PolyMet strikes 50:50 joint venture agreement with Teck Resources

Joint Venture to develop NorthMet, further study Mesaba opportunity

July 20, 2022

TSX: POM, NYSE American: PLM

NEWS RELEASE
2022-09

PolyMet strikes 50:50 joint venture agreement with Teck Resources
Joint Venture to develop NorthMet, further study Mesaba opportunity

·    PolyMet and Teck agree to become equal owners in NewRange Copper Nickel LLC

·    PolyMet’s NorthMet Project and Teck’s Mesaba Project represent two of the largest undeveloped clean energy mineral resources in the U.S.

·    The two projects account for approximately one-half of the known resources of high-demand copper, nickel, cobalt and PGMs in Minnesota’s Duluth Complex

·    Glencore commits to funding PolyMet’s portion of the initial work program and certain other costs and expenses up to US$105 million

  • St. Paul, Minn., July 20, 2022 – PolyMet Mining Corp. TSX: POM; NYSE American: PLM, (“PolyMet” or the “company”) has entered into an agreement (the “transaction”) with Teck American Inc., a subsidiary of Teck Resources Limited (“Teck”), to form a 50:50 joint venture that will place their respective NorthMet and Mesaba resources containing high-demand copper, nickel, cobalt and platinum group metals (PGM) under single management. These resources consist of Measured and Indicated resources of 795 million tons and 1,740 million tons for NorthMet and Mesaba, respectively, and further Inferred resources of 458 million tons and 1,612 million tons, respectively.[1]
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  • PolyMet and Teck will become equal owners in PolyMet Mining, Inc., which will be renamed NewRange Copper Nickel LLC. This name pays homage to the location of the resource and the rich mining heritage of the region, the new, modern methods of responsible mining to which the company is committed, and the new and diverse metal production it will bring to the Iron Range economy
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  • PolyMet Mining Corp. will offer investors direct access to the NewRange Copper Nickel JV as PolyMet will remain a publicly traded company, dually listed on the TSX and NYSE American.
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  • “This extraordinary venture links the expertise, experience and financial resources of PolyMet, Teck and Glencore to develop the NorthMet mine when the remaining permit proceedings are complete, and study the mine development options for Mesaba,” said Jon Cherry, PolyMet chairman, president and CEO. Following closing of the transaction, Glencore will retain its majority equity interest in PolyMet.
    “With both projects representing approximately half of the known resources of Minnesota’s Duluth Complex under NewRange Copper Nickel, Minnesota emerges as a global leader and major force in developing strategic minerals to feed the North American supply chain for clean energy technologies, electric mobility and modern societal use,” Mr. Cherry said. “The total assets of the NorthMet and Mesaba deposits make this one of the largest clean-energy mineral resources in the U.S. and globally.”
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  • PolyMet successfully navigated the NorthMet Project through the comprehensive federal and state environmental review process and federal land exchange – a process that involved considerable public involvement and tribal consultation. NorthMet earned nearly two dozen state and federal permits necessary to build and operate the 32,000 tons-per-day (29,000 tonnes) mine and processing facility. Three permits are pending final resolution to achieve project approval.
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  • Teck’s Mesaba Project is progressing baseline environmental studies, resource definition and mineral processing studies. Further studies and community and tribal consultation will be required to fully define long-term development potential.
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  • “This joint venture will benefit all our shareholders; it provides access to large, polymetallic resources and creates the opportunity to evaluate development and operational synergies, which could be significant, for the NorthMet and Mesaba resources,” Mr. Cherry said. “The successful completion of this transaction is expected to more than double the resources attributable to PolyMet shareholders. It also introduces a new member to the NorthMet Project with a strong balance sheet, an exceptional record of community involvement and sustainable mining practices, and world-class technical and mining capabilities.”
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  • Glencore has committed to funding PolyMet’s respective portion of the initial work program and certain other costs and expenses in an amount of up to USD$105 million. It is anticipated that upon closing, PolyMet will undertake a rights offering fully backstopped by Glencore. Further details on Glencore’s holdings in PolyMet are set out below.
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  • It is a condition of the financing commitment that PolyMet enter into an Investor Rights and Governance Agreement (“IRA”) to set out a suitable governance structure going forward. In recognition of such commitments, the governance structure would, among other things offer Glencore reasonable assurances relating to the development and operations, including having a say in decision-making related to these matters. The IRA will be entered into on completion of the transaction.
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  • The agreement is subject to customary closing conditions and certain regulatory approvals.

