Opponents of PolyMet Mining's plan to mine for copper, nickel and other metals in northeastern Minnesota keep hoping that the economics of the project collapse and no investor or bank steps up to fund it.

The project as outlined in a report released last week certainly isn't as financially appealing as it once was. After PolyMet investors digested the report, its stock price plunged and finished the week down 19 percent.

The biggest differences from the last stab at projecting the finances are much higher capital costs. The latest financial model includes more than $100 million of additional investment to keep mine waste out of the environment, according to PolyMet CEO Jon Cherry.

Yet it's premature to call this a deal that can't get financed. If forced to bet, the best odds still seem to lie with this project going into production, mostly because of the big involvement already of the Swiss-based commodity and mining giant Glencore.

PolyMet calls its project NorthMet and it is easily the most visible of several efforts underway to develop mining for copper, nickel and other metals in northeastern Minnesota. The company's involvement in the project goes all the way back to the late 1980s. In a nutshell, PolyMet envisions a processing facility at the site of an old iron mining operation called the Erie Plant near Hoyt Lakes and mining sites that lie several miles away to the east.

PolyMet Mining is based in St. Paul but is formally a Canadian company, which is one reason there's another detailed PolyMet technical report now out in the public. Canadian regulators care enough about the integrity of its capital market for mining to make sure public disclosures are reliable. That's particularly true since the spectacular collapse more than 20 years ago of a fraudulent gold mining company.

If there is one number out of PolyMet's nearly 300-page report that seemed to grab a lot of attention, it's 9.6 percent, the internal rate of return after taxes for Phase 1 of the project.

That finance term maybe means nothing to you, but it's just a basic measure of what kind of return investors can expect from investing almost $1 billion.

As such things go, 9.6 percent is awfully skinny if trying to attract investors to a business with potentially big swings in selling prices among other risks. An earlier report PolyMet issued showed a potential rate of return that was nearly three times higher.

"I anticipated, until literally the day I opened this up a couple of days ago, that this [report] would similarly show that rate of return," said Jim Kuipers, a veteran Montana mining consultant who advises Minnesota environmental advocacy groups. He knew PolyMet would be investing a lot more capital in the project than it had once planned, but metals prices have also increased since the time of the last forecast.

Yet the "decrease to 9 or 10 percent was very surprising, almost want to say shocking," he said.

On the other hand, if the capital is cheap enough to obtain in the market, this deal as proposed may make sense. One company that can get inexpensive money is the global commodity and mining company Glencore. It's already heavily invested in PolyMet, owning more than the third of the company on a fully diluted basis.

Glencore has a much stronger balance sheet than it had just a few years ago and generated cash flow from operations last year of about $11.6 billion.

Glencore has been able to borrow money at interest rates a whole lot cheaper than 9.6 percent.

In a busy week for PolyMet last week, it also announced even more funding from Glencore, additional debt financing of up to $80 million.

It's Glencore's money but it's still PolyMet in charge of the project. The plan it's trying to get permits for calls for an operation of 32,000 tons of material per day or about 225 million tons over a 20-year mine life. Once it starts production, PolyMet plans to use cash flow to build additional processing capability to extract more value from the rock it digs up.

That second phase makes the economic case a little better, but the real news last week was that the technical report for the first time showed two far better deals than PolyMet's 32,000 tons-a-day project, business cases PolyMet calls "opportunity" and "expansion."

"The thing that people have lost sight of is that we are only permitting 225 million tons out of a 730-million ton resource," Cherry said, suggesting that there's far more opportunity to make money here than maybe some people realize.

Actually, anybody paying any attention knew an expansion proposal was coming someday. PolyMet for years has planned to process 32,000 tons a day at an old iron mining plant built to handle 100,000 tons. It had proposed a 20-year mine plan to take out less than a third of the ore more or less already known to be in the ground.

What PolyMet calls its expansion case is an operation basically the same size as proposed but running 118,000 tons per day through it instead of 32,000. That would be a moneymaker, too, with a projected, after-tax rate of return approaching 24 percent, according to a preliminary analysis in the new technical report.

Cherry explained last week that the higher production plans would, of course, need a lot of additional engineering and permitting work, all to be happen down the road. The company remains focused on its 32,000 tons-per-day plan. "That's what we are going out to finance," he said.

Yet Kuipers pointed out that it's the higher-capacity projects that will make a lot of sense to a big company like Glencore.

"I think this project will go into production," Kuipers said. "They get through the permitting, and it's Glencore saying 'We want it, we'll take it, and we will go forward in the way we would do it. That's as big a mine, and as profitable a mine, as we can make it.'"

lee.schafer@startribune.com 612-673-4302