PolyMet Draws On Debt To Feed NorthMet

When credit markets are tight, it’s good to have supporters with deep pockets.

Aspiring miner PolyMet Mining (POM-T, PLM-X) does, and it’s not afraid to draw from them.

The company is taking the second tranche of US$7.5 million from its debt facility with Baar, Switzerland- based Glencore International to help advance its NorthMet polymetallic project in Minnesota.

The debt deal with Glencore was closed at the end of October for a total of US$50 million in convertible debt that is due at the end of September 2011.

PolyMet pays Glencore a floating rate based on 12-month LIBOR — currently 2.08% — plus 4% and the debentures can be exchanged for shares of PolyMet at US$4 per share. Together, with the warrants associated with the first tranche, Glencore can hold 10 million shares or 6.8% of the company.

PolyMet shares traded at $1.11 at presstime. The company currently has roughly 137 million shares outstanding and its share price has moved between $4.49 and 60¢ over the last 52 weeks.

At the beginning of September, the two companies announced a partnership that would see Glencore take an active role in Poly-

Met’s marketing and financings, as well as on its board.

The funds from the latest tranche are set to go towards finishing both key engineering work and the environmental impact study at NorthMet.

PolyMet has a 100% stake North- Met — a project that hosts a copper, nickel and precious metals orebody in northeastern Minnesota. The company also owns the Erie Plant — a processing facility that sits just 10 km away from NorthMet.

Proven and probable mineral reserves for the project are 274.7 million tonnes grading 0.28% copper, 0.08% nickel, and 0.4 gram per tonne combined precious metals (gold, platinum and palladium).

The company says reserves represent 43% of the measured and indicated resources, and were calculated using a copper price of US$1.25 per lb., a nickel price of US$5.60 per lb. and precious metal prices of US$400 per oz. gold, US$800 per oz. platinum and US$210 per oz. palladium.

PolyMet has already finished a feasibility study on the project and now just needs to secure environmental and operating permits before it can go into production.

Privately held Glencore has worldwide activities in the smelting, refining, mining, processing, purchasing, selling and marketing of metals and minerals, energy products and agricultural products.