☐ |
REGISTRATION STATEMENT PURSUANT TO SECTION 12 OF THE SECURITIES EXCHANGE ACT OF 1934
|
☑ |
ANNUAL REPORT PURSUANT TO SECTION 13(a) OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
For the eleven months ended December 31, 2017
|
Commission file number 001-32929 |
Title of each class
|
Name of each exchange on which registered
|
Common Shares, without par value | NYSE American and TSX |
☑ Annual Information Form
|
☑ Audited Annual Financial Statements
|
-
|
obtaining permits on a timely basis;
|
-
|
ability to raise the funds necessary to develop the NorthMet Project and continue operations;
|
-
|
ability to execute prospective business plans;
|
-
|
changes in the general economic and business conditions, including changes in interest rates and exchange rates;
|
-
|
changes in the resources market, including prices of natural resources, costs associated with mineral exploration and development, and other economic conditions;
|
-
|
natural phenomena;
|
-
|
actions by government authorities, including changes in government regulation;
|
-
|
uncertainties associated with legal proceedings; and
|
-
|
future decisions by management in response to changing conditions.
|
Contractual Obligations
(in 000’s)
|
Carrying
Value
|
Contractual
Cash Flows
|
Less than 1
year
|
1 – 3
years
|
3 – 5
years
|
More than 5
years
|
||||||||||||||||||
Accounts payable and accrued liabilities
|
$
|
3,630
|
$
|
3,630
|
$
|
3,630
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||||||||
Convertible debt
|
49,067
|
51,183
|
51,183
|
-
|
-
|
|||||||||||||||||||
Non-convertible debt
|
92,268
|
96,294
|
96,294
|
-
|
-
|
|||||||||||||||||||
Environmental rehabilitation provision
|
65,402
|
102,576
|
1,266
|
12,589
|
7,897
|
80,824
|
||||||||||||||||||
Firm Commitments
|
-
|
1,529
|
448
|
581
|
500
|
-
|
||||||||||||||||||
Total
|
$
|
210,397
|
$
|
255,212
|
$
|
152,821
|
$
|
13,170
|
$
|
8,397
|
$
|
80,824
|
|
POLYMET MINING CORP.
|
|
|
|
|
|
/s/ Jonathan Cherry
|
|
|
Name:
|
Jonathan Cherry |
|
Title:
|
Chief Executive Officer
|
TABLE OF CONTENTS |
|
|
|
|
|
1. |
INTRODUCTORY NOTES
|
1
|
2. |
CORPORATE STRUCTURE
|
3
|
3. |
GENERAL DEVELOPMENT OF THE BUSINESS
|
3
|
4. |
DESCRIPTION OF THE BUSINESS
|
6
|
5. |
RISK FACTORS
|
39
|
6. |
DIVIDENDS
|
46
|
7. |
CAPITAL STRUCTURE
|
46
|
8. |
MARKET FOR SECURITIES
|
47
|
9. | SECURITIES NOT LISTED OR QUOTED | 47 |
10. | DIRECTORS AND OFFICERS | 48 |
11. | LEGAL PROCEEDINGS AND REGULATORY ACTIONS | 50 |
12. | INTEREST OF MANAGEMENT AND OTHER MATERIAL TRANSACTIONS | 50 |
13. |
AUDITORS, TRANSFER AGENT AND REGISTRAR
|
50
|
14. | MATERIAL CONTRACTS | 50 |
15. | INTEREST OF EXPERTS | 52 |
16. | CONTROLS AND PROCEDURES | 52 |
17. | AUDIT COMMITTEE | 53 |
18. | ADDITIONAL INFORMATION | 55 |
SCHEDULE A. AUDIT COMMITTEE CHARTER | 56 |
1.
|
Introductory Notes
|
·
|
various economic assumptions, in particular, metal price estimates, set out in this AIF and elsewhere;
|
·
|
certain operational assumptions set out in the AIF, including mill recovery, operating scenarios;
|
·
|
construction schedules and timing issues; and
|
·
|
assumptions concerning timing and certainty regarding the environmental review and permitting process.
|
·
|
Zachary J. Black, SME-RM, of Hard Rock Consulting, of Lakewood, CO;
|
·
|
Jennifer J. Brown, P.G., of Hard Rock Consulting, of Lakewood, CO;
|
·
|
Nicholas Dempers, Pr. Eng., SAIMM, of Senet, of South Africa;
|
·
|
Thomas L. Drielick, P.E., of M3 Engineering, of Tucson, AZ.
|
·
|
Art S. Ibrado, P.E., of M3 Engineering., of Tucson, AZ; and
|
·
|
Erin L. Patterson, P.E., of M3 Engineering., of Tucson, AZ;
|
·
|
Tom Radue, P.E., of Barr Engineering, of Minneapolis, MN;
|
·
|
Jeff S. Ubl, P.E., of Barr Engineering, of Minneapolis, MN;
|
·
|
Herbert E. Welhener, SME-RM, Independent Mining Consultants, of Tucson, AZ;
|
2.
|
Corporate Structure
|
3.
|
General Development of the Business
|
·
|
March 2016 – MDNR determined that the Final EIS addresses the objectives defined in the EIS scoping review, meets procedural requirements and responds appropriately to public comments demonstrating the NorthMet Project can be constructed and operated in compliance with state and federal standards. The 30-day period allowed by law to challenge the state’s decision passed without any legal challenge being filed;
|
·
|
July 2016 – the Company submitted applications for water-related permits required to construct and operate NorthMet. The Eastern Region Regional Office of the USFS issued its response to comments on the Draft ROD for the land exchange and instructed the Superior National Forest to proceed with completing the Final ROD;
|
·
|
October 2016 – the Company closed the initial tranche of a private placement of 25,963,167 units for gross proceeds of $19.5 million and a second tranche of a private placement of 14,111,251 units for gross proceeds of $10.6 million pursuant to Glencore’s right to maintain its pro rata ownership;
|
·
|
December 2016 – the Memorandum of Agreement of the Section 106 Consultation under the National Historic Preservation Act was signed by the statutory parties;
|
·
|
January 2017 – the USFS issued its Final ROD authorizing a land exchange to transfer title to the surface rights over and around the NorthMet mineral rights to PolyMet in exchange for certain other lands owned by PolyMet;
|
·
|
June 2017 - the Company also appointed Patrick Keenan as Chief Financial Officer;
|
·
|
August and September 2017 - the MDNR released six draft water appropriation permits and two draft dam safety permits for 30-days of public review and comment which have all closed;
|
·
|
September 2017 - the Company issued and committed to issue to Glencore secured debentures with a total principal amount of $20 million;
|
·
|
October 2017 - the Company entered into an agreement with EIP Credit Co., LLC (“EIP Credit”) to reserve wetland bank credits for the NorthMet Project;
|
·
|
November 2017 - the U.S. House of Representatives approved bipartisan legislation introduced by Rep. Rick Nolan, D-MN-8 to ratify the previously approved land exchange between PolyMet and the U.S. Forest Service. This bill has been advanced to the US Senate for consideration;
|
·
|
January 2018 - the MDNR released its draft Permit to Mine for public review and comment which has closed;
|
·
|
January 2018 - the Minnesota Pollution Control Agency (“MPCA”) released its draft water quality permit, draft section 401 certification, and draft air emissions permit for public review and comment which have all closed;
|
·
|
February 2018 – the final public hearings on the draft permits were completed;
|
·
|
March 2018 - the Company and Glencore agreed to extend the term of outstanding debentures until March 31, 2019, reduce the interest rate on the outstanding debentures, and make available $80 million in additional debentures during 2018. Proceeds will be used to complete pre- and post-permitting work, including detailed engineering and environmental cleanup, and to purchase wetland credits; and
|
·
|
March 2018 - the Company issued an Updated Technical Report under NI 43-101 incorporating process improvements, project improvements, and environmental controls described in the Final EIS and draft permits. The update also included detailed capital costs, operating costs, and economic valuation for the mine plan being permitted as well as an assessment of potential future opportunities.
|
·
|
Transfer of title to the surface rights over and around the NorthMet mineral rights to PolyMet as part of the authorized land exchange;
|
·
|
Favorable decision by the state on 401 Water Quality Certification and USACE Final ROD and 404 wetlands permit under Clean Water Act;
|
·
|
Favorable decisions on state permits (Permit to Mine, air, water, and dam safety permits);
|
·
|
Completion of project implementation plan; and
|
·
|
Completion of construction finance plan, subject to typical conditions precedent such as receipt of key permits.
|
4.
|
Description of the Business
|
·
|
The U.S. Steel Lease dated January 4, 1989, subsequently amended and assigned, covers 4,162 acres originally leased from U.S. Steel Corporation (U.S. Steel), which subsequently sold the underlying mineral rights to RGGS Land & Minerals Ltd., L.P. (RGGS). PolyMet has extended the lease indefinitely by making $150,000 annual lease payments on each successive anniversary date. The lease payments are advance royalty payments and will be deducted from future production royalties payable to RGGS, which range from 3% to 5% based on the net smelter return, subject to minimum payments of $150,000 per annum.
|
·
|
On December 1, 2008, PolyMet entered into an agreement with LMC Minerals ("LMC") whereby PolyMet leases 120 acres that are encircled by the RGGS property. The initial term of the renewable lease is 20 years with minimum annual lease payments of $3,000 on each successive anniversary date until the earlier of NorthMet commencing commercial production or for the first four years, after which the minimum annual lease payment increases to $30,000. The initial term may be extended for up to four additional five-year periods on the same terms. The lease payments are advance royalty payments and will be deducted from future production royalties payable to LMC, which range from 3% to 5% based on the net smelter return, subject to a minimum payment of $30,000 per annum.
|
·
|
15 one-inch diameter holes for metallurgical samples (6,974 ft) drilled by Boart-Longyear of Salt Lake City (February - March 2005).
|
·
|
PQ sized holes (core diameter 3.3 inches) totaling 6,897 ft, to collect bulk sample material, and to improve the confidence in the known resource area (February - March 2005).
|
·
|
52 NTW sized holes (2.2 inches) totaling 41,403 ft for resource definition.
|
·
|
30 NQ2 sized holes (2.0 inches) totaling 21,892 ft for resource definition and geotechnical purposes. The NTW and NQ2 size core was drilled in the spring (February-March) and fall (September-December) of 2005.
|
·
|
Collect detailed geostatistical data across a grid in the initial mining area, and
|
·
|
Develop a geologic and assay framework around the west margin of the deposit.
|
Unit
|
Recovery
Count
|
Recovery Percentage
(%)
|
RQD
Count |
RQD
Percent |
1
|
8,906
|
99.9
|
4,194
|
91.8
|
2
|
1,879
|
99.5
|
968
|
90.3
|
3
|
4,374
|
100
|
2,632
|
93.5
|
4
|
2,160
|
100
|
1,063
|
96.4
|
5
|
1,901
|
100
|
838
|
94.3
|
6
|
2,262
|
100
|
1,041
|
94.7
|
7
|
951
|
99.3
|
396
|
87.4
|
Virginia Formation
|
2,095
|
99.7
|
1,069
|
87.6
|
Inclusions
|
62
|
98.1
|
57
|
86.6
|
Biwabik Iron Formation
|
381
|
100
|
60
|
79.8
|
Duluth Complex Average
|
99.96
|
92.82
|
·
|
Original U.S. Steel core sampling, by U.S. Steel, 1969-1974
|
·
|
Re-analysis of U.S. Steel pulps and rejects, selection by Fleck and NRRI, 1989-1991
|
·
|
Analysis of previously un-sampled U.S. Steel core, sample selection by Fleck and NRRI in 1989-1991, and 1999-2001
|
·
|
Analysis of 2 of the 4 NERCO drill-holes, 1991
|
·
|
PolyMet RC cuttings, 1998-2000
|
·
|
PolyMet core, 2000, 2005, 2007, and 2010
|
·
|
Base metals (Cu, Co, Mo, Ni and Zn) - Four-acid digestion with ICP-AES finish,
|
·
|
Base metals (Ag, Cu, Co, Mo, Ni and Zn) – Aqua Regia digestion with ICP-AES finish,
|
·
|
PGEs (Au, Pt and Pd) – 30 gm fire assay with ICP-AES finish, and
|
·
|
Total Sulphur by LECO furnace.
|
·
|
Insertion of coarse blank every 40 samples;
|
·
|
Insertion of Standard Reference Material (SRM) every 40 samples; and
|
·
|
Submission of duplicate 1/4 or 1/8 of the drill core every 40 samples.
|
·
|
No overlapping intervals,
|
·
|
Down-hole surveys at drill-hole collar,
|
·
|
Consistent drill-hole depths for all data tables, and
|
·
|
Gaps in the “from – to” data tables.
|
·
|
Flotation Test work conducted by SGS Lakefield (SGS) between 1998 and 2014, and
|
·
|
Supplementary flotation test work conducted by SGS in 2015 and interpreted by Eurus Mineral Consultants (EMC) for circuit modeling and flotation plant design.
|
·
|
The Bulk Copper-Nickel Flotation circuit
|
·
|
The Copper-Nickel Separation Circuit
|
·
|
The Pyrrhotite Flotation Circuit
|
Grades (UnDiluted) | ||||||||||||||||||||||||||||||
Class
|
Tonnage
(Mt)
|
Copper |
Nickel
|
Platinum
|
Palladium
|
Gold
|
Cobalt
|
Silver
|
NSR
|
Cu-EQ
|
||||||||||||||||||||
|
|
(%)
|
(%)
|
(ppb)
|
(ppb)
|
(ppb)
|
(ppm)
|
(ppm)
|
$/ton
|
(%)
|
||||||||||||||||||||
Measured
|
237.2
|
0.270
|
0.080
|
69
|
241
|
35
|
72
|
0.97
|
19.67
|
0.541
|
||||||||||||||||||||
Indicated
|
412.2
|
0.230
|
0.070
|
63
|
210
|
32
|
70
|
0.87
|
16.95
|
0.470
|
||||||||||||||||||||
M&I
|
649.3
|
0.245
|
0.074
|
65
|
221
|
33
|
71
|
0.91
|
17.94
|
0.496
|
||||||||||||||||||||
Inferred
|
508.9
|
0.240
|
0.070
|
72
|
234
|
37
|
66
|
0.93
|
17.66
|
0.489
|
1.
|
Mineral resources are not mineral reserves and do not have demonstrated economic viability.
