Plans for construction of the first copper-nickel mine in Minnesota will proceed as PolyMet Mining Corp. announced that it had secured a $20 million loan from its largest investor, Glencore. This announcement came one day after the company announced plans to raise $80 million in cash with the sale of additional stock to current shareholders.
PolyMet said it would move forward with permitting and eventual construction plans for its mine near Hoyt Lakes, the Duluth News Tribune reported.
Glencore already owns 25.6 percent of PolyMet and has options to increase that to 34 percent.
Glencore also will be PolyMet’s customer, with an agreement for Glencore to buy all the copper concentrate made at the mine and move it elsewhere to be processed, probably Sudbury, Ontario.
Vancouver-based PolyMet said it would raise another $60 million by selling additional stock to its current shareholders based on how much they already own. Glencore, as the largest shareholder, will get the bulk of that stock. The $60 million stock sale, set for May or June, will allow PolyMet to pay back Glencore the $20 million loan and still have enough cash on hand to get through the environmental permitting process and start buying mining equipment.
Jon Cherry, PolyMet president and CEO told reporters in a telephone news conference that the company expects to have its supplemental draft environmental review cleared by regulatory agencies and out for public comment by mid-summer and that the long, often-delayed environmental review could be completed by early 2014. He said state and federal permits to start mining could be in hand later in 2014 with construction starting soon after.
That would put the first production in late 2015 or early 2016, Cherry said.
Douglas Newby, PolyMet chief financial officer, said the company already has raised more than $163 million to acquire property and access, conducts tests, environmental review and engineering plans for the mining operations. But even the money raised during the newly announced financing won’t be enough to actually build out the mine.
Newby and Cherry said another $300 million will be needed sometime in 2014, when permits are in hand, to actually start construction. And that does not include another $160 million, down the line, to build a second phase of the project — a hydrometallurgical plant to process the metals. That plant won’t be built until PolyMet has significant revenue from the mine.
That would put the final cost of the project at more than $623 million.
In the works for more than a decade, the PolyMet project has been reworked in recent years to meet environmental concerns of regulatory agencies and others, especially potentially acidic runoff when the copper-bearing rock is exposed to water and air.
PolyMet is proposing an openpit mine near Babbitt and a processing center at the old LTV taconite mine north of Hoyt Lakes. The project would create about 350 jobs for more than 20 years, plus extensive spinoff business. PolyMet also would recover gold, platinum, palladium and other valuable metals.