PolyMet shares up 156% on Glencore proposal

PolyMet Mining Corp. [POM-TSX, PLM-NYSE American] shares were up by over 150% Tuesday on news that Swiss metals trading giant Glencore AG has made a non-binding offer to buy all of the PolyMet shares it doesn’t already own for US$2.11 cash or US$71 million.

The Glencore offer represents a 167% premium over the trading price of PolyMet shares at the close of business on June 30, 2023.

On Tuesday, the shares jumped 156.7% or $1.63 to $2.67 in morning trading after previously trading in a 52-week range of $4.50 and $1.00.

PolyMet said the offer is subject to a number of conditions, including the entering into of a definitive agreement. It also warned that, while an independent Special Committee is reviewing the offer, there is no guarantee that a definitive agreement will materialize or subsequently meet with its approval.

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.

Mesaba is estimated to contain a measured and indicated resource of 1,740 million tonnes of 0.43% copper, 0.10% nickel, 73 g//t cobalt, 0.035 g/t platinum, 0.097 g/t palladium, 0.03 g/t gold and 1.1 g/t silver according to a estimated that was published this year.

NorthMet is expected to produce copper and nickel-copper concentrates, which Glencore has substantial experience in marketing.

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