|
2.
|
All resources are stated above a $7.35 NSR cut-off. Cut-off is based on estimated processing and G&A costs. Metal Prices and metallurgical recoveries used for the development of cut-off grade are presented in Table 14-33 of the 2018 Technical Report.
|
3.
|
Mineral resource tonnage and contained metal have been rounded to reflect the accuracy of the estimate, and numbers may not add due to rounding.
|
4.
|
Cu-Eq (copper equivalent grade) is based on the mill recovery to concentrates and metal prices (see Table 14-33 of the 2018 Technical Report).
|
5.
|
Copper Equivalent (Cu Eq) = ((Cu head grade x recovery x Cu Price)) + (Ni head grade x recovery x Ni Price) + (Pt head grade x recovery x Pt Price) + (Pd head grade x recovery x Pd Price) +(Au head grade x recovery x Au Price) + (Co head grade x recovery x Co Price) + (Ag head grade x recovery x Ag Price)) / (Cu recovery x Cu Price).
|
Grades (Diluted)
|
||||||||||||||||||||||||||||||
Class
|
Tonnage
(x 1,000)
|
Copper
|
Nickel
|
Platinum
|
Palladium
|
Gold
|
Cobalt
|
Silver
|
NSR
|
Cu-Eq
|
||||||||||||||||||||
|
|
(%)
|
(%)
|
(ppb)
|
(ppb)
|
(ppb)
|
(ppm)
|
(ppm)
|
$/ton
|
(%)
|
||||||||||||||||||||
Proven
|
121,849
|
0.308
|
0.087
|
82
|
282
|
41
|
74.81
|
1.11
|
19.87
|
0.612
|
||||||||||||||||||||
Probable
|
132,820
|
0.281
|
0.081
|
78
|
256
|
37
|
74.06
|
1.02
|
18.02
|
0.559
|
||||||||||||||||||||
Total
|
254,669
|
0.294
|
0.084
|
80
|
268
|
39
|
74.42
|
1.06
|
18.90
|
0.584
|
1.
|
Mineral reserve tonnage and contained metal have been rounded to reflect the accuracy of the estimate, and numbers may not add due to rounding
|
2.
|
All reserves are stated above a $7.98 NSR cutoff and bound within the final pit design.
|
3.
|
Tonnage and grade estimates are in Imperial units
|
4.
|
Total Tonnage within the pit is 628,499 ktons; average waste: ore ratio = 1.47
|
5.
|
Cu-Eq values are based on the metal prices in Table 15-2 of the 2018 Technical Repot and total mill recoveries in Table 15-3 of the 2018 Technical Report and diluted mill feed.
|
6.
|
Copper Equivalent (CuEq) = ((Cu head grade x recovery x Cu Price) + (Ni head grade x recovery x Ni Price) + (Pt head grade x recovery x Pt Price) + (Pd head grade x recovery x Pd Price) + (Au head grade x recovery x Au Price) + (Co head grade x recovery x Co Price) + (Ag head grade x recovery x Ag Price)) / (Cu head grade x recovery x Cu Price)
|
7.
|
NSR values include post property concentrate transportation, smelting and refining costs and payable metal calculations.
|
|
|
Total
|
Year -1
|
Year 1
|
Year 2
|
Year 3
|
Year 4
|
Year 5
|
Year 6
|
Year 7
|
Year 8
|
Year 9
|
Year 10
|
Year 11
|
Year 12
|
Year 13
|
Year 14
|
Year 15
|
Year 16
|
Year 17
|
Year 18
|
Year 19
|
Year 20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ore Mined
|
NSR
cutoff -->
|
|
14.00
|
14.00
|
14.00
|
13.00
|
11.00
|
11.00
|
12.00
|
11.00
|
9.00
|
9.00
|
7.98
|
7.98
|
7.98
|
7.98
|
7.98
|
7.98
|
7.98
|
7.98
|
|
||
ktons
|
198,867
|
|
7,250
|
11,600
|
11,600
|
11,600
|
11,600
|
11,600
|
11,600
|
11,600
|
11,600
|
11,600
|
11,600
|
11,600
|
11,600
|
11,600
|
11,600
|
11,600
|
11,600
|
6,017
|
|
||
DCu, %
|
0.311
|
|
0.348
|
0.358
|
0.355
|
0.334
|
0.334
|
0.333
|
0.334
|
0.314
|
0.300
|
0.280
|
0.273
|
0.268
|
0.274
|
0.275
|
0.287
|
0.292
|
0.322
|
0.345
|
|
||
DNi, %
|
0.088
|
|
0.103
|
0.105
|
0.095
|
0.087
|
0.086
|
0.089
|
0.097
|
0.093
|
0.085
|
0.083
|
0.082
|
0.083
|
0.083
|
0.081
|
0.080
|
0.081
|
0.088
|
0.094
|
|
||
Cu-Eq Mill, %
|
|
0.617
|
|
0.688
|
0.712
|
0.716
|
0.674
|
0.662
|
0.664
|
0.664
|
0.619
|
0.597
|
0.555
|
0.559
|
0.562
|
0.548
|
0.540
|
0.563
|
0.564
|
0.613
|
0.650
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Ore to
Stockpile
(8.50/t NSR
cutoff)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ktons
|
26,133
|
|
2,364
|
4,487
|
5,254
|
3,882
|
1,512
|
1,799
|
3,170
|
2,805
|
383
|
477
|
|
|
|
|
|
|
|
|
|
||
DCu, %
|
0.171
|
|
0.182
|
0.184
|
0.182
|
0.171
|
0.153
|
0.160
|
0.164
|
0.157
|
0.137
|
0.137
|
|
|
|
|
|
|
|
|
|
||
DNi, %
|
0.058
|
|
0.064
|
0.062
|
0.057
|
0.055
|
0.052
|
0.054
|
0.059
|
0.058
|
0.052
|
0.053
|
|
|
|
|
|
|
|
|
|
||
CuEq Mill, %
|
|
0.348
|
|
0.364
|
0.364
|
0.370
|
0.355
|
0.324
|
0.324
|
0.335
|
0.322
|
0.293
|
0.292
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Ore from
Stockpile
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
ktons
|
26,133
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,583
|
11,600
|
8,950
|
|
DCu, %
|
0.171
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.171
|
0.171
|
0.171
|
|
DNi, %
|
0.058
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.058
|
0.058
|
0.058
|
|
Cu-Eq Mill, %
|
|
0.348
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.348
|
0.348
|
0.348
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Mill Feed
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
ktons
|
225,000
|
|
7,250
|
11,600
|
11,600
|
11,600
|
11,600
|
11,600
|
11,600
|
11,600
|
11,600
|
11,600
|
11,600
|
11,600
|
11,600
|
11,600
|
11,600
|
11,600
|
11,600
|
11,600
|
11,600
|
8,950
|
|
DCu, %
|
0.295
|
|
0.348
|
0.358
|
0.355
|
0.334
|
0.334
|
0.333
|
0.334
|
0.314
|
0.300
|
0.280
|
0.273
|
0.268
|
0.274
|
0.275
|
0.287
|
0.292
|
0.322
|
0.261
|
0.171
|
0.171
|
|
DNi, %
|
0.085
|
|
0.103
|
0.105
|
0.095
|
0.087
|
0.086
|
0.089
|
0.097
|
0.093
|
0.085
|
0.083
|
0.082
|
0.083
|
0.083
|
0.081
|
0.080
|
0.081
|
0.088
|
0.077
|
0.058
|
0.058
|
|
CuEq Mill, %
|
|
0.586
|
|
0.688
|
0.712
|
0.716
|
0.674
|
0.662
|
0.664
|
0.664
|
0.619
|
0.597
|
0.555
|
0.559
|
0.562
|
0.548
|
0.540
|
0.563
|
0.564
|
0.613
|
0.505
|
0.348
|
0.348
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Waste, ktons
|
Total
|
348,823
|
|
25,868
|
23,913
|
20,204
|
24,518
|
26,888
|
26,601
|
17,142
|
16,743
|
18,379
|
19,923
|
20,400
|
17,280
|
15,509
|
16,440
|
15,085
|
16,433
|
18,030
|
9,467
|
0
|
|
Cat 1
|
212,065
|
|
16,686
|
13,409
|
13,462
|
18,810
|
20,864
|
20,088
|
10,802
|
7,235
|
10,477
|
11,283
|
12,180
|
10,462
|
8,637
|
8,939
|
7,730
|
8,177
|
9,222
|
3,602
|
|
||
Cat 2
|
95,980
|
|
4,029
|
5,191
|
4,814
|
4,740
|
4,830
|
4,978
|
4,792
|
7,307
|
5,571
|
5,740
|
5,637
|
4,591
|
4,601
|
5,425
|
6,104
|
6,838
|
6,895
|
3,897
|
|
||
Cat 3
|
23,490
|
|
1,200
|
1,713
|
821
|
810
|
979
|
1,166
|
1,094
|
1,435
|
1,710
|
2,020
|
2,023
|
1,623
|
1,576
|
1,351
|
954
|
1,143
|
851
|
1,021
|
|
||
Cat 4
|
|
17,288
|
|
3,953
|
3,600
|
1,107
|
158
|
215
|
369
|
454
|
766
|
621
|
880
|
560
|
604
|
695
|
725
|
297
|
275
|
1,062
|
947
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total ktons
mined
|
573,823
|
|
35,482
|
40,000
|
37,058
|
40,000
|
40,000
|
40,000
|
31,912
|
31,148
|
30,362
|
32,000
|
32,000
|
28,880
|
27,109
|
28,040
|
26,685
|
28,033
|
29,630
|
15,484
|
0
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Re-handle,
ktons
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockpiled ore
to mill
|
26,133
|
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
5,583
|
11,600
|
8,950
|
|
Waste rock to
pit backfill
|
60,521
|
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
7,384
|
7,385
|
2,000
|
2,000
|
2,000
|
1,000
|
3,021
|
2,812
|
1,000
|
10,000
|
18,270
|
3,649
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total ktons
moved
|
660,477
|
|
35,482
|
40,000
|
37,058
|
40,000
|
40,000
|
40,000
|
31,912
|
31,148
|
37,746
|
39,385
|
34,000
|
30,880
|
29,109
|
29,040
|
29,706
|
30,845
|
30,630
|
31,067
|
29,870
|
12,599
|
|
|
|
|
Year -1
|
Year 1
|
Year 2
|
Year 3
|
Year 4
|
Year 5
|
Year 6
|
Year 7
|
Year 8
|
Year 9
|
Year 10
|
Year 11
|
Year 12
|
Year 13
|
Year 14
|
Year 15
|
Year 16
|
Year 17
|
Year 18
|
Year 19
|
Year 20
|
·
|
The existing circuit design and equipment is more than 50 years old
|
·
|
The plant has been idle for more than 15 years
|
·
|
The complex’s operational and maintenance requirements associated with running a tertiary and quaternary crushing circuit as well as 12 milling streams
|
·
|
The large number of transfer points associated with the above
|
·
|
Tertiary and quaternary crushing would no longer be required. This eliminates a large portion of the current circuit which is highly maintenance intensive, and also requires significant dust control measures and building heating requirements.
|
·
|
The ore storage bin operating and discharge methodology would be changed to allow a greater volume of the bin to be used, while also reducing the number of operating transfer points. This would significantly reduce the dust emissions within the concentrator building.
|
·
|
The new milling circuit would have variable speed control on both mills allowing for greater process control and adaptability to cater to any potential variability in the upstream and downstream process characteristics.
|
·
|
New larger mills have greater operating efficiencies and less maintenance requirements, therefore reducing operating costs.
|
·
|
Simplified milling control system as a result of reduced service requirements to the mills. These include process water addition points, lubrication systems monitoring, discharge density and grind size control and ore feed.
|
·
|
Phase I: The Beneficiation Plant consisting of crushing, grinding, flotation, concentrate thickening and concentrate filtration. The Beneficiation Plant will produce and market concentrates containing copper, nickel, cobalt and precious metals.
|
·
|
Phase II: In mine year 2, a hydrometallurgical plant is expected to be commissioned to process nickel sulfide and pyrrhotite concentrates, with processing starting in mine year 3. This concentrate stream will be processed through a single autoclave to recover high-grade copper concentrate, and recover the nickel-cobalt hydroxide and precious metals precipitates as by-products.
|
·
|
138 kV incoming HV power supply from the Minnesota Power grid
|
·
|
Power distribution to the existing facilities
|
·
|
Process plant buildings complete with distribution services
|
·
|
Administration and site offices
|
·
|
Site and mine access roads
|
·
|
Rail network including locomotive services and re-fueling facilities
|
·
|
Natural gas supply
|
·
|
FTB with return water barge and pumps
|
·
|
Mining and plant workshops
|
Permit
|
Agency
|
Subject(s) Covered
|
NPDES/SDS Permit
|
MPCA
|
Treated water discharge; groundwater and surface water monitoring; water quality
|
401 Certification
|
MPCA
|
State water quality certification of federal 404 related activities
|
Air Quality Permit
|
MPCA
|
Air emissions; sources and limits
|
Construction Stormwater Permit
|
MPCA
|
Addresses runoff from land-disturbing construction activities
|
Permit to Mine
|
MDNR
|
Construction and development; financial assurance
|
Dam Safety Permit
|
MDNR
|
Construction, operation and maintenance of dams
|
Public Waters Work Permit
|
DNR
|
Construction within a public water
|
Water Appropriation Permit
|
MDNR
|
Water quantity and use
|
Wetland Replacement Plan
|
MDNR
|
Wetland impacts and mitigation
|
404 Permit
|
USACE
|
Wetland impacts and mitigation
|
·
|
The closed Mining Area or portion is safe, secure, and free of hazards,
|
·
|
It is in an environmentally stable condition, and
|
·
|
It minimizes hydrologic impacts and the release of hazardous substances that adversely affect natural resources; and it is maintenance free
|
·
|
Mine CAPEX which includes cost estimates for mine site development and major mining equipment costs,
|
·
|
Mine ore loadout and mine and plant railroad refurbishment costs,
|
·
|
Comminution, processing, utilities and plant refurbishment costs,
|
·
|
Costs to build out the existing tailings basin, and
|
·
|
Costs for water treatment and water management.
|
·
|
The NorthMet Project utilizes a 20-year LOM plan.
|
·
|
It isn’t anticipated that final operating permits will result in any material changes to mine or plant design.
