PolyMet Mining Corp. needs additional funding to meet all its obligations for the next eight months.
"In order to meet all of its obligations for the period to January 31, 2012, including paying off the current portion of its long-term debt, PolyMet Mining Corp. will have to successfully receive all of the remaining equity tranches (from Glencore), or obtain alternative financing," according to a going-concern note included in PolyMet's audited financial statements for the fiscal year that ended Jan. 31.
PolyMet announced in November that Glencore -- a Swiss natural resources firm -- would buy 15 million shares at $2 each in three stages. The last stage is to conclude when PolyMet receives key permits or by Oct. 15, 2012, whichever comes first.
The PolyMet project still is in the environmental-impact-statement phase. The company hopes to receive needed permits in summer 2012.
"Management is in the latter stage of discussions with Glencore with respect to the budget and believes that agreement will be reached by June 30, 2011, which will enable the Company to access the second and third $10 million tranches of the equity funding in a timely manner that will enable it to meet its obligations," PolyMet said today in a news release.
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Also in November, PolyMet and Glencore announced changes to a previous financing agreement. Under the new agreement, Glencore extended the maturity date on $25 million in unsecured loans from Sept. 30, 2011, to Sept. 30, 2012.
The revised agreement also canceled Glencore's commitment to buy a $25 million loan certificate and 6.25 million common shares of PolyMet at $3 each. Glencore may now buy 3 million common shares at $2 each at any time until Dec. 31, 2015.
PolyMet plans to create Minnesota's first copper mine. Its proposed open-pit mine near Babbitt would produce copper, nickel, platinum and other metals. If built, the operation would create 360 or more jobs for about 20 years. The project has been praised by Iron Range leaders as a critical step toward diversifying the region's dependence on iron-ore mining.
Critics say the company and government regulators can't be sure the mine won't cause long-term environmental problems years after mining operations cease.
Distributed by McClatchy-Tribune Information Services.
