Vancouver — Several private-placement financings are expected to provide
Two private-placement financings should generate gross proceeds of about $16.4 million for the advanced project situated in the Duluth Complex, one of the world’s largest layered mafic intrusive complexes.
PolyMet plans to develop an open-pit mine that would produce copper with lesser amounts of nickel, cobalt, platinum group metals and gold through a proprietary hydrometallurgical process for the treatment of bulk concentrates. If that goal is achieved, NorthMet would be the first major non-ferrous mining operation in the state.
Minnesota has a long mining history, albeit one exclusively focused on iron ore deposits in the world-famous Mesabi Range. The high-grade hematite mines are now exhausted, leaving only low-grade taconite deposits for exploitation. The state’s reputation as “mining friendly” has also declined over the years, making permitting challenging, at least relative to nearby Canadian provinces.
The NorthMet project has faced a string of challenges too, since the deposit was discovered by U.S. Steel in 1969. A large deposit was drilled and delineated in the early 1970s, but complex metallurgy stalled all efforts to develop the project. At the time there was no economic way to extract the platinum group elements from the low-grade, base metal mineralization.
The project came to life in 1989 when Fleck Resources (a predecessor company of PolyMet) acquired rights to the project (then known as Dunka Road) from U.S. Steel. Fleck went on to form joint ventures with several companies to develop the project, but once again, no process could be found to economically produce clean concentrates and extract the contained metals from a bulk concentrate.
Fleck changed its name to PolyMet in 1998, and focused its efforts on investigating various hydrometallurgical processes, which led to development of the PlatSol process that same year. The patented hydrometallurgical process was the key to improving the economics of the project, but wasn’t immediately recognized as such, given the project’s history and initial suspicion about “black-box” proprietary processing technologies.
Weak metal prices didn’t help matters either, even though a pre-feasibility study commissioned in 2000 showed that a full feasibility study was warranted. A major component was pilot-plant testing of the hydrometallurgical process, which the company says “confirmed consistently acceptable recoveries” of copper and other metals. At the same time, other mining companies were testing or using similar hydrometallurgical processes at their operations with good success.
Warren Hudelson, executive vice-president of development, says the PlatSol technology was the key to unlocking the value of the NorthMet deposit. “Without this process, the minerals would remain in the ground, no question about it.”
Things were looking up for PolyMet in 2001 when Australian company North came aboard as a joint-venture partner, but hopes of mine development were dashed in 2002 when North was acquired by
PolyMet floundered for a few years as management and head offices were changed, but by 2003, a new team was in place with fresh ideas about how best to move the open-pit project forward. Led by President William Murray, a former chief operating officer for Anglo American, management developed a smaller, higher-grade mining plan with a more simplified process flow-sheet than was originally envisioned, thus reducing future capital and operating costs.
In late 2003, another important development took place when the company acquired, for a bargain-basement price, an idle taconite concentrator a few miles from the deposit, along an existing rail line. Much of what is needed to concentrate ores from NorthMet is already in place, except for the final-stage processing technology.
The plant was mothballed in 2000 and has capacity for 30,000 tonnes per day. At this stage, however, the company envisions a daily throughput rate of 25,000 tonnes.
Hudelson points out that this acquisition dramatically slashed previous capital-cost estimates, given that the plant has a replacement value of more than US$200 million.
The company plans to re-activate the plant to produce bulk concentrate that will then be processed in a newly added hydrometallurgical circuit. The PlatSol process will separate the concentrate into copper metal cathode on-site, and produce a mixed nickel and cobalt hydroxide precipitate and a platinum group precipitate that would both be sent offsite for refining.
Earlier this summer, PolyMet reported “significant overall improvements in the projected economics” at NorthMet, based on a technical report prepared by Australia’s Mine Design and Development and consulting geologists Hellman & Schofield.
While NorthMet has large geological resources amenable to open-pit mining, recent scoping and optimization studies have focused on mineralized areas with the highest grades and lowest strip ratios.
The latest resource estimates, released early this year, are based on a 0.2% copper cutoff grade. Indicated resources amenable to open-pit mining are now reported as 215 million tonnes grading 0.31% copper, 0.09% nickel, and 69 ppb (parts per billion) cobalt, 296 ppb palladium, 77 ppb platinum and 50 ppb gold. Inferred resources add another 110 million tonnes at comparable grades.
These estimates are not yet fully compliant with National Instrument 43-101 reporting standards, as they rely in part on inferred resources to provide pit-shell continuity.
The latest optimization report also shows that the life-of-mine strip ratio has been reduced to 1.1:1 waste-to-ore, compared with 4.3:1 in the prefeasibility study. The strip ratio would be even lower in the first 10 years, at 0.8:1.
The bankable feasibility study will better determine operating parameters and capital costs, and will also include results of ongoing infill drilling to upgrade existing resources into sufficient reserves for at least the first 10 years of a mine plan.
Also under way is the commissioning of a continuous pilot plant to confirm metallurgical recoveries at SGS Lakefield Laboratories, under the guidance of Bateman Engineering.
The final feasibility report is expected to be in hand by the first quarter of 2006. Meanwhile, PolyMet is poised to file a detailed Environmental Assessment Worksheet to the state, which in turn will trigger the permitting process for the project. The company says initial studies “have not identified any issues that can’t be addressed in an environmentally responsible manner.”
Several local environmental groups, including the Friends of the Boundary Waters Wilderness, are monitoring the project to ensure that all potential environmental impacts are addressed. Acid-mine drainage and wetlands destruction appear to be their main areas of concern, but the groups appear willing to work with the company to ensure the project meets environmental standards and minimizes the impact on local forests and wetlands. This was no accident of fate, Hudelson says.
“We’ve taken an innovative approach with environmental groups, one that goes beyond the formal consulting process with state agencies and local communities. We’ve gone the extra mile to communicate our plans and answer their questions and, as a result, the groups are knowledgeable and open-minded, and not opposed to mining in the abstract.”
PolyMet hopes to complete the regulatory process in time to receive permits by the spring of 2007, with a view to starting production in early 2008. If all goes as planned, the company will revive mining in Minnesota by opening the state’s first-ever metal mine.
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