Glencore to buy US$30m in PolyMet stock

Vancouver – PolyMet Mining (POM-T, PLM-X) has agreed to sell US$30 million worth of shares to Glencore International as it works towards securing final permitting of its NorthMet open pit project in northeastern Minnesota.

The deal sees PolyMet selling 15 million shares at US$2 each in three tranches of US$10 million. The first tranche should close in January, 2011 the second in October 2011 and the third either by late 2012 or shortly after PolyMet receives key permits for its NorthMet Project.

Glencore and PolyMet already have established financial dealings. In late 2009 PolyMet arranged the sale of 9.4 million shares at US$2.65 to Glencore for gross proceeds of US$25 million.

PolyMet also established a US$50 million debenture with Glencore in late 2008, the terms of which were updated along with the latest financing announcement. The maturity date of the US$25 million already issued to PolyMet in tranches A to D has been extended a year to September 30, 2012, while commitments on the remaining US$25 million tranche E have been cancelled.

PolyMet has been working to secure environmental approval for the NorthMet project since 2004. So far over 100 technical studies spanning 14,000 pages have been completed as part of the process.

In October the company announced that government agencies planned to complete a supplemental draft environmental impact statement to, among other things, respond to concerns identified by the United States Environmental Protection Agency. PolyMet expects the supplemental review to be completed in the summer of 2011 and the final EIS 6 to 9 months later.

As of a May, 2008 feasibility study update, 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 completed a definitive feasibility study in 2006.

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.

Initial capital costs are US$312 million, while a second phase that will include hydrometallurgical and electrowinning facilities will bring the total to US$602 million.

The company controls 100% of NorthMet, as well as the nearby Erie crushing and mining facility.

Polymet’s share price dropped 9¢ or 4.1% to close at $2.11 on the day. The company has a 52-week share price between $1.33 and $3.89 and 150 million shares outstanding.