PolyMet Mining Corp’s initial investment case rests on its ability to secure environmental permitting for its NorthMet Project, arrange financing and complete construction on time and within budget. PolyMet purchased the Erie Plant and associated infrastructure for a fraction of the replacement cost, which positions the project at a low capital and operating cost relative to its peers. PolyMet’s valuation has material upside if it expands its capacity or uses its infrastructure to consolidate the Duluth Complex in Minnesota. Our base case valuation is US$479m or US$1.32/share on a diluted basis. Our upside valuation, based on potential plant expansion to 90ktpd, is US$1,254m or US$3.08 per share (diluted).
Low-cost development property with strategic advantage
PolyMet’s strengths are: its location in the Mesabi Iron Range with its supporting infrastructure; the Erie Plant’s scalability and capacity; the size of the NorthMet deposit; the world-class scale of the Duluth Complex; its first mover advantage; Glencore’s support (technical, marketing and financial); the geopolitical stability of its location; and the breadth and experience of its management.
Permitting and financing key sensitivities
Exploration- and development-stage mining companies have permitting, geologic, commodity price, access-to-capital and execution risk. There could be delays in receiving environmental permits. The financial market may not be accommodating and there is a risk the project may not be finished on time and within budget.
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PolyMet Mining Corp
Low-cost polymetallic development project
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