PolyMet finances NorthMet exploration

PolyMet Mining (POM-V) has received US$500,000 in exploration financing as part of a joint-venture agreement with Australia’s North Ltd.

The funds, which constitute the first part of a private placement, will be applied to the NorthMet polymetallic mine in northern Minnesota.

North can earn a 60% interest in the project by spending US$10.8 million on exploration, paying at least US$4.2 million in cash to Polymet and completing a bankable feasibility study.

PolyMet, in turn, can retain a 40% participating interest by funding its equity share of the development costs. Alternatively, it can let North put up all the costs in exchange for an additional 27.5% interest, leaving PolyMet with a 12.5% carried interest.

The first tranche of the private placement consists of 500,000 units priced at US$1 each. A unit contains one share and one share purchase warrant, exercisable within two years at $1.20 per share.

Within three months, North is required to take down the second tranche, consisting of US$1.7 million at the same prices.

“The joint venture will advance NorthMet toward the ultimate goal of building a mine capable of producing platinum, palladium, gold, copper, nickel and cobalt,” says Polymet President Donald Gentry.

North also operates and owns a 56.1% interest in Iron Ore Co. of Canada. Its other major assets include a quarter-stake in the Alumbrera copper-gold operation in Argentina, as well as various copper-gold, uranium and zinc mines around the world.

North was recently the subject of a takeover bid by Rio Tinto (RTP-N). The London-based major already owns a 14.5% interest in North and has offered A$3.80 in cash per share for the remainder of the company. North’s management, however, has described the offer as “totally inadequate.”