PolyMet committee backs Glencore takeover plan
PolyMet Mining Corp. [POM-TSX, PLM NYSE American] said Monday it has entered in a definitive deal that will see Swiss metals trading giant Glencore AG acquiring the 17.8% stake in PolyMet that it doesn’t already own for US$2.11 cash or US$71 million.
The announcement is based on the unanimous recommendation of an independent special committee of PolyMet’s board of directors. However, the deal is still subject to a number of conditions, including approval by PolyMet shareholders, court approval and other customary closing conditions.
The amount offered represents a 167% premium to the unaffected share price on June 30, 2023, the last trading day prior to the announcement of Glencore proposal (non-binding at the time) to acquire PolyMet.
On Monday, PolyMet shares advanced on the news, rising 2.23% or $0.06 to $2.75. The shares are currently trading in a 52-week range of $4.50 and $1.00.
Al Hodnik, Lead Independent Director and Chair of the PolyMet Independent Special Committee welcomed the transaction as: “The necessary step for advancement of the NewRange Copper Nickel joint venture and the development of strategic minerals vital to our economy’s clean energy transformation.’’ NorthMet is expected to produce copper and nickel-copper concentrates, which Glencore has substantial experience in marketing.
PolyMet was in the news recently when it completed a US$195 million rights offering, money that was used to repay all of PolyMet’s unsecured and secured, and convertible debt owed to Glencore and costs related to the rights offering. Proceeds were also intended to fund the company’s portion of the NewRange Copper Nickel LLC joint venture with Teck Resources Ltd. (TECK.B-TSX, TECK.A-TSX, TECK-NYSE. Teck and PolyMet are equal partners in NewRange Copper Nickel, an entity set up to manage two undeveloped clean energy projects in Minnesota.
They include PolyMet’s NorthMet and Teck’s Mesaba projects, which together account for approximately one half of the known resources of copper, nickel, cobalt and PGMs in Minnesota’s Duluth Complex.
Glencore acquired 87.8 million shares under the rights offering, leaving it with an 82.19% stake in PolyMet.
Teck has said the joint venture will help to unlock a new domestic supply of critical metals for the low-carbon transition through responsible mining.
According to a 2019 estimate, NorthMet contains measured and indicated resource of 795 million tons of 0.234% copper, 0.071% nickel, 69.0 g/t cobalt, 0.062 g/t platinum, 0.214 g/t palladium, 0.031 g/t gold, and 0.87 g/t silver. NorthMet is also estimated to contain 290.4 million tons of proven and probable reserves.
In on overview of the NorhMet project, PolyMet said major state and federal permits have been received for what is expected to be an open pit mining operation, including permit to mine, air and water permits and federal wetlands. The project covers 19,000 contiguous acres, including mine and processing sites, transportation corridor, existing tailings basin and buffer.