POLYMET MINING CORP

PolyMet signed an agreement on July 16, 2023 for Glencore AG, already its controlling shareholder, to buy all shares it does not already own. Minority shareholders (about 17.8% of shares) would receive US$2.11 in cash per share. The deal needs Supreme Court of British Columbia approval, 66-2/3% of votes cast, and a majority of disinterested shareholders' votes, with an outside date of December 31, 2023. The board and a special committee of independent directors approved it, and Glencore and all directors and officers who own shares signed agreements to vote in favour. After completion, the shares are expected to be delisted from NYSE American and the TSX and the company expects to end its US and Canadian reporting. A US$12 million termination amount is payable by PolyMet to Glencore in certain circumstances. This follows Glencore's rise to about 71.6% in the 2019 rights offering.

business combination

The Minnesota Supreme Court agreed to review the Court of Appeals' March 23 ruling on the NorthMet air permit, granting petitions from both PolyMet and the MPCA. It earlier agreed in April to review the January 13 Court of Appeals ruling that sent the Permit to Mine and two dam safety permits back to the DNR for a contested case hearing, with that case expected to be heard later this year. PolyMet says it has won six of 11 state and federal cases, with five (three state, two federal) still pending. Permits remain under challenge, so the outcome is unresolved.

regulatory community update

The Minnesota Court of Appeals sent NorthMet's air permit back to the Minnesota Pollution Control Agency to provide more information. PolyMet said it is disappointed, is evaluating all legal options and is continuing to move forward. This is a setback to the 'all permits held' position from 2019, and the company's description now says the permits are the subject of ongoing litigation.

regulatory community update

PolyMet reported results of its 2018-19 drilling at NorthMet: Proven and Probable Reserves rose 14% to 290 million tons, and Measured and Indicated Resources rose 22% to 795 million tons (from 649 million in the earlier resource figure). The 2019 reserve adds 177 million pounds of copper, 53 million pounds of nickel and 322,000 ounces of precious metals. The CEO said the company remains in ongoing discussions with potential lenders about financing, continuing the open project financing thread; no financing agreement is announced.

drilling progress report

The rights offering closed, with 682,813,838 new shares issued for gross proceeds of about US$265 million at US$0.3881 per share. The proceeds were used to repay the Glencore debt, pay Glencore's standby fee and cover expenses, resolving the debt thread from March. Glencore bought 627,247,983 shares in the offering and now holds 720,084,055 shares, about 71.6% of the company (about 69.0% fully diluted), up from 28.8%. The rest of the shareholders were diluted unless they exercised their rights.

capital raising announcement

Preliminary results show the rights offering closed its subscription period fully covered, with Glencore expected to buy about 430.6 million shares under its backstop, ending with roughly 71.66% of the shares. Holders who didn't exercise their rights keep the same number of shares but own a smaller percentage. At the June 26, 2019 annual meeting all company motions passed: nine directors, including CEO Jonathan Cherry, were elected and PricewaterhouseCoopers was re-appointed as auditor. Results are preliminary and subject to final count.

capital raising announcement

PolyMet filed its final prospectus and set the terms of the rights offering: each share held on June 3, 2019 gets one right, and each right buys 2.119069 new shares at US$0.3881, with rights expiring June 26, 2019. The company says it expects about US$251.3 million of Glencore debt to be repaid at closing, with about US$7.7 million for Glencore's standby fee and about US$6.0 million of expenses. Shareholders who don't exercise their rights face dilution, which the filing says may be significant. This settles the pricing and timing left open in March.

capital raising announcement

PolyMet filed a preliminary prospectus and an SEC Form F-10 for the rights offering flagged in March, aiming to raise about US$265 million. Glencore (28.8% shareholder) signed a standby agreement to buy any unsubscribed shares, for a fee of about US$7.7 million. Proceeds are meant to repay Glencore's debt (US$165 million principal plus about US$77.8 million accrued interest at March 31, 2019), the fee and expenses. Price is set at a 20% discount to a five-day average share price, and shareholders who don't participate would own a smaller share. Still subject to TSX, NYSE American and U.S. antitrust clearance.

capital raising announcement

The U.S. Army Corps of Engineers issued its Record of Decision and Section 404 wetlands permit, and with the state permits issued late last year PolyMet says it now holds all permits (18 state and federal approvals) to build and operate NorthMet. Separately, Glencore AG agreed to extend maturity of about US$243 million of secured convertible and non-convertible debt, which was due March 31, 2019, to allow a rights offering by June 30, 2019, fully backstopped by Glencore, to raise funds to repay it. PolyMet will issue additional warrants to Glencore and amend Glencore's existing exchange warrants, subject to stock exchange approval; pricing and timing of the rights offering are not yet given. The company says project financing is expected to take several months.

regulatory community update

The Minnesota DNR released its draft Permit to Mine for NorthMet, following the December financial assurance submission. Public hearings are set for February 7 and 8 in Aurora and Duluth, and comments close March 6, 2018, after which the agencies will make final permit decisions.

regulatory community update

PolyMet submitted an updated Permit to Mine application for its NorthMet project to the Minnesota DNR with its financial assurance estimate (the guarantee covering closure and cleanup costs if the company cannot pay). It proposes $75 million for the first two years of construction (about $65 million in instruments such as letters of credit and surety bonds plus $10 million cash held in trust by the state) and $544 million for the first year of mining. The company says this meets what the state needs to issue a draft permit, which it expects soon.

regulatory community update