  • PolyMet appointed a special committee of independent directors (the “Special Committee”) to consider and make a recommendation with respect to the transaction. Based on the unanimous recommendation of the Special Committee and after consultation with its outside independent financial and legal advisors, PolyMet’s board unanimously approved entering into the transaction. Both the Special Committee and the Board determined the transaction is in the best interests of the company.
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  • The company’s independent financial advisor, Paradigm Capital Inc. and the Special Committee’s independent financial advisor, Maxit Capital LP, provided an opinion to the Board and the Special Committee, respectively, that as of the date thereof, and subject to the various assumptions, limitations and qualifications set forth therein, the transaction is fair, from a financial point of view, to the company.
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  • PolyMet has engaged Farris LLP as its legal advisor in connection with the transaction. The Special Committee has engaged Mason Law as its legal advisor in connection with the transaction. Glencore has engaged McCarthy Tetrault LLP as its legal advisor in connection with the transaction.

This press release has been reviewed and approved by Herb Welhener, an independent Qualified Person within the meaning of National Instrument 43-101.

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About PolyMet

PolyMet is a mine development company that owns 100% of the NorthMet Project, the first large-scale project to have received permits within the Duluth Complex in northeastern Minnesota, one of the world’s major, undeveloped copper, nickel and platinum group metal mining regions. NorthMet has significant proven and probable reserves of copper, nickel and palladium – metals vital to infrastructure improvements and global carbon reduction efforts – in addition to marketable reserves of cobalt, platinum and gold. When operational, NorthMet will become one of the leading producers of nickel, palladium and cobalt in the U.S., providing a much needed, responsibly mined source of these critical and essential metals.

Located in the Mesabi Iron Range, the project will provide economic diversity while leveraging the region’s established supplier network and skilled workforce and generate a level of activity that will have a significant positive effect in the local economy. For more information: www.polymetmining.com.

About Glencore and its holdings in PolyMet

Glencore is one of the world’s largest global diversified natural resource companies and a major producer and marketer of more than 60 responsibly-sourced commodities that advance everyday life. Through a network of assets, customers and suppliers that spans the globe, Glencore produces, processes, recycles, sources, markets and distributes the commodities that enable decarbonization while meeting the energy needs of today.

Glencore companies employ around 135,000 people, including contractors. With a strong footprint in over 35 countries in both established and emerging regions for natural resources, the company’s marketing and industrial activities are supported by a global network of more than 40 offices.

Glencore’s customers are industrial consumers, such as those in the automotive, steel, power generation, battery manufacturing and oil sectors. Glencore also provides financing, logistics and other services to producers and consumers of commodities.

Glencore is proud to be a member of the Voluntary Principles on Security and Human Rights and the International Council on Mining and Metals, and is an active participant in the Extractive Industries Transparency Initiative.

Glencore recognizes its responsibility to contribute to the global effort to achieve the goals of the Paris Agreement. The company’s ambition is to be a net zero total emissions company by 2050. In August 2021, Glencore increased its medium-term emission reduction target to a 50% reduction by 2035 on 2019 levels and introduced a new short-term target of a 15% reduction by 2026 on 2019 levels.

As at June 30, 2022 Glencore holds 72,008,404 common shares of PolyMet (“Common Shares”), representing approximately 71.0% of the issued and outstanding Common Shares. In addition, Glencore also holds: (i) a purchase warrant (the “2019 Warrant”); (ii) convertible debentures (the “2020 Convertible Debentures”) in the aggregate principal amount of US$30,000,000; (iii) a convertible debenture (the “2021 Convertible Debenture”) in the aggregate principal amount of US$10,000,000; and (iv) convertible debentures (the “2022 Convertible Debentures” in the aggregate principal amount of US$33,000,000, and collectively with the 2020 Convertible Debenture and the 2021 Convertible Debentures, the “Convertible Debentures”) in the aggregate principal amount of US$73,000,000.