|
·
|
Most of the process equipment would be procured and fabricated in the US and is transportable to site by road or rail.
|
Description
|
PHASE I
($000)
|
***DIRECT COST***
|
|
MINE CAPEX
|
|
Mine Site
|
65,395
|
Construction Material Testing
|
1,490
|
Mine Equipment
|
99,710
|
RAILROAD AND ORE DELIVERY
|
20,200
|
COMMINUTION
|
135,013
|
COPPER & NICKEL CONCENTRATION
|
120,609
|
CONCENTRATES LOADOUT FACILITIES
|
49,895
|
WATER MANAGEMENT
|
62,651
|
PLANT CONTROL SYSTEM (PCS)
|
1,919
|
FLOTATION TAILINGS BASIN
|
39,684
|
PLANT INFRASTRUCTURE
|
10,879
|
PLANT UTILITIES
|
99,245
|
Subtotal DIRECT COST (MINE & CONCENTRATOR)
|
706,690
|
·
|
Recent quotations (Q4 2016 and Q1 2017) were obtained for new mechanical equipment based on detailed enquiries including specifications and equipment duty sheets. The mechanical equipment was sized based on test work results, system modelling and in certain cases equipment sizing was dictated by physical layout/foot print constraints.
|
·
|
Preliminary designs for new structures, bins and chutes.
|
·
|
Preliminary civil and earthworks designs associated with the new structures, equipment and operational requirements including access and spillage containment.
|
·
|
Priced piping and valve MTOs developed from preliminary PFDs and General Arrangement drawings.
|
·
|
Quotations for electrical and instrumentation equipment based on recent enquiries, including installation on similar projects.
|
·
|
A complete instrument index including a comprehensive BOM was developed and issued for pricing.
|
·
|
Man-hour estimations for the installation of new equipment, electrical, instrumentation, structures and associated civil works. These were based on industry standards.
|
***DIRECT COST***
|
PHASE II
($000)
|
HYDROMET
|
|
Site General
|
24,152
|
Ni-Cu Concentrate Oxidative Leaching
|
68,880
|
Au/PGM Recovery
|
3,780
|
Cu Concentrate
|
3,743
|
Cu Sulfide Precipitation
|
1,621
|
Iron/Acid Removal
|
5,808
|
Mixed Hydroxide Precipitation
|
3,486
|
Magnesium Removal
|
736
|
Hydromet Tailings
|
840
|
Hydrometallurgical Residue Facility
|
43,903
|
Reagent Storage and Mixing
|
15,671
|
Plant Scrubber
|
1,591
|
Hydromet Raw Water
|
1,647
|
Hydromet Process Water
|
1,241
|
Steam Systems
|
1,085
|
Gas Systems
|
784
|
Subtotal DIRECT COST (PHASE II)
|
178,966
|
|
PHASE I
($000)
|
PHASE II
($000)
|
||||||
TOTAL DIRECT COST (Excluding Mine Equipment)
|
606,980
|
178,966
|
||||||
FREIGHT - LOGISTICS
|
19,393
|
7,017
|
||||||
MOBILIZATION, TEMPORARY FACILITIES AND POWER
|
4,523
|
|||||||
TOTAL CONSTRUCTED COST
|
626,373
|
$
|
190,506
|
|||||
EPCM
|
90,999
|
32,196
|
||||||
COMMISSIONING
|
7,790
|
1,394
|
||||||
CAPITAL SPARES
|
929
|
|||||||
TOTAL CONTRACTED COST
|
725,162
|
225,025
|
||||||
CONTINGENCY
|
71,597
|
33,754
|
||||||
AVERAGE CONTINGENCY
|
9.9
|
%
|
15
|
%
|
||||
ADDED OWNER'S COST (including initial fills & reagents)
|
24,489
|
|||||||
TOTAL CONTRACTED AND OWNER'S COST
|
821,248
|
258,779
|
||||||
Owner's Cost Mine Equipment (Initial Capital)
|
99,710
|
|||||||
Haul Truck Tire Adjustment
|
(900
|
)
|
||||||
EIP Credits
|
25,065
|
|||||||
TOTAL EVALUATED PROJECT COST
|
945,124
|
258,779
|
||||||
COMBINED TOTALS |
1,203,903
|
% of Total
|
||
CATEGORY
|
($000)
|
Mining Cost
|
Drilling
|
50,662
|
5.6
|
Blasting
|
97,144
|
10.7
|
Loading
|
99,297
|
11.0
|
Hauling
|
257,502
|
28.5
|
Auxiliary
|
147,737
|
16.3
|
General Mine
|
32,512
|
3.6
|
General Maintenance
|
33,888
|
3.7
|
Mine G&A
|
98,338
|
10.9
|
Locomotive
|
79,884
|
8.8
|
Analytical Lab Contract
|
6,000
|
0.7
|
TOTAL MINING COST
|
904,553
|
100
|
32,000 STPD
|
|||
OPEX Parameter
|
Units
|
Value
|
Fraction (%)
|
Tonnage Processed
|
tpa
|
11,600,000
|
|
Labor
|
USD/t
|
1.04
|
15.9
|
Power
|
USD/t
|
2.11
|
32.2
|
Natural Gas
|
USD/t
|
0.27
|
4.1
|
Consumables/Water Treatment
|
USD/t
|
2.44
|
37.3
|
Maintenance Supplies & Plant Vehicles
|
USD/t
|
0.66
|
10.1
|
Assay Costs
|
USD/t
|
0.02
|
0.3
|
Phase I Plant Costs
|
USD/t
|
6.55
|
100
|
32,000 STPD
|
|||
OPEX Parameter
|
Units
|
Value
|
Fraction (%)
|
Tonnage Processed
|
tpa
|
11,600,000
|
|
Labor
|
USD/t
|
0.21
|
9.9
|
Power
|
USD/t
|
0.11
|
5.2
|
Consumables and Reagents
|
USD/t
|
1.17
|
55.2
|
Maintenance
|
USD/t
|
0.57
|
26.9
|
Supplies & Services
|
USD/t
|
0.06
|
2.8
|
Phase II Plant Costs
|
USD/t
|
2.12
|
100
|
·
|
Phase I: produce and market concentrates containing copper, nickel, PGMs, cobalt and precious metals.
|
·
|
Phase II: once processed via Phase I, continue processing the nickel concentrate through a single autoclave, resulting in production and sale of high grade copper concentrate, value added nickel-cobalt hydroxide, and precious metals precipitate products.
|
Cost Category
|
UOM
|
Phase I
|
Phase I & II
|
|||||
Capital Costs
|
||||||||
Initial Capital
|
$ millions
|
945.1
|
1,203.9
|
|||||
LOM Sustaining Capital
|
$ millions
|
220.6
|
220.6
|
(1)
|
||||
Operating Costs
|
LOM
|
|||||||
Mining & Delivery to Plant
|
$/st processed
|
4.02
|
4.02
|
|||||
Processing
|
$/st processed
|
6.55
|
8.66
|
|||||
G&A
|
$/st processed
|
0.48
|
0.48
|
|||||
Total
|
$/st processed
|
11.05
|
13.16
|
|||||
LOM Average Annual Payable Metal in Cons Produced
|
||||||||
Copper
|
000 lbs
|
54,792
|
57,754
|
|||||
Nickel
|
000 lbs
|
6,646
|
8,711
|
|||||
Cobalt
|
000 lbs
|
281
|
311
|
|||||
Platinum
|
koz
|
8
|
14
|
|||||
Palladium
|
koz
|
42
|
59
|
|||||
Gold
|
koz
|
2
|
4
|
|||||
Silver
|
koz
|
48
|
48
|
|||||
Average Annual Payable Metal in Cons Produced (Yrs 2-6)
|
||||||||
Copper
|
000 lbs
|
66,748
|
69,384
|
|||||
Nickel
|
000 lbs
|
7,867
|
9,647
|
|||||
Cobalt
|
000 lbs
|
333
|
352
|
|||||
Platinum
|
koz
|
12
|
19
|
|||||
Palladium
|
koz
|
58
|
73
|
|||||
Gold
|
koz
|
3
|
6
|
|||||
Silver
|
koz
|
68
|
68
|
(1)
|
Susutaing capex for Phase II is included as an OPEX cost for replacement parts piping liners etc for Hydromet plant
|
Base Case
($/lb or $/oz)
|
Metal Recovery
to Conc. (%)
|
Production
(million lbs or oz)
|
Contribution to
net revenue (%)
|
Cash Cost
per lb Cu Eq
|
Cash Cost
per lb Cu
|
|
Cu Eq$/lb
or $/oz
|
by-product $/lb
or $/oz
|
|||||
Assumptions
|
LOM
|
|||||
Phase I
|
||||||
Copper (lb)
|
3.22
|
91.8
|
1,096
|
60.5
|
1.91
|
1.06
|
Nickel (lb)
|
7.95
|
63.5
|
133
|
18.1
|
||
Cobalt (lb)
|
20.68
|
35.9
|
5.6
|
2.0
|
||
Platinum (oz)
|
1,128
|
73.4
|
170
|
3.3
|
||
Palladium (oz)
|
973
|
78.1
|
836
|
13.9
|
||
Gold (oz)
|
1,308
|
58.9
|
45
|
1.0
|
||
Silver (oz)
|
18.92
|
56.9
|
958
|
0.3
|
||
Low-grade Nickel PGM (Ktonne)
|
55.00
|
N/A
|
912
|
0.9
|
Base Case
($/lb or $/oz)
|
Metal Recovery
to Conc. (%)
|
Production
(million lbs or oz)
|
Contribution to
net revenue (%)
|
Cash Cost
per lb Cu Eq
|
Cash Cost
per lb Cu
|
|
Cu Eq$/lb
or $/oz
|
by-product $/lb
or $/oz
|
|||||
Assumptions
|
LOM
|
|||||
Phase I & II
|
||||||
Copper (lb)
|
3.22
|
91.8
|
1,155
|
54.3
|
1.79
|
0.59
|
Nickel (lb)
|
7.95
|
63.5
|
174
|
20.2
|
||
Cobalt (lb)
|
20.68
|
35.9
|
6.2
|
1.9
|
||
Platinum (oz)
|
1,128
|
73.4
|
286
|
4.7
|
||
Palladium (oz)
|
973
|
78.1
|
1,189
|
16.9
|
||
Gold (oz)
|
1,308
|
58.9
|
86
|
1.6
|
||
Silver (oz)
|
18.92
|
56.9
|
958
|
0.3
|
||
Low-grade Nickel PGM (Ktonne)
|
55.00
|
N/A
|
175
|
0.1
|
|
Phase I
|
Phase I & II
|
||||||||||||
|
Units
|
First 5 Yrs 1
|
LOM
|
LOM 2
|
||||||||||
Life of Mine
|
Yrs
|
20
|
20
|
|||||||||||
Material Mined
|
Mt
|
197
|
574
|
574
|
||||||||||
Ore Mined
|
Mt
|
58
|
225
|
225
|
||||||||||
Waste: Ore Ratio
|
2.4
|
1.6
|
1.6
|
|||||||||||
Ore Grade
|
||||||||||||||
Copper
|
%
|
0.343
|
0.295
|
0.295
|
||||||||||
Nickel
|
%
|
0.092
|
0.085
|
0.085
|
||||||||||
Cobalt
|
ppm
|
76
|
75
|
75
|
||||||||||
Palladium
|
ppm
|
0.327
|
0.269
|
0.269
|
||||||||||
Platinum
|
ppm
|
0.099
|
0.079
|
0.079
|
||||||||||
Gold
|
ppm
|
0.048
|
0.039
|
0.039
|
||||||||||
Annual Payable Metal Produced
|
||||||||||||||
Copper
|
mlb
|
66.7
|
54.8
|
57.8
|
||||||||||
Nickel
|
mlb
|
7.9
|
6.6
|
8.7
|
||||||||||
Cobalt
|
mlb
|
0.33
|
0.28
|
0.31
|
||||||||||
Palladium
|
koz
|
57.6
|
41.8
|
59.4
|
||||||||||
Platinum
|
koz
|
12.4
|
8.5
|
14.3
|
||||||||||
Gold
|
koz
|
3.4
|
2.2
|
4.3
|
||||||||||
Copper Equivalent3
|
mlb
|
112.4
|
90.6
|
106.4
|
||||||||||
|
||||||||||||||
Cash Costs: by-product
|
$/lb Cu
|
0.67
|
1.06
|
0.59
|
||||||||||
Cash Costs: Cu equivalent
|
$/lb CuEq
|
1.71
|
1.91
|
1.79
|
||||||||||
|
||||||||||||||
Development Capital
|
$M |
945
|
945
|
1,204
|
||||||||||
Sustaining Capital
|
$M |
99
|
221
|
221
|
||||||||||
|
||||||||||||||
Annual Revenue
|
$M |
362
|
292
|
343
|
||||||||||
Annual EBITDA
|
$M |
170
|
118
|
152
|
||||||||||
NPV7 (After Taxes)
|
$M |
173
|
271
|
|||||||||||
IRR (After Taxes)
|
%
|
9.6
|
10.3
|
|||||||||||
Payback (after taxes, from first production)
|
Years
|
7.3
|
7.5
|
·
|
Engineering – Basic and Detailed
|
·
|
Demolition
|
·
|
Construction
|
Operating Plan
|
Unit of Measure
|
59,000 STPD
|
118,000 STPD
|
||||||||||
Phase I
|
Phase I & II
|
Phase I
|
Phase I & II
|
||||||||||
Mineralized Material Processed
|
Million st
|
293
|
293
|
730
|
730
|
||||||||
Operating Life
|
years
|
15
|
15
|
19
|
19
|
||||||||
LOM Strip Ratio
|
1.5
|
1.5
|
2.2
|
2.2
|
|||||||||
Capital Costs
|
|||||||||||||
Initial Capital
|
$ millions
|
1,095
|
1,354
|
1,614
|
1,872
|
||||||||
LOM Sustaining Capital
|
$ millions
|
249
|
249
|
900
|
900
|
||||||||
Operating Costs
|
|||||||||||||
Mining & Delivery to Plant
|
$/st processed
|
3.16
|
3.16
|
3.36
|
3.36
|
||||||||
Processing
|
$/st processed
|
5.32
|
6.94
|
5.36
|
6.34
|
||||||||
G&A
|
$/st processed
|
0.78
|
0.78
|
0.28
|
0.28
|
||||||||
Subtotal Operating Costs
|
$/st processed
|
9.26
|
10.88
|
9.00
|
9.98
|
||||||||
Selling Costs
|
$/st processed
|
3.23
|
2.55
|
2.94
|
2.34
|
||||||||
Total Operating Costs
|
$/st processed
|
12.49
|
13.43
|
11.94
|
12.32
|
|
Phase I
|
Phase I & II
|
||||||||||||
|
Units
|
First 5 Yrs 1
|
LOM
|
LOM 2
|
||||||||||
Life of Mine
|
Yrs
|
15
|
4
|
15
|
||||||||||
Material Mined
|
Mt
|
294
|
724
|
724
|
||||||||||
Mill Feed Mined
|
Mt
|
106
|
293
|
293
|
||||||||||
Waste: Mill Feed Ratio
|
1.8
|
1.5
|
1.5
|
|||||||||||
Mill Feed Grade
|
||||||||||||||
Copper
|
%
|
0.313
|
0.290
|
0.290
|
||||||||||
Nickel
|
%
|
0.087
|
0.083
|
0.083
|
||||||||||
Cobalt
|
ppm
|
75
|
74
|
74
|
||||||||||
Palladium
|
ppm
|
0.293
|
0.264
|
0.264
|
||||||||||
Platinum
|
ppm
|
0.087
|
0.079
|
0.079
|
||||||||||
Gold
|
ppm
|
0.043
|
0.039
|
0.039
|
||||||||||
Annual Payable Metal Produced
|
||||||||||||||
Copper
|
mlb
|
110.5
|
93.6
|
98.2
|
||||||||||
Nickel
|
mlb
|
13.2
|
11.3
|
14.5
|
||||||||||
Cobalt
|
mlb
|
0.56
|
0.48
|
0.52
|
||||||||||
Palladium
|
koz
|
90.5
|
71.4
|
99.2
|
||||||||||
Platinum
|
koz
|
19.1
|
14.8
|
24.1
|
||||||||||
Gold
|
koz
|
5.0
|
3.9
|
7.3
|
||||||||||
Copper Equivalent3
|
mlb
|
184.7
|
154.7
|
179.7
|
||||||||||
|
||||||||||||||
Cash Costs: by-product
|
$/lb Cu
|
0.45
|
