PolyMet expects to mine copper by late 2015One day after announcing plans to raise $80 million in cash, officials of PolyMet Mining Corp. on Thursday said they are moving headlong toward permitting and, eventually, construction of Minnesota’s first copper-nickel mine.
By: John Myers, Duluth News Tribune
One day after announcing plans to raise $80 million in cash, officials of PolyMet Mining Corp. on Thursday said they are moving headlong toward permitting and, eventually, construction of Minnesota’s first copper-nickel mine.
“This is a pretty big step for our project,” Jon Cherry, PolyMet president and CEO, told reporters Thursday. “We’re getting over that hump.”
On Wednesday the company announced it would receive a $20 million loan from its largest investor, Swiss commodities giant Glencore. 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 near Hoyt Lakes and move it elsewhere to be processed, probably Sudbury, Ontario.
Also on Wednesday, 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.
Cherry told reporters in a telephone news conference Thursday 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.
“We think this is a great opportunity for us,” Cherry said of the stock offering and loan. “We’re making great progress on the project.”
Cherry said PolyMet has made “significant progress” with regulators over the past six months in answering questions that have delayed the project — especially how the company plans to deal with acidic runoff from multiple locations. Cherry reiterated that the company has successfully tested a large-scale reverse osmosis system that removes sulfate and other pollutants from mining wastewater.
“We’re in a position now where we can demonstrate we can meet all the environmental standards that are out there,” Cherry added.
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
doesn’t 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 open-pit 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.
Current PolyMet shareholders will receive notice of the option to buy more stock within a few weeks. If they don’t, they should contact their broker, Cherry said. He said the deal will not increase Glencore’s ownership share of PolyMet unless other stockholders choose not to buy more. Any leftover shares could be made available to the public.