PolyMet Mining announces filing of preliminary prospectus

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 Poly- Met 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 in 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.

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.

Source: www.businessnorth.com, May 7, 2019

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