0.72
|
0.23
|
||||||||||
Cash Costs: Cu equivalent
|
$/lb CuEq
|
1.56
|
1.71
|
1.59
|
||||||||||
|
||||||||||||||
Development Capital
|
$M |
1,095
|
1,095
|
1,354
|
||||||||||
Sustaining Capital
|
$M |
128
|
249
|
249
|
||||||||||
|
||||||||||||||
Annual Revenue
|
$M |
595
|
498
|
579
|
||||||||||
Annual EBITDA
|
$M |
307
|
234
|
294
|
||||||||||
NPV7
|
$M |
751
|
963
|
|||||||||||
IRR
|
%
|
17.5
|
18.5
|
|||||||||||
Payback (from first production)
|
Years
|
4.6
|
4.8
|
|
Phase I
|
Phase I & II
|
||||||||||||
|
Units
|
First 5 Yrs 1
|
LOM
|
LOM 2
|
||||||||||
Life of Mine
|
Yrs
|
5
|
19
|
4
|
19
|
4
|
||||||||
Material Mined
|
Mt
|
767
|
2,366
|
2,366
|
||||||||||
Mill Feed Mined
|
Mt
|
212
|
730
|
730
|
||||||||||
Waste: Mill Feed Ratio
|
2.6
|
2.2
|
2.2
|
|||||||||||
Mill Feed Grade
|
||||||||||||||
Copper
|
%
|
0.292
|
0.268
|
0.268
|
||||||||||
Nickel
|
%
|
0.084
|
0.076
|
0.076
|
||||||||||
Cobalt
|
ppm
|
74
|
70
|
70
|
||||||||||
Palladium
|
ppm
|
0.281
|
0.247
|
0.247
|
||||||||||
Platinum
|
ppm
|
0.074
|
0.073
|
0.073
|
||||||||||
Gold
|
ppm
|
0.038
|
0.037
|
0.037
|
||||||||||
Annual Payable Metal Produced
|
||||||||||||||
Copper
|
mlb
|
203.5
|
167.8
|
172.4
|
||||||||||
Nickel
|
mlb
|
23.8
|
19.0
|
23.3
|
||||||||||
Cobalt
|
mlb
|
1.01
|
0.80
|
0.83
|
||||||||||
Palladium
|
koz
|
163.5
|
129.7
|
170.9
|
||||||||||
Platinum
|
koz
|
28.0
|
26.0
|
38.5
|
||||||||||
Gold
|
koz
|
7.8
|
7.6
|
11.6
|
||||||||||
Copper Equivalent3
|
mlb
|
336.9
|
275.6
|
309.5
|
||||||||||
|
||||||||||||||
Cash Costs: by-product
|
$/lb Cu
|
0.56
|
0.85
|
0.39
|
||||||||||
Cash Costs: Cu equivalent
|
$/lb CuEq
|
1.61
|
1.78
|
1.64
|
||||||||||
|
||||||||||||||
Development Capital
|
$M |
1,614
|
1,614
|
1,872
|
||||||||||
Sustaining Capital
|
$M |
226
|
900
|
900
|
||||||||||
|
||||||||||||||
Annual Revenue
|
$M |
1085
|
887
|
997
|
||||||||||
Annual EBITDA
|
$M |
542
|
397
|
488
|
||||||||||
NPV7
|
$M |
1737
|
2243
|
|||||||||||
IRR
|
%
|
21.9
|
23.6
|
|||||||||||
Payback (from first production)
|
Years
|
4.1
|
4.1
|
·
|
Review and update the scope of the NorthMet Project design to reflect changes resulting from the permitting process, if any, and other Project enhancements.
|
·
|
Select a water treatment plant design and supply provider once the final permits are in place.
|
·
|
Complete basic engineering on all designs, and initiate detailed design.
|
·
|
Establish construction contracts formats.
|
·
|
Establish documents that will be used for all equipment purchases.
|
·
|
Finalize permitting activities.
|
·
|
Commence a NI-43-101 Pre-feasibility study to increase the level of accuracy of the capital and operating estimates presented in Section 24.2 of the 2018 Technical Report.
|
·
|
Design general arrangement drawings of the plant area to develop more accurate material take-offs for both the maximum and ramp-up throughput capital cost estimates.
|
·
|
Update the financial model based on any changes to the current capital and operating cost estimates and to reflect current metal prices. Metal prices and terms for mine planning purposes may not be reflective of the prices presented in the 2018 Technical Report at the commencement of mining.
|
·
|
M3 recommends reviewing the design of the WWTS with respect to the building costs and construction schedule.
|
·
|
Design an infill drilling program on inferred resources in an attempt to move inferred into the measured and indicated classification.
|
5.
|
Risk Factors
|
·
|
delays in the issuance of permits;
|
·
|
delays or higher than expected costs in obtaining the necessary equipment or services to build and operate the Project; and
|
·
|
adverse mining conditions may delay and hamper PolyMet’s ability to produce the expected quantities of minerals.
|
·
|
protect the environment, including the quality of the air and water in the vicinity of exploration, development, and mining operations;
|
·
|
remediate the environmental impacts of those exploration, development, and mining operations;
|
·
|
protect and preserve wetlands and endangered species; and
|
·
|
mitigate negative impacts on certain archaeological and cultural sites.
|
·
|
global and regional supply and demand;
|
·
|
political and economic conditions and production costs in major metal producing regions;
|
·
|
the strength of the United States dollar; and
|
·
|
expectations for inflation.
|
·
|
Success in discovering and developing commercially viable quantities of minerals is the result of a number of factors, including the quality of management, the interpretation of geological data, the level of geological and technical expertise and the quality of land available for exploration;
|
·
|
Operations are subject to a variety of existing laws and regulations relating to exploration and development, permitting procedures, safety precautions, property reclamation, employee health and safety, air and water quality standards, pollution and other environmental protection controls, all of which are subject to change and are becoming more stringent and costly to comply with;
|
·
|
A large number of factors beyond PolyMet’s control, including fluctuations in metal prices and production costs, inflation, the proximity and liquidity of precious metals and energy fuels markets and processing equipment, government regulations, including regulations relating to prices, taxes, royalties, land tenure, land use, importing and exporting of minerals and environmental protection, and other economic conditions, will affect the economic feasibility of mining;
|
·
|
Substantial expenditures are required to construct mining and processing facilities;
|
·
|
Title to mining properties may be subject to other claims; and
|
·
|
In the development stage of a mining operation, PolyMet’s mining activities could be subject to substantial operating risks and hazards, including metal bullion losses, environmental hazards, industrial accidents, labor disputes, encountering unusual or unexpected geologic formations or other geological or grade problems, encountering unanticipated ground or water conditions, cave-ins, pit-wall failures, flooding, rock falls, periodic interruptions due to inclement weather conditions or other unfavorable operating conditions and other acts of God. Some of these risks and hazards are not insurable or may be subject to exclusion or limitation in any coverage which the Company obtains or may not be insured due to economic considerations.
|
·
|
industrial accidents;
|
·
|
railroad accidents;
|
·
|
labor disputes;
|
·
|
environmental hazards;
|
·
|
electricity stoppages;
|
·
|
equipment failures; and
|
·
|
severe weather and other natural phenomena.
|
6.
|
Dividends
|
7.
|
Capital Structure
|
8.
|
Market for Securities
|
TSX
|
NYSE American | |||||
Month
|
High
(C$) |
Low
(C$) |
Volume
|
High
(US$) |
Low
(US$) |
Volume
|
February 2017
|
1.15
|
1.04
|
417,300
|
0.88
|
0.78
|
3,620,500
|
March 2017
|
1.06
|
0.98
|
474,400
|
0.80
|
0.74
|
5,370,900
|
April 2017
|
1.03
|
0.94
|
319,300
|
0.77
|
0.70
|
4,738,300
|
May 2017
|
0.98
|
0.85
|
220,800
|
0.72
|
0.66
|
4,398,900
|
June 2017
|
0.88
|
0.77
|
409,300
|
0.67
|
0.58
|
2,878,800
|
July 2017
|
0.90
|
0.75
|
231,200
|
0.70
|
0.59
|
2,988,100
|
August 2017
|
0.85
|
0.74
|
343,000
|
0.69
|
0.58
|
2,980,500
|
September 2017
|
0.78
|
0.74
|
569,800
|
0.64
|
0.59
|
3,768,300
|
October 2017
|
0.88
|
0.73
|
934,600
|
0.69
|
0.59
|
6,622,000
|
November 2017
|
0.84
|
0.75
|
444,600
|
0.66
|
0.60
|
4,635,600
|
December 2017
|
1.07
|
0.80
|
611,500
|
0.86
|
0.63
|
9,520,100
|
9.
|
Securities Not Listed or Quoted
|
Date of Issuance
|
Number of Stock Options Issued
|
Exercise Price (US$)
|
June 15, 2017
|
1,892,000
|
0.61
|
July 20, 2017
|
250,000
|
0.66
|
Date of Issuance
|
Number of Restricted Share Units Issued
|
Exercise Price (US$)
|
June 15, 2017
|
1,077,869
|
N/A
|
Designation of Class
|
Number of Securities
held in Escrow
|
Percentage of Class
|
Common shares (1)
|
191,000
|
0.01%
|
(1)
|
Common shares are held by Farris, Vaughan, Wills & Murphy LLP and were issued as restricted shares to certain United States employees. Contractual restrictions on transfer ends on receipt of permits to commence construction (95,500 common shares) and commencement of commercial production (95,500 common shares).
|
10.
|
Directors and Officers
|
Name & Residence
|
Position(s) with the Company
|
Principal Occupation during
past five years
|
Director since
|
Dennis Bartlett (4,5)
Arizona, United States |
Director
|
Chief Executive Officer & Director, Cupric Canyon Capital
|
July 19, 2017
|
Jonathan Cherry (4,5)
Minnesota, United States |
Director, President & Chief Executive Officer
|
Same
|
July 16, 2012
|
Mike Ciricillo (4,5)
Arizona, United States |
Director
|
Head of Copper & Smelting and Refining, Glencore
|
July 19, 2017
|
David Dreisinger (2,3,4,5)
British Columbia, Canada |
Director
|
Professor and Chairholder of the Industrial Research and Chair
in Hydrometallurgy, University British Columbia
|
October 3, 2003
|
W. Ian L. Forrest (1,2,3)
Vaud, Switzerland
|
Director, Chairman
|
Chartered Accountant
|
October 3, 2003
|
Helen Harper (2,3,4,5)
Ontario, Canada
|
Director
|
Asset Manager for North America Copper Operations, Glencore
|
July 13, 2016
|
Alan R. Hodnik (1,3,4)
Minnesota, United States
|
Director
|
Chairman, President and Chief Executive Officer, Allete Inc.
|
March 9, 2011
|
Stephen Rowland (1,3)
Connecticut, United States |
Director
|
Executive, Glencore
|
October 30, 2008
|
Michael M. Sill (1,2)
Minnesota, United States
|
Director
|
Chief Executive Officer, Road Machinery & Supplies Co.
|
March 9, 2011
|
Patrick Keenan
Minnesota, United States |
Chief Financial Officer
|
Same, and previously Senior Vice President of Finance and
Treasurer, Newmont Mining Corporation
|
N/A
|
Bradley Moore
Minnesota, United States |
Executive Vice President, Environmental &
Governmental Affairs
|
Same
|
N/A
|
Notes: | (1) | Member of the Compensation Committee. | |
(2) | Member of the Audit Committee. Helen Harper is a non-voting participant. | ||
(3) | Member of the Nominating and Corporate Governance Committee. Helen Harper and Stephen Rowland are non-voting participants. | ||
(4) | Member of the Health, Safety, Environment and Communities Committee. | ||
(5) | Member of the Technical Steering Committee. |
11.
|
Legal Proceedings and Regulatory Actions
|
12.
|
Interest of Management and Other Material Transactions
|
13.
|
Transfer Agent and Registrar
|
14.
|
Material Contracts
|
·
|
Acquisition of the mine site lease, see Item 4 for a complete description;
|
·
|
Acquisition of the Erie Plant and associated infrastructure acquired in the Asset Purchase Agreements I and II, see Item 4 for a complete description; and
|
·
|
Financing agreements entered into with Glencore, see below for a complete description.
