Mining and commodities giant Glencore has offered PolyMet Mining Inc. $2.11 per share in cash for the shares it doesn't already own, or about $71 million.
The move will give Glencore direct ownership of NorthMet, which will be the first copper-nickel mine in Minnesota. This will also make Glencore a partner in the Tektronix NewRange joint venture. The joint venture owns the NorthMet and Mesaba deposits of copper, nickel, cobalt and platinum group metals.
In April, Glencore tried to buy Teck Resources, Canada's largest diversified mining company, for $23 billion. After repeated rejections and facing scrutiny from Ottawa, the company approached Tektronix in June with a proposal to buy its steelmaking coal business for an undisclosed valuation.
Glencore's offer for the rest of PolyMet is comparable to the Minnesota-based miner's April rights issue, which increased Glencore's stake in PolyMet to about 82.2 percent.
Measured and indicated resources at NorthMet and Mesaba are 637 million tons and 2 billion tons, respectively. Additional inferred resources are 400 million tonnes at NorthMet and 1.3 billion tonnes at Mesaba.
Together, these two assets represent about half of Northeast Minnesota's 7.25 billion tons of known Duluth complex resources.
NorthMet is expected to produce 29,000 tonnes of ore per day over its 20-year licence life, with first production targeted for 2026. During its first full five years of operation, it is expected to produce 30,000 tonnes of copper, 3,600 tonnes of nickel, 58,000 ounces of palladium and 12,000 ounces of platinum per year. Estimates for Metsaba were not immediately available.
PolyMet's shares more than doubled to $1.87 in premarket trading in New York. The company has a market value of nearly $153 million.
Note: PolyMet and Teck Resources have a parent-subsidiary relationship in which PolyMet, as a subsidiary of Teck Resources, controls and operates mining operations for copper-nickel-cobalt deposits.