Pursuant to the 2019 Warrant, Glencore is entitled to purchase 745,306 Common Shares with an exercise price of US$6.3840.

As at June 30, 2022, US$2,321,580 in interest had accrued on the 2020 Convertible Debentures. The 2020 Convertible Debentures have a conversion price of US$2.223 per share. Accordingly, as of June 30, 2022, Glencore was entitled to 14,539,622 Common Shares upon conversion of the 2020 Convertible Debentures.

As at June 30, 2022, US$392,432 in interest had accrued on the 2021 Convertible Debenture. The 2021 Convertible Debenture has a conversion price of $3.455 per share. Accordingly, as of June 30, 2022, Glencore was entitled to 3,007,940 Common Shares upon conversion of the 2021 Convertible Debenture.

As at June 30, 2022, US$430,478 in interest had accrued on the 2022 Convertible Debentures. The 2022 Convertible Debentures have a conversion price of $2.57 per share. Accordingly, as of June 30, 2022, Glencore was entitled to 13,007,968 Common Shares upon conversion of the 2022 Convertible Debentures.

Assuming exercise of the 2019 Warrant and conversion of the Convertible Debentures, but excluding issuance of Common Shares committed under existing compensation arrangements, Glencore would hold a total of 103,309,240 Common Shares representing approximately 77.8% of the Common Shares on a partially diluted basis (assuming no other Common Shares committed under existing compensation arrangements were issued by PolyMet) with the exercise prices and conversion prices described above.

Any Common Shares to be issued to Glencore in connection with any conversion of the Convertible Debentures or exercise of the 2019 Warrant would be acquired from treasury.

Glencore’s decision to enter into the transactions described in this news release was made for investment purposes. Glencore will continue to review its investment alternatives from time to time and may determine to increase or decrease its equity ownership in PolyMet through the acquisition or sale of additional outstanding common shares or other securities of PolyMet through open market or privately negotiated transactions in accordance with applicable securities laws.

Persons who wish to obtain a copy of the early warning report to be filed by Glencore in connection with this transaction may obtain a copy of such report from www.sedar.com or by contacting Glencore at the telephone number and address listed below.

For further information, please contact:

Media
Bruce Richardson, Corporate Communications
Tel: +1 (651) 389-4111
M: +1 (651) 964-9729
brichardson@polymetmining.com

Charles Watenphul
Tel: +41 41 709 24 62
M: +41 79 904 33 20
charles.watenphul@glencore.com

Investor Relations
Tony Gikas, Investor Relations
Tel: +1 (651) 389-4110
investorrelations@polymetmining.com

Martin Fewings
Tel: +41 41 709 28 80
M: +41 79 737 56 42
martin.fewings@glencore.com

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. Forward–looking statements relate to future events or future performance and reflect management’s expectations or beliefs regarding future events including, but not limited to, statements with respect to the anticipated benefits of the proposed 50/50 joint venture and the company’s expectations with respect to the future development of NorthMet and Mesaba and required financings. Forward-looking statements address future events and conditions and therefore involve inherent known and unknown risks and uncertainties. Such risks and uncertainties include, but are not limited to, among other things, risks relating to the parties meeting their conditions precedent, receipt of regulatory approvals, timing of closing, the outcome of the development of the NorthMet and Mesaba projects, and the outcome of any financing required to raise the funds for PolyMet’s share of the initial work program and Glencore’s funding commitment. 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 (except as required by law) 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, 2021, 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.

No regulatory authority has reviewed or accepted responsibility for the adequacy or accuracy of this release.

Resources quoted are sourced from the PolyMet November 2019 press release and Teck’s 2021 Annual Information Form. The Teck resource statement is treated as an historical estimate. PolyMet will undertake an independent resource evaluation of Mesaba using Independent Mining Consultants, of Tucson, Arizona

[1] See resource statements in accompanying Joint Venture Overview

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