|
·
|
Equity – five separate agreements comprising $25.0 million placement of PolyMet common shares in calendar 2009 in two tranches; a $30.0 million placement of PolyMet common shares in calendar 2010 in three tranches; a $20.0 million placement of PolyMet common shares in calendar 2011 in one tranche; a $20.960 million purchase of PolyMet common shares in the 2013 Rights Offering; and a $10.583 million purchase of PolyMet common shares in the 2016 Private Placement;
|
·
|
Convertible debt (“Glencore Convertible Debt”) – agreement comprising $25.0 million initial principal secured convertible debentures drawn in four tranches;
|
·
|
Non-convertible debt (“Glencore Non-Convertible Debt”) – four separate agreements comprising $30.0 million initial principal secured debentures in calendar 2015 drawn in four tranches; an $11.0 million initial principal secured debenture in calendar 2016 drawn in one tranche; a $14.0 million initial principal secured debenture in calendar 2016 drawn in four tranches; and a $20.0 million initial principal secured debenture in calendar 2017 drawn in two tranches. Subsequent to December 31, 2017, a fifth separate agreement was entered into comprising up to $80.0 million initial principal secured debentures in calendar 2018 to be drawn in five tranches at the Company’s option;
|
·
|
Marketing Agreement whereby Glencore committed to purchase all of the Company’s production of concentrates, metal, or intermediate products on market terms at the time of delivery for at least the first five years of production; and
|
·
|
Corporate Governance Agreement whereby from January 1, 2014 as long as Glencore holds 10% or more of PolyMet's shares (on a fully diluted basis), Glencore has the right, but not obligation, to nominate at least one director and not more than the number of directors proportionate to Glencore's fully diluted ownership of PolyMet, rounded down to the nearest whole number, such number to not exceed 49% of the total board.
|
·
|
92,836,072 shares representing 29.1% of PolyMet's issued shares;
|
·
|
Glencore Convertible Debt exchangeable through the exercise of an exchange warrant (“Exchange Warrant”) at $1.2696 per share into 38,660,854 common shares of PolyMet (including capitalized and accrued interest as at December 31, 2017), and where the exercise price and the number of shares issuable are subject to conventional anti-dilution provisions;
|
·
|
Warrants to purchase 7,055,626 common shares at $1.00 per share at any time until October 28, 2021, subject to acceleration on the earlier of receipt of permits necessary to construct NorthMet or the twelve month anniversary of the issue date provided the 20-day VWAP of PolyMet common shares is equal to or greater than $1.50 (“Acceleration Triggering Event”), and where the exercise price and the number of warrants are subject to conventional anti-dilution provisions; and
|
·
|
Warrants to purchase 625,000 common shares at $0.7797 per share at any time until October 28, 2021, and where the exercise price and the number of warrants are subject to conventional anti-dilution provisions.
|
15.
|
Interest of Experts
|
16.
|
Controls and Procedures
|
17.
|
Audit Committee
|
Fiscal Year Ending
|
Audit Fees
|
Audit Related Fees
|
Tax Fees
|
All Other Fees
|
December 31, 2017
|
CDN $139,000
|
CDN $54,000
|
CDN $35,451
|
CDN $Nil
|
January 31, 2017
|
CDN $199,000
|
CDN $54,000
|
CDN $21,060
|
CDN $Nil
|
18.
|
Additional Information
|
1. |
To assist the Board of Directors in fulfilling its fiduciary responsibilities’ relating to the Company's quality and integrity of accounting, auditing, and reporting practices and the integrity of the Company's internal accounting controls and management information systems;
|
2. |
To review with the auditors, internal accountants and management of the Company:
|
a. |
any audited financial statement of the Company, including any such statement that is to be presented to an annual general meeting or provided to shareholders or filed with regulatory authorities and including any audited financial statement contained in a prospectus, registration statement or other similar document, and
|
b. |
the financial disclosure in each Annual Report and Management Discussion and Analysis of the Company which accompanies such audited financial statement and in each such filing, prospectus, registration statement or other similar document;
|
3. |
To review with the internal accountants and management of the Company:
|
a. |
any unaudited financial statement of the Company, including any such statement that is to be presented to an annual general meeting or provided to shareholders or filed with regulatory authorities and including any unaudited financial statement contained in a prospectus, registration statement, Quarterly Report or other similar document,
|
b. |
the financial disclosure in each Quarterly Report and when applicable, Management Discussion and Analysis of the Company accompanying such unaudited financial statement and in each such filing, prospectus, registration statement or other similar document which accompanies such unaudited financial statement, and
|
c. |
in connection with the Form 40-F of the Company, review (i) Management's disclosure to the Committee and the independent auditor under Section 302 of the Sarbanes-Oxley Act, including identified changes in internal control over financial reporting; and (ii) the contents of the Chief Executive Officer and the Chief Financial Officer certificates to be filed under Sections 302 and 906 of the Sarbanes-Oxley Act and the process conducted to support the certifications;
|
4. |
To otherwise review as required and report to the Board of Directors with respect to the adequacy of internal accounting and audit procedures and the adequacy of the Company’s management information systems;
|
5. |
To otherwise ensure that no restrictions are placed by Management on the scope of the auditors review and examination of the Company’s accounts;
|
6. |
To appoint or replace the independent auditor and approve the terms on which the independent auditor is engaged for the ensuing fiscal year;
|
7. |
At least annually, evaluate the independent auditor's qualifications, performance, and independence, including that of the lead partner. The evaluation will include obtaining a written report from the independent auditor describing the firm's internal quality control procedures; any material issues raised by the most recent Public Company Accounting Oversight Board inspection, internal quality control review, or PCAOB review, of the firm or by any inquiry or investigation by governmental or professional authorities within the past five years, concerning an independent audit or audits carried out by the firm, and any steps taken to deal with those issues; and all relationships between the independent auditor and the Company;
|
8. |
Resolve any disagreements between Management and the independent auditor about financial reporting;
|
9. |
Establish and oversee a policy designating permissible services that the independent auditor may perform for the Company, providing for preapproval of those services by the Committee subject to the de minimis exceptions permitted under applicable rules, and quarterly review of any services approved by the designated member under the policy and the firm's non-audit services and related fees;
|
10. |
Ensure receipt from the independent auditor of a formal written statement delineating all relationships between the auditor and the Company, consistent with applicable requirements of the PCAOB regarding the independent auditor’s communications with the Committee concerning independence, actively engage in a dialogue with the auditor about any disclosed relationships or services that may impact the objectivity and independence of the auditor, and take appropriate action to oversee the independence of the independent auditor;
|
11. |
Advise the Board about the Committee's determination whether the Committee consists of three or more members who are Financially Literate, including at least one member who has financial sophistication and is a financial expert;
|
12. |
Inquire of Management and the independent auditor about significant risks or exposures, review the Company's policies for risk assessment and risk management, and assess the steps Management has taken to control such risk to the Company, except as to those risks for which oversight has been assigned to other committees of the Board or retained by the Board;
|
13. |
Review with Management and the independent auditor:
|
a. |
The Company's annual assessment of the effectiveness of its internal controls and the independent auditor's attestation,
|
b. |
The adequacy of the Company's internal controls, including computerized information system controls and security,
|
c. |
Any "material weakness" or "significant deficiency" in the design or operation of internal control over financial reporting, and any steps taken to resolve the issue, and
|
d. |
Any related significant findings and recommendations of the independent auditor and internal audit together with Management's responses;
|
14. |
Develop, review, and oversee procedures for (i) receipt, retention, and treatment of complaints received by the Company regarding accounting, internal accounting controls, and auditing matters and (ii) the confidential, anonymous submission of employee concerns regarding accounting or auditing matters;
|
15. |
Review policies and procedures with respect to transactions between the Company and officers and directors, or affiliates of officers or directors, or transactions that are not a normal part of the Company’s business, and review and approve those related-party transactions that would be disclosed pursuant to SEC Regulation S-K, Item 404;
|
16. |
Review with Management and the independent auditor at least annually the Company's critical accounting policies and significant judgments and estimates, including any significant changes in the Company's selection or application of accounting principles and the effect of regulatory and accounting initiatives on the financial statements of the Company;
|
17. |
To ensure that the Company disseminates information concerning its financial position and results of operations to the public in a timely fashion;
|
18. |
Complete an annual evaluation of the Committee’s performance;
|
19. |
Include a copy of the Committee charter as an appendix to the proxy statement at least once every three years, or disclose annually in the proxy statement where the charter can be found on the Company's website;
|
20. |
Set clear hiring policies for the Company's hiring of employees or former employees of the independent auditor who were engaged in the Company's account, and ensure the policies comply with any regulations applicable to the Company; and
|
21. |
Review with Management the Company’s policies and processes for tax planning and compliance.
|
/s/ Jonathan Cherry
|
|
/s/ Patrick Keenan |
|
Jonathan Cherry
|
|
Patrick Keenan
|
|
President and Chief Executive Officer
|
|
Chief Financial Officer
|
|
December 31,
2017
|
January 31,
2017
|
|||||||
ASSETS
|
||||||||
Current
|
||||||||
Cash
|
$
|
6,931
|
$
|
18,674
|
||||
Amounts receivable (Note 5)
|
432
|
749
|
||||||
Prepaid expenses
|
811
|
813
|
||||||
8,174
|
20,236
|
|||||||
Non-Current
|
||||||||
Amounts receivable (Note 5)
|
2,533
|
2,012
|
||||||
Mineral Property, Plant and Equipment (Notes 3 and 4)
|
395,205
|
364,913
|
||||||
Intangible (Note 5)
|
3,130
|
1,888
|
||||||
Total Assets
|
409,042
|
389,049
|
||||||
LIABILITIES
|
||||||||
Current
|
||||||||
Accounts payable and accruals
|
3,630
|
3,188
|
||||||
Convertible debt (Notes 7 and 8)
|
49,067
|
-
|
||||||
Non-convertible debt (Notes 7 and 9)
|
92,268
|
-
|
||||||
Environmental rehabilitation provision (Note 6)
|
1,266
|
781
|
||||||
146,231
|
3,969
|
|||||||
Non-Current
|
||||||||
Convertible debt (Notes 7 and 8)
|
-
|
42,154
|
||||||
Non-convertible debt (Notes 7 and 9)
|
-
|
65,752
|
||||||
Environmental rehabilitation provision (Note 6)
|
64,136
|
69,845
|
||||||
Total Liabilities
|
210,367
|
181,720
|
||||||
SHAREHOLDERS’ EQUITY
|
||||||||
Share Capital (Note 10)
|
269,516
|
268,895
|
||||||
Share Premium
|
1,151
|
1,151
|
||||||
Equity Reserves
|
60,505
|
59,682
|
||||||
Deficit
|
(132,497
|
)
|
(122,399
|
)
|
||||
Total Shareholders’ Equity
|
198,675
|
207,329
|
||||||
Total Liabilities and Shareholders’ Equity
|
$
|
409,042
|
$
|
389,049
|
||||
ON BEHALF OF THE BOARD OF DIRECTORS:
|
|
|
|
|
|
/s/ Jonathan Cherry , Director
|
|
/s/ Dr. David Dreisinger , Director
|
For the 11
months ended
December 31, 2017
|
For the 12
months ended
January 31, 2017
|
|||||||
General and Administrative Expenses
|
||||||||
Salaries, directors’ fees and related benefits
|
$
|
2,209
|
$
|
2,199
|
||||
Share-based compensation (Note 10)
