualified
Person for Franconia in accordance with NI 43-101 of the Canadian
Securities Administrators who has had responsibility for the overall
coordination and supervision of Franconia's projects and of the
preparation of Franconia's scientific and technical information
contained in this Press Release.


Franconia's financial advisor is Gryphon Partners and its legal advisor
is Cassels Brock & Blackwell LLP.




Investor Call


A conference call with senior management of Duluth and Franconia for the
investment community has been scheduled for Monday, December 20 at
10:00 a.m. EST. Christopher Dundas, Chairman and CEO of Duluth Metals,
Vern Baker, President of Duluth Metals and Brian Gavin, President and
CEO of Franconia Minerals, will provide comments and 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 #:


(888) 231-8191





Int'l/Local Dial-In #:


(647) 427-7450





Webcast URL:


>www.duluthmetals.com.




Footnotes




(1 see Franconia's company profile on Sedar at
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. Aside from the joint venture, Duluth Metals retains a
100% position on approximately 31,000 acres of mineral interests on
exploration properties adjacent to and nearby the Nokomis joint
venture.


About Twin Metals Minnesota LLC

Twin Metals Minnesota LLC is a joint venture company, which is 60% owned
by Duluth Metals and 40% by Antofagasta plc. The joint venture's
principal asset is called the Nokomis Project, located within the
Duluth Complex mining camp in north-eastern Minnesota.


About Franconia Minerals

Franconia Minerals Corporation is currently focused on the development of the Duluth Complex
copper-nickel-platinum-palladium project - consisting of the Birch
Lake, Maturi and Spruce Road deposits - in this highly prospective
region of northeastern Minnesota. Underground mining at Birch Lake will
minimize the surface impact of the operation. Also, storage of mine
wastes underground would further minimize the surface impact.
Additional resources at the Birch Lake project include Inferred
Resources at the Maturi deposit (see news release of September 6, 2006)
and at the Spruce Road deposit (see news release of December 3, 2007).
Independent reports prepared to NI 43-101 standards by Scott Wilson RPA
are available at >www.franconiaminerals.com.




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:

Duluth Metals: Mara Strazdins, Director of Corporate Communications Office: (416) 369-1500 mstrazdins@Duluthmetals.com Web Page: http://www.duluthmetals.com/">www.Duluthmetals.com

Franconia Minerals: Toronto: Greg Taylor: Office: (905) 337-7673 / Mobile: (416) 605-5120 gtaylor@franconiaminerals.com