PolyMet Mining Corp. (“PolyMet” or the “company”) (TSX: POM; NYSE
American: PLM) has filed a short form preliminary prospectus with
securities regulatory authorities in each of the Canadian provinces, and
a registration statement on Form F-10 with the U.S. Securities and
Exchange Commission (“SEC”) in respect of an offering of rights
(“Rights”) to purchase common shares of the company to raise
approximately US$265 million in gross proceeds (the “Rights Offering”).
Summary of Rights Offering
Pursuant to the Rights Offering, all eligible registered shareholders of
PolyMet (subject to applicable law) will receive one Right for every
common share of PolyMet owned on the record date (the “Record Date”),
which will be a date no less than 10 calendar days following receipt of
the approval of the Toronto Stock Exchange (“TSX”) and NYSE American for
the Rights Offering. The Rights Offering will include an additional
subscription privilege entitling holders of Rights who have fully
exercised their Rights to subscribe for additional common shares, if
available, that were not otherwise subscribed for under the Rights
Offering.
PolyMet will apply to have the Rights listed for trading on both the TSX
and NYSE American. The approval of such listings is subject to the
company fulfilling all of the listing requirements of these exchanges.
In accordance with the rules of the TSX and as provided in the Standby
Agreement (described below) with Glencore, the subscription price for
the common shares of PolyMet to be purchased upon exercise of the Rights
(the “Rights Price”) will represent a 20 percent discount to the U.S.
dollar equivalent of the volume weighted average price (“VWAP”) of
PolyMet common shares on the TSX for the five trading days immediately
prior to the day the final short form prospectus for the Rights Offering
(the “Final Prospectus”) is filed. The number of Rights required to
subscribe for one new common share of PolyMet will be determined on the
basis of the Rights Price and the number of common shares in issue at
the time of pricing (currently approximately 322 million common shares)
in order to receive gross proceeds of approximately US$265 million. The
period during which Rights may be exercised under the Rights Offering
will be determined at the time of filing the Final Prospectus.
Standby Purchase Agreement
As contemplated by the previously disclosed Extension Agreement between
PolyMet and Glencore AG (“Glencore”) and in connection with the Rights
Offering, PolyMet has entered into a standby purchase agreement (the
"Standby Purchase Agreement") pursuant to which Glencore, subject to
certain terms and conditions and limitations, has agreed to exercise its
basic subscription privilege in full and to purchase at the Rights
Price, that number of common shares, equal to the difference, if any, of
(x) the total number of common shares offered pursuant to the Rights
Offering minus (y) the number of common shares subscribed for pursuant
to the basic subscription privilege and the additional subscription
privilege (the “Standby Commitment”). As a result, subject to the
satisfaction of the terms and conditions of the Standby Purchase
Agreement, the Rights Offering will be fully backstopped by Glencore.
Glencore will be entitled to a fee (the “Standby Fee”) at the closing of
the Rights Offering of approximately US$7.7 million which is equal to
3.0 percent of the total funds committed by Glencore (based on the
assumptions in this news release).
The company intends to make available the proceeds of the Rights
Offering for: (a) the repayment of the amount that PolyMet is indebted
to Glencore which, as at March 31, 2019, is the principal amount of
US$165 million plus accrued interest of approximately US$77.8 million
plus additional interest which continues to accrue; (b) the payment of
the Standby Fee in full; and (c) payment of expenses of the Rights
Offering.
By virtue of its 28.8 percent shareholding in PolyMet, Glencore is a
related party to the company, and the Rights Offering, as a result of
the Standby Commitment, is a related party transaction pursuant to
Multilateral Instrument 61-101 – Protection of Minority
Securityholders in Special Transactions ("MI 61-101"). However, the
Rights Offering is exempt from the formal valuation and minority
shareholder approval requirements under MI 61-101 pursuant to section
5.1(k)(ii) of MI 61-101.
The Rights Offering, and Glencore’s ability and obligation to
participate n the Rights Offering, including in respect of the Standby
Commitment, is subject to certain conditions including, but not limited
to, the receipt of all necessary approvals, including the approval of
the TSX and NYSE American and the receipt of clearance under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976.
Further details concerning the Rights Offering, including the terms of
the Standby Purchase Agreement are contained in the company's
preliminary short form prospectus which will be available on the
company's SEDAR profile and in the company’s Form F-10 filed with the
SEC on EDGAR (available at www.sec.gov).
The foregoing description of certain terms of the Standby Purchase
Agreement does not purport to be complete and is qualified in its
entirety by reference to the full text of such agreements to be filed by
PolyMet under its profile at www.sedar.com.
Subject to applicable law, a rights certificate and the Final Prospectus
will be distributed to all eligible shareholders who owned common shares
on the Record Date along with instructions explaining how many Rights a
shareholder is entitled to receive, the number of PolyMet common shares
that can be purchased for those Rights, how to subscribe to such Rights
or instruct brokers how to subscribe for the purchase of common shares
pursuant to those Rights, or instruct such shareholder’s broker to
subscribe for the purchase of common shares on the shareholder’s behalf,
and how to sell Rights in the market or otherwise transfer them to
another party.
This news release does not constitute an offer to sell, nor the
solicitation of an offer to buy, the securities in any jurisdiction; nor
shall there be any sale of securities mentioned in this news release in
any jurisdiction in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities
laws of such jurisdiction.
About PolyMet
PolyMet Mining Corp. (www.polymetmining.com)
is a publicly traded mine development company that owns 100 percent of
Poly Met Mining, Inc., a Minnesota corporation that controls 100 percent
of the NorthMet copper-nickel-precious metals ore body through a
long-term lease, and owns 100 percent of the former LTV Steel Mining
Company processing facility, located approximately seven rail miles from
the ore body in the established mining district of the Mesabi Iron Range
in northeastern Minnesota. Poly Met Mining, Inc. has completed its
Definitive Feasibility Study and received all permits necessary to
construct and operate the NorthMet Project. NorthMet is expected to
require approximately two million hours of construction labor, create
approximately 360 long-term jobs directly, and generate a level of
activity that will have a significant multiplier effect in the local
economy.
PolyMet Disclosures
This news release contains certain forward-looking statements
concerning anticipated developments in PolyMet’s operations in the
future. Forward-looking statements are frequently, but not always,
identified by words such as “expects,” “anticipates,” “believes,”
“intends,” “estimates,” “potential,” “possible,” “projects,” “plans,”
and similar expressions, or statements that events, conditions or
results “will,” “may,” “could,” or “should” occur or be achieved or
their negatives or other comparable words. These forward-looking
statements may include statements regarding the ability to receive
environmental and operating permits, job creation, and the effect on the
local economy, or other statements that are not a statement of fact.
Forward-looking statements address future events and conditions and
therefore involve inherent known and unknown risks and uncertainties.
Actual results may differ materially from those in the forward-looking
statements due to risks facing PolyMet or due to actual facts differing
from the assumptions underlying its predictions.
PolyMet’s forward-looking statements are based on the beliefs,
expectations and opinions of management on the date the statements are
made, and PolyMet does not assume any obligation to update
forward-looking statements if circumstances or management’s beliefs,
expectations and opinions should change.
Specific reference is made to risk factors and other considerations
underlying forward-looking statements discussed in PolyMet’s most
recent Annual Report on Form 40-F for the fiscal year ended December 31,
2018, and in our other filings with Canadian securities authorities and
the U.S. Securities and Exchange Commission.
The Annual Report on Form 40-F also contains the company’s mineral
resource and other data as required under National Instrument 43-101.
The TSX has not reviewed and does not accept responsibility for the
adequacy or accuracy of this release.
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