|
1,318
|
1,808
|
||||||
Professional fees
|
784
|
432
|
||||||
Regulatory fees
|
137
|
154
|
||||||
Investor and public relations
|
1,036
|
1,227
|
||||||
Office and administration
|
637
|
756
|
||||||
Amortization
|
4
|
18
|
||||||
Total General and Administration Expenses
|
6,125
|
6,594
|
||||||
Other Expenses (Income)
|
||||||||
Finance costs - net (Note 11)
|
2,233
|
2,672
|
||||||
(Gain) / loss on foreign exchange
|
6
|
(7
|
)
|
|||||
Gain on disposal of financial instrument (Note 5)
|
(36
|
)
|
(8
|
)
|
||||
Loss on disposal of intangible (Note 5)
|
1,324
|
-
|
||||||
Loss on disposal of lands (Note 5)
|
469
|
-
|
||||||
Other income
|
(23
|
)
|
(22
|
)
|
||||
Total Other Expenses
|
3,973
|
2,635
|
||||||
Loss for the Period
|
10,098
|
9,229
|
||||||
Other Comprehensive Loss (Income)
|
||||||||
Reclassified gain on disposal of financial instrument (Note 5)
|
36
|
8
|
||||||
Items that may be subsequently reclassified to profit or loss:
|
||||||||
Unrealized gain on financial instrument (Note 5)
|
166
|
(221
|
)
|
|||||
Other Comprehensive Income for the Period
|
202
|
(213
|
)
|
|||||
Total Comprehensive Loss for the Period – Net of Tax
|
$
|
10,300
|
$
|
9,016
|
||||
Basic and Diluted Loss per Share
|
$
|
(0.03
|
)
|
$
|
(0.03
|
)
|
||
Weighted Average Number of Shares
|
318,891,961
|
288,998,010
|
Share Capital (authorized = unlimited)
|
Equity Reserves
|
|||||||||||||||||||||||||||||||
Accumulated
|
Total
|
|||||||||||||||||||||||||||||||
Issued
|
Share
|
Share
|
Contributed
|
Other Comp
|
Equity
|
Shareholders'
|
||||||||||||||||||||||||||
Shares
|
Capital
|
Premium
|
Surplus
|
Inc / (Loss)
|
Reserves
|
Deficit
|
Equity
|
|||||||||||||||||||||||||
Balance - January 31, 2016
|
277,557,082
|
$
|
242,917
|
$
|
1,151
|
$
|
53,560
|
$
|
199
|
$
|
53,759
|
$
|
(113,170
|
)
|
$
|
184,657
|
||||||||||||||||
Total comprehensive loss for the period
|
-
|
-
|
-
|
-
|
213
|
213
|
(9,229
|
)
|
(9,016
|
)
|
||||||||||||||||||||||
Private placement and issuance costs (Note 10)
|
40,074,418
|
25,091
|
-
|
3,444
|
-
|
3,444
|
-
|
28,535
|
||||||||||||||||||||||||
Refinance of debentures (Notes 7, 8 and 9)
|
-
|
-
|
-
|
250
|
-
|
250
|
-
|
250
|
||||||||||||||||||||||||
Payment of land purchase options (Note 10)
|
241,376
|
200
|
-
|
-
|
-
|
-
|
-
|
200
|
||||||||||||||||||||||||
Vesting of restricted shares and RSU’s (Note 10)
|
537,481
|
575
|
-
|
(694
|
)
|
-
|
(694
|
)
|
-
|
(119
|
)
|
|||||||||||||||||||||
Share-based compensation (Note 10)
|
135,162
|
112
|
-
|
2,406
|
-
|
2,406
|
-
|
2,518
|
||||||||||||||||||||||||
Bonus share cost amortization (Note 10)
|
-
|
-
|
-
|
304
|
-
|
304
|
-
|
304
|
||||||||||||||||||||||||
Balance - January 31, 2017
|
318,545,519
|
$
|
268,895
|
$
|
1,151
|
$
|
59,270
|
$
|
412
|
$
|
59,682
|
$
|
(122,399
|
)
|
$
|
207,329
|
||||||||||||||||
Total comprehensive loss for the period
|
-
|
-
|
-
|
-
|
(202
|
)
|
(202
|
)
|
(10,098
|
)
|
(10,300
|
)
|
||||||||||||||||||||
Payment of land purchase options (Note 10)
|
396,616
|
256
|
-
|
-
|
-
|
-
|
-
|
256
|
||||||||||||||||||||||||
Vesting of restricted shares and RSU’s (Note 10)
|
360,963
|
365
|
-
|
(365
|
)
|
-
|
(365
|
)
|
-
|
-
|
||||||||||||||||||||||
Share-based compensation (Note 10)
|
-
|
-
|
-
|
1,111
|
-
|
1,111
|
-
|
1,111
|
||||||||||||||||||||||||
Bonus share cost amortization (Note 10)
|
-
|
-
|
-
|
279
|
-
|
279
|
-
|
279
|
||||||||||||||||||||||||
Balance – December 31, 2017
|
319,303,098
|
$
|
269,516
|
$
|
1,151
|
$
|
60,295
|
$
|
210
|
$
|
60,505
|
$
|
(132,497
|
)
|
$
|
198,675
|
For the 11
months ended
December 31, 2017
|
For the 12
months ended
January 31, 2017
|
|||||||
Operating Activities
|
||||||||
Loss for the period
|
$
|
(10,098
|
)
|
$
|
(9,229
|
)
|
||
Items not involving cash:
|
||||||||
Amortization
|
4
|
18
|
||||||
Environmental rehabilitation provision accretion (Note 6)
|
1,776
|
1,465
|
||||||
Share-based compensation (Note 10)
|
1,318
|
1,808
|
||||||
Unrealized loss on foreign exchange
|
1
|
4
|
||||||
Loss on disposal of intangible (Note 5)
|
1,324
|
-
|
||||||
Loss on disposal of lands (Note 5)
|
469
|
-
|
||||||
Gain on disposal of financial instruments (Note 5)
|
(36
|
)
|
(8
|
)
|
||||
Changes in non-cash working capital:
|
||||||||
Amounts receivable
|
23
|
(40
|
)
|
|||||
Prepaid expenses
|
2
|
472
|
||||||
Accounts payable and accruals
|
227
|
47
|
||||||
Net cash used in operating activities
|
(4,990
|
)
|
(5,463
|
)
|
||||
Financing Activities
|
||||||||
Share issuance proceeds, net of costs (Note 10)
|
-
|
28,535
|
||||||
Debenture funding, net of costs (Notes 7 and 9)
|
14,917
|
13,943
|
||||||
Debenture repayment (Notes 7 and 9)
|
-
|
(5,111
|
)
|
|||||
Cash settled RSU’s (Note 10)
|
-
|
(119
|
)
|
|||||
Net cash provided by financing activities
|
14,917
|
37,248
|
||||||
Investing Activities
|
||||||||
Property, plant and equipment purchases (Note 4)
|
(21,030
|
)
|
(23,445
|
)
|
||||
Financial instrument disposal proceeds (Note 5)
|
171
|
82
|
||||||
Intangible purchases (Note 5)
|
(810
|
)
|
-
|
|||||
Net cash used in investing activities
|
(21,669
|
)
|
(23,363
|
)
|
||||
Net Increase (Decrease) in Cash
|
(11,742
|
)
|
8,422
|
|||||
Effect of foreign exchange on Cash
|
(1
|
)
|
(4
|
)
|
||||
Cash - Beginning of period
|
18,674
|
10,256
|
||||||
Cash - End of period
|
$
|
6,931
|
$
|
18,674
|
||||
Supplemental information – non-cash investing and financing
|
||||||||
Accounts payable and accruals
|
$
|
(60
|
)
|
$
|
(207
|
)
|
||
Transfer from PP&E to intangible (Note 5)
|
2,320
|
-
|
||||||
Debt accretion and capitalized interest (Notes 7, 8 and 9)
|
18,512
|
15,103
|
||||||
Share-based compensation (Note 10)
|
232
|
710
|
||||||
Bonus share amortization (Note 10)
|
279
|
304
|
||||||
Fair value of shares issued for land options (Note 10)
|
$
|
256
|
$
|
200
|
1.
|
Nature of Business and Liquidity
|
2.
|
Summary of Significant Accounting Policies
|
3.
|
Mineral Property Agreements
|
4.
|
Mineral Property, Plant and Equipment
|
Net Book Value
|
NorthMet
|
Other fixed assets
|
Total
|
|||||||||
Balance at January 31, 2016
|
$
|
321,559
|
90
|
321,649
|
||||||||
Additions
|
38,767
|
89
|
38,856
|
|||||||||
Changes to rehabilitation provision (Note 6)
|
4,467
|
-
|
4,467
|
|||||||||
Amortization
|
-
|
(59
|
)
|
(59
|
)
|
|||||||
Balance at January 31, 2017
|
364,793
|
120
|
364,913
|
|||||||||
Additions
|
39,474
|
32
|
39,506
|
|||||||||
Disposals (Note 5)
|
(2,789
|
)
|
-
|
(2,789
|
)
|
|||||||
Changes to rehabilitation provision (Note 6)
|
(6,363
|
)
|
-
|
(6,363
|
)
|
|||||||
Amortization
|
-
|
(62
|
)
|
(62
|
)
|
|||||||
Balance at December 31, 2017
|
$
|
395,115
|
$
|
90
|
$
|
395,205
|
NorthMet
|
December 31,
2017
|
January 31,
2017
|
||||||
Mineral property acquisition and interest costs
|
$
|
86,863
|
$
|
68,352
|
||||
Mine plan and development
|
50,250
|
47,833
|
||||||
Environmental
|
122,396
|
111,421
|
||||||
Consulting and wages
|
52,965
|
49,715
|
||||||
Reclamation and remediation (Note 6)
|
60,289
|
66,652
|
||||||
Site activities
|
21,403
|
19,871
|
||||||
Mine equipment
|
949
|
949
|
||||||
Total
|
$
|
395,115
|
$
|
364,793
|
5.
|
Intangible and EIP Receivable
|
11 months ended
December 31, 2017
|
12 months ended
January 31, 2017
|
|||||||
Intangible – beginning of period
|
$
|
1,888
|
$
|
1,888
|
||||
Additions
|
3,130
|
-
|
||||||
Disposals
|
(1,888
|
)
|
-
|
|||||
Intangible – end of period
|
$
|
3,130
|
$
|
1,888
|
11 months ended
December 31, 2017
|
12 months ended
January 31, 2017
|
|||||||
EIP Receivable – beginning of period
|
$
|
2,656
|
$
|
2,517
|
||||
Initial recognition
|
564
|
-
|
||||||
Collections
|
(171
|
)
|
(82
|
)
|
||||
Gain (Loss) on re-measurement
|
(166
|
)
|
221
|
|||||
EIP Receivable – end of period
|
2,883
|
2,656
|
||||||
Less current portion
|
(350
|
)
|
(644
|
)
|
||||
Non-current portion
|
$
|
2,533
|
$
|
2,012
|
6.
|
Environmental Rehabilitation Provision
|
11 months ended
December 31, 2017
|
12 months ended
January 31, 2017
|
|||||||
Environmental Rehabilitation Provision – beginning of period
|
$
|
70,626
|
$
|
65,684
|
||||
Change in estimate
|
(6,363
|
)
|
4,467
|
|||||
Liabilities discharged
|
(637
|
)
|
(990
|
)
|
||||
Accretion expense
|
1,776
|
1,465
|
||||||
Environmental Rehabilitation Provision – end of period
|
65,402
|
70,626
|
||||||
Less current portion
|
(1,266
|
)
|
(781
|
)
|
||||
Non-current portion
|
$
|
64,136
|
$
|
69,845
|
7.
|
Glencore Financing
|
·
|
Equity – five separate agreements comprising $25.0 million placement of PolyMet common shares in calendar 2009 in two tranches; a $30.0 million placement of PolyMet common shares in calendar 2010 in three tranches; a $20.0 million placement of PolyMet common shares in calendar 2011 in one tranche; a $20.960 million purchase of PolyMet common shares in the 2013 Rights Offering; and a $10.583 million purchase of PolyMet common shares in the 2016 Private Placement (see Note 10);
|
·
|
Convertible debt (“Glencore Convertible Debt”) – agreement comprising $25.0 million initial principal secured convertible debentures drawn in four tranches (see Notes 8 and 16);
|
·
|
Non-convertible debt (“Glencore Non-Convertible Debt”) – four separate agreements comprising $30.0 million initial principal secured debentures in calendar 2015 drawn in four tranches; an $11.0 million initial principal secured debenture in calendar 2016 drawn in one tranche; $14.0 million initial principal secured debenture in calendar 2016 drawn in four tranches; and a $20.0 million initial principal secured debenture in calendar 2017 drawn and to be drawn in two tranches (see Note 9). Subsequent to December 31, 2017, a fifth separate agreement was entered into comprising up to $80.0 million initial principal secured debentures in calendar 2018 to be drawn in five tranches at the Company’s option (see Note 16);
|
·
|
Marketing Agreement whereby Glencore committed to purchase all of the Company’s production of concentrates, metal, or intermediate products on market terms at the time of delivery for at least the first five years of production; and
|
·
|
Corporate Governance Agreement whereby from January 1, 2014 as long as Glencore holds 10% or more of PolyMet's shares (on a fully diluted basis), Glencore has the right, but not obligation, to nominate at least one director and not more than the number of directors proportionate to Glencore's fully diluted ownership of PolyMet, rounded down to the nearest whole number, such number to not exceed 49% of the total board.
|
·
|
92,836,072 shares representing 29.1% of PolyMet's issued shares (January 31, 2017 - 92,836,072 shares);
|
·
|
Glencore Convertible Debt exchangeable through the exercise of an exchange warrant (“Exchange Warrant”) at $1.2696 per share into 38,660,854 common shares of PolyMet (including capitalized and accrued interest as at December 31, 2017), and where the exercise price and the number of shares issuable are subject to conventional anti-dilution provisions. See Notes 8 and 16 for additional details;
|
·
|
Warrants to purchase 7,055,626 common shares at $1.00 per share at any time until October 28, 2021, subject to acceleration on the earlier of receipt of permits necessary to construct NorthMet or the twelve month anniversary of the issue date provided the 20-day VWAP of PolyMet common shares is equal to or greater than $1.50 (“Acceleration Triggering Event”), and where the exercise price and the number of warrants are subject to conventional anti-dilution provisions. See 2016 Agreements below for additional details; and
|
·
|
Warrants to purchase 625,000 common shares at $0.7797 per share at any time until October 28, 2021, and where the exercise price and the number of warrants are subject to conventional anti-dilution provisions. See 2016 Agreements below for additional details.
|
8.
|
Convertible Debt
|
11 months ended
December 31, 2017
|
12 months ended
January 31, 2017
|
|||||||
Convertible Debt – beginning of period
|
$
|
42,154
|
$
|
35,986
|
||||
Accretion and capitalized interest
|
6,913
|
6,168
|
||||||
Convertible Debt – end of period
|
49,067
|
42,154
|
||||||
Less current portion
|
(49,067
|
)
|
-
|
|||||
Non-current portion
|
$
|
-
|
$
|
42,154
|
9.
|
Non-Convertible Debt
|
11 months ended
December 31, 2017
|
12 months ended
January 31, 2017
|
|||||||
IRRRB – beginning of period
|
$
|
-
|
$
|
4,962
|
||||
Accretion and capitalized interest
|
-
|
149
|
||||||
Repayment
|
-
|
(5,111
|
)
|
|||||
IRRRB – end of period (Note 9a)
|
-
|
-
|
||||||
Glencore – beginning of period
|
65,752
|
43,023
|
||||||
Accretion and capitalized interest
|
11,599
|
8,786
|
||||||
Funding, net of costs
|
14,917
|
13,943
|
||||||
Glencore – end of period (Note 9b)
|
92,268
|
65,752
|
||||||
Total Non-Convertible Debt
|
92,268
|
65,752
|
||||||
Less current portion
|
(92,268
|
)
|
-
|
|||||
Non-current portion
|
$
|
-
|
$
|
65,752
|
a)
|
IRRRB
|
b)
|
Glencore
|
b) |
Glencore - Continued
|
10.
