PolyMet Mining will get a cash infusion of up to $30 million from its majority owner Glencore, money needed to continue fighting legal battles over its proposed copper-nickel mine in northeastern Minnesota.
PolyMet announced Wednesday that it will issue unsecured convertible debentures of up to $30 million to a subsidiary of Glencore, a Switzerland-based global mining giant. The debentures are convertible to stock.
Glencore, which has long bankrolled the controversial Minnesota mine, converted much of its existing debt in PolyMet to stock last June. It now owns 72% of PolyMet, a stake that would rise to 75% upon conversion of the new debentures.
PolyMet plans a $1 billion project, which includes a processing plant in Hoyt Lakes and a mine near Babbitt. It would be the state’s first hard-rock metals mine.
Money raised from the debenture offering will be used primarily for litigation surrounding the mine’s permits, as well as for continued engineering and administrative expenses, PolyMet said in a statement.
PolyMet’s project has generated deep divisions between proponents who said it would be vital to the Iron Range economy and opponents who note that hard-rock sulfide mines are acute water-pollution hazards.
PolyMet, which is based in Toronto but run from St. Paul, continues searching for project financing, though court fights with environmental groups over its permits are hampering the effort.
The litigation “has put a little damper on financing efforts,” said Bruce Richardson, a PolyMet spokesman.
The global economic threat from the coronavirus pandemic could make raising money even more difficult. Copper prices hit a four-year low Thursday, while prices of other metals have also tanked.
Copper is a bellwether for the global economy as it’s used in many industrial applications.
Copper and other mining stocks have been pummeled, too, as economic worries have spread, with Glencore trading Thursday near $2.75, down from around $6 in early February.
The new PolyMet debentures will be sold to Glencore in four tranches over 2020. They will all be due on March 31, 2023, or earlier if PolyMet completes $100 million of the roughly $1 billion needed for project financing.
The debentures, which accrue interest at 4%, are convertible at a PolyMet stock price of 22 cents — about where PolyMet shares were trading early Thursday afternoon.