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MN DNR opens bids for mineral prospecting - in Carlton County and other local areas

Geologists have known for decades that there's plenty of copper, nickel, gold and other minerals under northern Minnesota forests, but most of it wasn't considered worth the cost to dig it up.

Until now.

On Tuesday, the Minnesota Department of Natural Resources opened bids submitted by mining companies that want to prospect for minerals on state lands - including some in Carlton County.

The highest bidders will win exclusive rights to search for and potentially mine on the land for 50 years. The state gets a small annual lease fee during exploration and, if the company strikes paydirt, the state gets a lucrative royalty on every ton of mineral mined.

"I suspect we'll see some interest," said Ernie Lehman, the grandfather of Minnesota minerals exploration. Around the world, "northern Minnesota has become a focus for mineral interests.''

Boosting the region's image among mining companies is the progress the PolyMet copper-mining project is making through the environmental review process, Lehman said.

"Investor interest in northern Minnesota is increasing as people see that it's more likely we can do business here," he said.

Vermilion Gold, one firm Lehman is associated with, has submitted a bid to look for gold under state land just west of the Iron Range. "We're looking at areas where some exploration in the early '80s showed quite a bit of potential for gold," he said.

The DNR leases offered this time are in Carlton, St. Louis, Itasca, Pine, Morrison and Benton counties - outside the "Duluth'' geological complex near the Iron Range where copper and other deposits already have been confirmed.

The new lease areas include much of the region around Island Lake Reservoir north of Duluth and state land just west of Grand Lake outside Duluth. Other large parcels are in southwest Carlton County, not far from where Kennecott Mining discovered copper in Aitkin County, and in northeastern Itasca County in the Togo area.

Annual sales

About once each year the DNR holds silent auctions for mineral exploration rights on state lands. The federal government does the same thing on national forest lands in the area.

Both state and federal agencies have been busy offering leases on the east end of the Iron Range near Ely, Babbitt and Hoyt Lakes, where the proposed PolyMet mine is now under environmental review. Dozens of test mine shafts have been drilled on DNR and Forest Service lands in recent years in that area as prospecting companies search for deposits that might be affordable to dig.

Now, the DNR is betting that improved exploration and retrieval technology and - especially - improving prices for copper and other metals will lead to more interest across new areas.

"We put out a request for nominations on possible parcels last fall ... and the interest we received resulted in some of the areas you see'' in today's auction, said Marty Vadis, who heads the DNR's division of Lands and Minerals.

It's not clear if minable deposits will be found on any of the parcels, and any actual mining probably would be a decade or more away. But several mining companies appear ready to take the chance, pay the lease fees and hope they find enough minerals to make it worth mining.

"Part of it is that we think we're getting better at finding'' precious metals in new areas, Lehman said. "But the driving factor is the prices we're seeing."

Gold is at an all-time high price of more than $1,100 an ounce. Copper, which had fallen as low as $1.20 a pound last year, has rebounded to more than $3.40. Platinum, which sat at $400 an ounce in 2002, has skyrocketed to about $1,500 an ounce.

Opponents say non-iron mining is much riskier for the region's environment because the minerals are often found in rock with high sulfur content. When exposed to air and water, that rock can cause sulfuric acid runoff that can leach heavy metals into local waterways. They also note that many Minnesotans don't want to see new areas opened to a plethora of mines across northern Minnesota.

Supporters of copper mines note they would help diversify the region's economy. The PolyMet project, for example, is projected to employ about 400 people for the 20-year life of the mine.