|
Share Capital
|
a) |
Issuances for Cash and Land Acquisition
|
b) |
Share-Based Compensation
|
c) |
Share Options
|
11 months ended
December 31, 2017
|
12 months ended
January 31, 2017
|
|||||||||||||||
Number of Options
|
Weighted Average
Exercise Price
|
Number of Options
|
Weighted Average
Exercise Price
|
|||||||||||||
Outstanding – beginning of period
|
20,962,002
|
1.10
|
18,975,002
|
1.29
|
||||||||||||
Granted
|
2,142,000
|
0.62
|
5,502,000
|
0.76
|
||||||||||||
Expired
|
(1,445,000
|
)
|
2.19
|
(3,515,000
|
)
|
1.64
|
||||||||||
Outstanding – end of period
|
21,659,002
|
0.98
|
20,962,002
|
1.10
|
c) |
Share Options - Continued
|
11 months ended
December 31, 2017
|
12 months ended
January 31, 2017
|
|||||
Risk-free interest rate
|
1.42% to 1.82%
|
1.01% to 1.30%
|
||||
Expected dividend yield
|
-
|
-
|
||||
Expected forfeiture rate
|
-
|
-
|
||||
Expected volatility
|
53.91% to 57.06%
|
55.88% to 59.17%
|
||||
Expected life in years
|
2.50 to 5.00
|
2.50 to 5.00
|
||||
Weighted average fair value of each option
|
$0.22 to $0.32
|
$0.26 to $0.38
|
Range of Exercise Prices
|
Number of options
outstanding
|
Number of options
exercisable
|
Weighted Average
Exercise Price
|
Weighted Average
Remaining Life
|
0.7110 to 0.7977
|
11,754,000
|
10,020,667
|
0.73
|
3.92
|
0.8200 to 0.9972
|
3,839,000
|
3,789,000
|
0.97
|
5.89
|
1.0058 to 1.5000
|
4,096,002
|
4,096,002
|
1.15
|
2.78
|
1.7689 to 2.4886
|
1,665,000
|
1,465,000
|
2.01
|
2.15
|
2.6273 to 3.0695
|
305,000
|
182,500
|
2.81
|
0.74
|
21,659,002
|
19,553,169
|
0.98
|
3.87
|
d) |
Restricted Shares and Restricted Share Units
|
11 months ended
December 31, 2017
|
12 months ended
January 31, 2017
|
|||||||
Outstanding - beginning of period
|
2,618,020
|
990,471
|
||||||
Issued
|
1,077,869
|
2,303,239
|
||||||
Forfeited
|
(8,896
|
)
|
-
|
|||||
Vested
|
(405,963
|
)
|
(675,690
|
)
|
||||
Outstanding - end of period
|
3,281,030
|
2,618,020
|
e) |
Bonus Shares
|
11 months ended
December 31, 2017
|
12 months ended
January 31, 2017
|
|||
Allocated
|
Authorized
& Unissued
|
Allocated
|
Authorized
& Unissued
|
|
Outstanding – beginning of period
|
3,150,000
|
3,640,000
|
3,150,000
|
3,640,000
|
Outstanding – end of period
|
3,150,000
|
3,640,000
|
3,150,000
|
3,640,000
|
f) |
Share Purchase Warrants
|
11 months ended
December 31, 2017
|
12 months ended
January 31, 2017
|
|||||||||||||||
Number of
Purchase
Warrants
|
Weighted
Average
Exercise Price
|
Number of
Purchase
Warrants
|
Weighted
Average
Exercise Price
|
|||||||||||||
Outstanding – beginning of period
|
27,780,213
|
$
|
0.95
|
6,919,287
|
$
|
0.91
|
||||||||||
Issued
|
-
|
-
|
21,322,212
|
0.99
|
||||||||||||
Expiration
|
(6,458,001
|
)
|
(0.82
|
)
|
(461,286
|
)
|
(2.17
|
)
|
||||||||
Outstanding – end of period
|
21,322,212
|
$
|
0.99
|
27,780,213
|
$
|
0.95
|
11 months ended
December 31, 2017
|
12 months ended
January 31, 2017
|
||||||
Risk-free interest rate
|
-
|
0.98% to 1.33%
|
|||||
Expected dividend yield
|
-
|
-
|
|||||
Expected forfeiture rate
|
-
|
-
|
|||||
Expected volatility
|
-
|
55.58% to 58.47%
|
|||||
Expected life in years
|
-
|
2.50 to 5.00
|
|||||
Weighted average fair value of each warrant (1)
|
-
|
$0.19 to $0.40
|
(1) |
The fair value of share purchase warrants was used in determining the allocation of net proceeds under the relative fair value method for Placement Units on October 18, 2016 and Glencore Units on October 28, 2016. See Notes 7 and 10a for additional details.
|
11 months ended
December 31, 2017
|
12 months ended
January 31, 2017
|
|||||||
Debt accretion and capitalized interest:
Convertible debt (Notes 7 and 8)
|
$
|
6,913
|
$
|
6,168
|
||||
Non-convertible debt (Notes 7 and 9)
|
11,599
|
8,935
|
||||||
Environmental rehabilitation provision accretion (Note 6)
|
1,776
|
1,465
|
||||||
Other finance costs
|
562
|
1,261
|
||||||
Less: amounts capitalized on qualifying assets
|
(18,512
|
)
|
(15,103
|
)
|
||||
Finance costs
|
2,338
|
2,726
|
||||||
Interest income:
Bank deposits
|
(105
|
)
|
(54
|
)
|
||||
Finance income
|
(105
|
)
|
(54
|
)
|
||||
Finance costs - net
|
$
|
2,233
|
$
|
2,672
|
11 months ended
December 31, 2017
|
12 months ended
January 31, 2017
|
|||||||
Salaries and other short-term benefits
|
$
|
1,898
|
$
|
1,828
|
||||
Other long-term benefits
|
42
|
44
|
||||||
Share-based payment (1)
|
836
|
1,709
|
||||||
Total
|
$
|
2,776
|
$
|
3,581
|
(1)
|
Share-based payment represents the amount capitalized or expensed during the period (see Note 10).
|
a) |
Effective tax rate
|
11 months ended
December 31, 2017
|
12 months ended
January 31, 2017
|
|||||||
Loss for the year before taxes
|
$
|
(10,098
|
)
|
$
|
(9,229
|
)
|
||
Canadian statutory tax rate
|
27.0
|
%
|
26.0
|
%
|
||||
Expected tax recovery
|
(2,726
|
)
|
(2,400
|
)
|
||||
Difference in foreign tax rates
|
(84
|
)
|
(413
|
)
|
||||
Non-deductible items
|
356
|
470
|
||||||
Change in tax rate
|
5,025
|
-
|
||||||
Change in unrecognized deferred tax and other items
|
(2,571
|
)
|
2,343
|
|||||
Income Tax Expense / (Recovery)
|
$
|
-
|
$
|
-
|
b)
|
Deferred income tax assets and liabilities
|
|
11 months ended
December 31, 2017
|
12 months ended
January 31, 2017
|
||||||
Non-capital loss carry forward assets
|
$
|
27,799
|
$
|
35,992
|
||||
Mineral property acquisition, exploration and development costs
|
(27,799
|
)
|
(35,992
|
)
|
||||
Other
|
-
|
-
|
||||||
Net deferred income tax liabilities
|
$
|
-
|
$
|
-
|
11 months ended
December 31, 2017
|
12 months ended
January 31, 2017
|
|||||||
Non-capital loss carry forward assets
|
$
|
22,786
|
$
|
25,619
|
||||
Capital loss carry forward assets
|
360
|
347
|
||||||
Intercompany receivable assets
|
2,109
|
2,031
|
||||||
Other assets
|
1,159
|
1,059
|
||||||
Unrecognized deferred income tax assets
|
$
|
26,414
|
$
|
29,056
|
Contractual Obligations
|
Carrying
Value
|
Contractual
Cash flows
|
Less than
1 year
|
1 – 3
years
|
3 – 5
years
|
More than
5 years
|
||||||||||||||||||
Accounts payable and accruals
|
$
|
3,630
|
$
|
3,630
|
$
|
3,630
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||||||||
Convertible debt (Note 8)
|
49,067
|
51,183
|
51,183
|
-
|
-
|
-
|
||||||||||||||||||
Non-convertible debt (Note 9)
|
92,268
|
96,294
|
96,294
|
-
|
-
|
-
|
||||||||||||||||||
Firm commitments
|
-
|
1,529
|
448
|
581
|
500
|
-
|
||||||||||||||||||
Total
|
$
|
144,965
|
$
|
152,636
|
$
|
151,555
|
$
|
581
|
$
|
500
|
$
|
-
|
Loans and
receivables
|
Available
for sale
|
Othe
financial
liabilities
|
Total
carrying value
|
|||||||||||||
Financial assets
|
||||||||||||||||
Cash
|
$
|
6,931
|
$
|
-
|
$
|
-
|
$
|
6,931
|
||||||||
Amounts receivable
|
82
|
2,883
|
-
|
2,965
|
||||||||||||
Total financial assets
|
$
|
7,013
|
$
|
2,883
|
$
|
-
|
$
|
9,896
|
||||||||
Financial liabilities
|
||||||||||||||||
Accounts payable and accruals
|
$
|
-
|
$
|
-
|
$
|
3,630
|
$
|
3,630
|
||||||||
Convertible debt
|
-
|
-
|
49,067
|
49,067
|
||||||||||||
Non-convertible debt
|
-
|
-
|
92,268
|
92,268
|
||||||||||||
Total financial liabilities
|
$
|
-
|
$
|
-
|
$
|
144,965
|
$
|
144,965
|
Loans and
receivables
|
Available
for sale
|
Other
financial
liabilities
|
Total
carrying value
|
|||||||||||||
Financial assets
|
||||||||||||||||
Cash
|
$
|
18,674
|
$
|
-
|
$
|
-
|
$
|
18,674
|
||||||||
Amounts receivable
|
105
|
2,656
|
-
|
2,761
|
||||||||||||
Total financial assets
|
$
|
18,779
|
$
|
2,656
|
$
|
-
|
$
|
21,435
|
||||||||
Financial liabilities
|
||||||||||||||||
Accounts payable and accruals
|
$
|
-
|
$
|
-
|
$
|
3,188
|
$
|
3,188
|
||||||||
Convertible debt
|
-
|
-
|
42,154
|
42,154
|
||||||||||||
Non-convertible debt
|
-
|
-
|
65,752
|
65,752
|
||||||||||||
Total financial liabilities
|
$
|
-
|
$
|
-
|
$
|
111,094
|
$
|
111,094
|
Level 1 – |
Quoted prices (unadjusted) in active markets for identical assets or liabilities.
|
Level 2 – |
Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly.
|
Level 3 – |
Inputs for the asset or liability that are not based on observable market data.
|
December 31,
2017
|
January 31,
2017
|
|||||||
Cash
|
$
|
6,931
|
$
|
18,674
|
||||
Convertible debt
|
49,067
|
42,154
|
||||||
Non-convertible debt
|
$
|
92,268
|
$
|
65,752
|
Period
|
Length of
Period
|
Ending of Period
|
Comparative Period
|
Filing Deadline
|
Interim financials (1st Quarter)
|
3 months
|
Mar. 31, 2018
|
3 months ended
Apr. 30, 2017
|
May 15, 2018
|
Interim financials (2nd Quarter)
|
6 months
|
Jun. 30, 2018
|
6 months ended
Jul. 31, 2017
|
Aug 14, 2018
|
Interim financials (3rd Quarter)
|
9 months
|
Sep. 30, 2018
|
9 months ended
Oct. 31, 2017
|
Nov 14, 2018
|
Audited Annual Financial Statements
|
12 months
|
Dec. 31, 2018
|
11 months ended
Dec. 31, 2017
|
Apr 1, 2019
|
·
|
Obtaining permits on a timely basis;
|
·
|
Raising the funds necessary to develop the NorthMet Project and continue operations;
|
·
|
Execution of prospective business plans; and
|
·
|
Complying with applicable government regulations and standards.
|
·
|
Changes in general economic and business conditions, including changes in interest rates and exchange rates;
|
·
|
Changes in the resource market including prices of natural resources, costs associated with mineral exploration and development, and other economic conditions;
|
·
|
Natural phenomena;
|
·
|
Actions by governments and authorities including changes in government regulation;
|
·
|
Uncertainties associated with legal proceedings; and
|
·
|
Other factors, many of which are beyond the Company’s control.
|
·
|
In January 2017, the United States Forest Service (“USFS”) issued its Final Record of Decision (“ROD”) authorizing a land exchange to transfer title of the surface rights over and around the NorthMet mineral rights to PolyMet in exchange for certain other lands owned by PolyMet;
|
·
|
In June 2017, the Company appointed Patrick Keenan as Chief Financial Officer;
|
·
|
In August 2017 and September, the Minnesota Department of Natural Resources (“MDNR”) released six draft water appropriation permits and two draft dam safety permits for 30-days of public review and comment which have all closed;
|
·
|
In September 2017, the Company issued and committed to issue to Glencore secured debentures with a total principal amount of $20 million;
|
·
|
In October 2017, the Company entered into an agreement with EIP Credit Co., LLC (“EIP Credit”) to reserve wetland bank credits for the NorthMet Project;
|
·
|
In November 2017, the U.S. House of Representatives approved bipartisan legislation introduced by Rep. Rick Nolan, D-MN-8 to ratify the previously approved land exchange between PolyMet and the U.S. Forest Service. This bill has been advanced to the US Senate for consideration;
|
·
|
In January 2018, the MDNR released the draft Permit to Mine for public review and comment which has closed;
|
·
|
In January 2018, the Minnesota Pollution Control Agency (“MPCA”) released the draft water quality permit, draft section 401 certification, and draft air emissions permit for public review and comment which have all closed;
|
·
|
In February 2018, the final public hearings on the draft permits were completed;
|
·
|
In March 2018, the Company and Glencore agreed to extend the term of outstanding debentures until March 31, 2019, reduce the interest rate on the outstanding debentures, and make available $80 million in additional debentures during 2018. Proceeds will be used to complete pre- and post-permitting work, including detailed engineering and environmental cleanup, and to purchase wetland credits. See additional discussion in the “Financing Activities” section below; and
|
·
|
In March 2018, the Company issued an Updated Technical Report under NI 43-101 incorporating process improvements, project improvements, and environmental controls described in the Final EIS and draft permits. The update also included detailed capital costs, operating costs, and economic valuation for the mine plan being permitted as well as an assessment of potential future opportunities. See additional discussion in the “Feasibility Study, Mineral Resources and Mineral Reserves” section below.
|
·
|
Transfer of title to the surface rights over and around the NorthMet mineral rights to PolyMet as part of the authorized land exchange;
|
·
|
Favorable decision by the state on 401 Water Quality Certification and U.S. Army Corps of Engineers (“USACE”) Final ROD and 404 wetlands permit under Clean Water Act;
|
·
|
Favorable decisions on final state permits (Permit to Mine, air, water, and dam safety permits);
|
·
|
Completion of project implementation plan; and
|
·
|
Completion of construction finance plan, subject to typical conditions precedent such as receipt of key permits.
|
·
|
Section 404 Individual Permit for Impacted Wetlands
|
·
|
Permit to Mine
|
·
|
Water Appropriations Permit
|
·
|
Dam Safety Permit
|
·
|
Wetland Replacement Plan
|
·
|
Section 401 Certification (required before the USACE can issue its ROD and Section 404 Permit)
|
·
|
National Pollutant Discharge Elimination System (NPDES) Permit
|
·
|
State Disposal System (SDS) Permit
|
·
|
Air Emissions Permit
|
·
|
A 505-acre net increase of wetlands to the federal estate;
|
·
|
A net increase of 94 acres with public water frontage available for public and tribal use;
|
·
|
A 40-acre net gain in USFS lands;
|
·
|
Improved management effectiveness by exchanging lands that have no public overland access with lands that do have access;
|
·
|
Reduction of 33 miles in property boundaries to be managed by the USFS;
|
·
|
Federal cost savings from the elimination of two easements and their associated administrative costs; and
|
·
|
Conveyance of federal lands already adjacent to intensively developed private lands for other inholdings in the Superior National Forest.
|
·
|
Equity – five separate agreements comprising $25.0 million placement of PolyMet common shares in calendar 2009 in two tranches; a $30.0 million placement of PolyMet common shares in calendar 2010 in three tranches; a $20.0 million placement of PolyMet common shares in calendar 2011 in one tranche; a $20.960 million purchase of PolyMet common shares in the 2013 Rights Offering; and a $10.583 million purchase of PolyMet common shares in the 2016 Private Placement;
|
·
|
Convertible debt (“Glencore Convertible Debt”) – agreement comprising $25.0 million initial principal secured convertible debentures drawn in four tranches; and
|
·
|
Non-convertible debt (“Glencore Non-Convertible Debt”) – four separate agreements comprising $30.0 million initial principal secured debentures in calendar 2015 drawn in four tranches; an $11.0 million initial principal secured debenture in calendar 2016 drawn in one tranche; a $14.0 million initial principal secured debenture in calendar 2016 drawn in four tranches; and a $20.0 million initial principal secured debenture in calendar 2017 drawn in two tranches. Subsequent to December 31, 2017, a fifth separate agreement was entered into comprising up to $80.0 million initial principal secured debentures in calendar 2018 to be drawn in five tranches at the Company’s option. See additional details below.
|
·
|
92,836,072 shares representing 29.1% of PolyMet's issued shares;
|
·
|
Glencore Convertible Debt exchangeable through the exercise of an exchange warrant (“Exchange Warrant”) at $1.2696 per share into 38,660,854 common shares of PolyMet (including capitalized and accrued interest as at December 31, 2017) and where the exercise price and the number of shares issuable are subject to conventional anti-dilution provisions;
|
·
|
Warrants to purchase 7,055,626 common shares at $1.00 per share at any time until October 28, 2021, subject to acceleration on the earlier of receipt of permits necessary to construct NorthMet or the twelve month anniversary of the issue date provided the 20-day VWAP of PolyMet common shares is equal to or greater than $1.50 (“Acceleration Triggering Event”), and where the exercise price and the number of warrants are subject to conventional anti-dilution provisions; and
|
·
|
Warrants to purchase 625,000 common shares at $0.7797 per share at any time until October 28, 2021, and where the exercise price and the number of warrants are subject to conventional anti-dilution provisions.
|
Two and Three Months Ended
|
||||||||
Dec 31,
2017
|
Oct 31,
2017
|
Jul 31,
2017
|
Apr 30,
2017
|
Jan 31,
2017
|
Oct 31,
2016
|
Jul 31,
2016
|
Apr 30,
2016
|
|
Revenues
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
General and Administrative
|
(1,584)
|
(1,193)
|
(2,080)
|
(1,268)
|
(2,583)
|
(993)
|
(1,178)
|
(1,840)
|
Other Income (Expenses)
|
(350)
|
(1,058)
|
(608)
|
(1,957)
|
(645)
|
(1,101)
|
(377)
|
(512)
|
Loss for the Period
|
(1,934)
|
(2,251)
|
(2,688)
|
(3,225)
|
(3,228)
|
(2,094)
|
(1,555)
|
(2,352)
|
Loss per Share (1)
|
(0.01)
|
(0.01)
|
(0.01)
|
(0.01)
|
(0.01)
|
(0.01)
|
(0.01)
|
(0.01)
|
Cash used in operating activities
|
(748)
|
(914)
|
(1,454)
|
(1,874)
|
(1,589)
|
(1,483)
|
(855)
|
(1,536)
|
Cash provided by (used) by financing activities
|
-
|
14,917
|
-
|
-
|
331
|
31,085
|
5,832
|
-
|
Cash used in investing activities
|
(3,569)
|
(6,997)
|
(6,166)
|
(4,937)
|
(5,613)
|
(6,339)
|
(4,553)
|
(6,858)
|
(1)
|
Loss per share amounts may not reconcile due to rounding differences.
|
December 31, 2017 - $0.223 million
|
January 31, 2017 - $0.811 million
|
|
October 31, 2017 - $0.283 million
|
October 31, 2016 - $0.137 million
|
|
July 31, 2017 - $0.672 million
|
July 31, 2016 - $0.233 million
|
|
April 30, 2017 - $0.140 million
|
April 30, 2016 - $0.627 million
|
For the Periods Ended
|
11 months ended
December 31, 2017
|
12 months ended
January 31, 2017
|
12 months ended
January 31, 2016
|
Revenue
|
-
|
-
|
-
|
Net Loss
|
(10,098)
|
(9,229)
|
(9,346)
|
Basic and Diluted Loss Per Share
|
(0.03)
|
(0.03)
|
(0.03)
|
Total Assets
|
409,042
|
389,049
|
337,660
|
Convertible and Non-Convertible Debt
|
141,335
|
107,906
|
79,009
|
Total Shareholders’ Equity
|
198,675
|
207,329
|
184,657
|
|
December 31, 2017 - $1.318 million
|
|
January 31, 2017 - $1.808 million
|
|
January 31, 2016 - $0.457 million
|
Contractual Obligations
|
Carrying
Value
|
Contractual
Cash flows
|
Less than
1 year
|
1 – 3
years
|
3 – 5
years
|
More than
5 years
|
||||||||||||||||||
Accounts payable and accruals
|
$
|
3,630
|
$
|
3,630
|
$
|
3,630
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||||||||
Convertible debt (Note 8)
|
49,067
|
51,183
|
51,183
|
-
|
-
|
-
|
||||||||||||||||||
Non-convertible debt (Note 9)
|
92,268
|
96,294
|
96,294
|
-
|
-
|
-
|
||||||||||||||||||
Firm commitments
|
-
|
1,529
|
448
|
581
|
500
|
-
|
||||||||||||||||||
Total
|
$
|
144,965
|
$
|
152,636
|
$
|
151,555
|
$
|
581
|
$
|
500
|
$
|
-
|
Level 1 – |
Quoted prices (unadjusted) in active markets for identical assets or liabilities.
|
Level 2 – |
Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly.
|
Level 3 – |
Inputs for the asset or liability that are not based on observable market data.
|
December 31,
2017
|
January 31,
2017
|
|||||||
Cash
|
$
|
6,931
|
$
|
18,674
|
||||
Convertible debt
|
49,067
|
42,154
|
||||||
Non-convertible debt
|
$
|
92,268
|
$
|
65,752
|
11 months ended
December 31, 2017 (1)
|
12 months ended
January 31, 2017 (2)
|
|||||||
Salaries and other short-term benefits
|
$
|
1,898
|
$
|
1,828
|
||||
Other long-term benefits
|
42
|
44
|
||||||
Share-based payment (3)
|
836
|
1,709
|
||||||
Total
|
$
|
2,776
|
$
|
3,581
|
(1)
|
Eleven months ended December 31, 2017 includes Directors (Dennis Bartlett, Jonathan Cherry, Mike Ciricillo, Matthew Daley, David Dreisinger, W. Ian L. Forrest, Helen Harper, Alan Hodnik, Stephen Rowland, and Michael Sill) and senior management (Jonathan Cherry, Patrick Keenan, Douglas Newby, and Bradley Moore).
|
(2)
|
Twelve months ended January 31, 2017 includes Directors (Jonathan Cherry, Matthew Daley, David Dreisinger, W. Ian L. Forrest, Helen Harper, Alan Hodnik, William Murray, Stephen Rowland, and Michael Sill) and senior management (Jonathan Cherry, Douglas Newby, and Bradley Moore).
|
(3)
|
Share-based payment represents the amount capitalized or expensed during the period.
|
Type of Security
|
Number
Outstanding
|
Weighted Average
Exercise Price
|
||||||
Issued and outstanding common shares
|
320,302,721
|
$
|
-
|
|||||
Restricted share units
|
2,334,971
|
$
|
-
|
|||||
Share options
|
21,214,002
|
$
|
0.94
|
|||||
Share purchase warrants
|
21,231,712
|
$
|
0.99
|
|||||
Convertible debt including capitalized interest
|
38,660,854
|
$
|
1.27
|
Mine
ID number(1)
|
Mine or
Operating
Name
|
Section
104 Significant and Substantial Citations (2) |
Section
104(b) Orders (3) |
Section
104(d) Citations and Orders (4) |
Section
110(b)(2) Violations (5) |
Section
107(a) Orders (6) |
Total dollar
value of MSHA assessments proposed (7) |
Total
number of Mining Related Fatalities |
Received
Notice of Pattern of Violations Under Section 104(e) yes/no |
Received
Notice of Potential to Have Pattern under section 104(e) yes/no |
Legal
Actions Pending as of Last Day of Period(8) |
Categories
of Pending Legal Actions (i-vii)(9) |
Legal
Actions Initiated During Period |
Legal
Actions Resolved During Period |
||||||||||||||||||||||||||||||
2103658
|
POLYMET
|
0
|
0
|
0
|
0
|
0
|
$
|
232
|
0
|
No
|
No
|
0
|
NA
|
0
|
0
|
1
|
MSHA assigns an identification number to each mine or operation and may or may not assign separate identification number to related facilities. The information provided in this table is presented by mine identification number.
|
2
|
Represents the total number of citations issued by MSHA for violation of health or safety standards that could significantly and substantially contribute to a serious injury if left unabated.
|
3
|
Represents the total number of orders issued, which represents a failure to abate a citation under section 104(a) within the period prescribed by MSHA. This results in an order of immediate withdrawal from the area of the mine affected by the condition until MSHA determines that the violation has been abated.
|
4
|
Represents the total number of citation and orders issued by MSHA for unwarrantable failure to comply with mandatory health or safety standards.
|
5
|
Represents the total number of flagrant violations identified.
|
6
|
Represents the total number of imminent danger orders issued under section 107(a) of the Mine Act.
|
7
|
Amounts represent the total dollar value of proposed assessments received from MSHA.
|
8
|
Pending legal actions before the Federal Mine Safety and Health Review Commission (the “Commission”) as required to be reported by Section 1503(a)(3) of the Act.
|
9
|
The following provides additional information regarding the types or categories of proceedings that may be brought before the commission:
|
(i)
|
Contest Proceedings - may be filed with the Commission by an operator to challenge the issuance of a citation or order issued by MSHA;
|
|
(ii)
|
Civil Penalty Proceedings - may be filed with the Commission by an operator to challenge a civil penalty MSHA has proposed for a violation contained in a citation or order;
|
|
(iii)
|
Discrimination Proceedings - involves a miner’s allegation that he or she has suffered adverse employment action because he or she engaged in activity protected under the Mine Act, such as making a safety complaint;
|
|
(iv)
|
Temporary Reinstatement Proceedings - involves cases in which a miner has filed a complaint with MSHA stating that he or she suffered discrimination and the miner lost his or her position;
|
|
(v)
|
Compensation Proceedings - may be filed with the Commission by miners entitled to compensation when a mine is closed by certain closure orders issued by MSHA. The purpose of the proceeding is to determine the amount of compensation if any, due to miners idled by the orders;
|
|
(vi)
|
Applications for Temporary Relief - applications for temporary relief of any order issued under Section 104; and
|
|
(vii)
|
Appeals.
|
1.
|
I have reviewed this Annual Report on Form 40-F of PolyMet Mining Corp. (“the Company”);
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report;
|
4.
|
The Company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the Company and have:
|
5.
|
The Company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company’s auditors and the audit committee of the Company’s board of directors (or persons performing the equivalent functions):
|
Date: March 27, 2018
|
/s/ Jonathan Cherry
|
|
Name: Jonathan Cherry
|
|
Title: Chief Executive Officer (Principal Executive Officer)
|
1.
|
I have reviewed this Annual Report on Form 40-F of PolyMet Mining Corp. (“the Company”);
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report;
|
4.
|
The Company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the Company and have:
|
5.
|
The Company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company’s auditors and the audit committee of the Company’s board of directors (or persons performing the equivalent functions):
|
Date: March 27, 2018
|
/s/ Patrick Keenan
|
|
Name: Patrick Keenan
|
|
Title: Chief Financial Officer (Principal Financial Officer)
|
Date: March 27, 2018
|
/s/ Jonathan Cherry
|
|
Name: Jonathan Cherry
|
|
Title: Chief Executive Officer (Principal Executive Officer)
|
|
|
Date: March 27, 2018
|
/s/ Patrick Keenan
|
|
Name: Patrick Keenan
|
|
Title: Chief Financial Officer (Principal Financial Officer)
|
Dated this 27th day of March, 2018.
|
/s/ Zachary J. Black
|
|
Name: Zachary J. Black
|
Dated this 27th day of March, 2018.
|
/s/ Jennifer J. Brown
|
|
Name: Jennifer J. Brown
|
Dated this 27th day of March, 2018.
|
/s/ Nicholas Dempers
|
|
Name: Nicolas Dempers
|
Dated this 27th day of March, 2018.
|
/s/ Thomas L. Drielick
|
|
Name: Thomas L. Drielick
|
Dated this 27th day of March, 2018.
|
/s/ Art S. Ibrado
|
|
Name: Art S. Ibrado
|
Dated this 27th day of March, 2018.
|
/s/ Erin L. Patterson
|
|
Name: Erin L. Patterson
|
Dated this 27th day of March, 2018.
|
/s/ Thomas J. Radue
|
|
Name: Thomas J. Radue
|
Dated this 27th day of March, 2018.
|
/s/ Herbert E. Welhener
|
|
Name: Herbert E. Welhener
|
Dated this 27th day of March, 2018.
|
/s/ Jeff S. Ubl
|
|
Name: Jeff S. Ubl
|
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