TSX- and NYSE American-listed PolyMet Mining has entered into a subscription agreement for the issuance of unsecured convertible debentures of up to $40-million with commodities major Glencore.

The funds would provide the company with the resources needed to work through remaining litigation and advance its NorthMet copper/nickel/precious metals project, in Minnesota, chairperson, president and CEO Jon Cherry said on Monday.

“In the coming months, we expect to transition from litigation to project finance and preparation for construction; these funds will support that effort as we move forward,” he stated.

Cherry cited as recent examples of progress for the project the reinstatement of the air permit by the Minnesota Pollution Control Agency and the ruling affirming key aspects of the water discharge permit for the NorthMet project by the Minnesota Court of Appeals, including a finding that the water quality standards of the state of Minnesota will not be violated as a result of the permitted project.

Last month, the Minnesota Court of Appeals ordered state regulators to reconsider a wastewater permit that was granted to PolyMet, but judges rejected six other challenges to the permit from environmentalists. The appeals court ordered the Minnesota Pollution Control Agency to reconsider whether any groundwater runoff from the proposed mine would pollute navigable waterways. The decision does not cancel the permit but it does further delay the timeline for when construction could begin on the $1-billion project.

Environmental groups also recently sued the US Forest Service in an attempt to reverse a 2017 land transfer that gave PolyMet more than 2 670 ha to build an openpit mine. The suit, led by the Center for Biological Diversity (CBD), claims the project would destroy a region home to Canada lynx and northern long-eared bat, both of which are listed as threatened with extinction under the US Endangered Species Act.

Similar lawsuits from CBD and others failed in 2019, with the court finding the parties lacked standing because PolyMet had not yet obtained permits and thus there was no way to measure if the project would cause imminent harm to the region. PolyMet has since acquired the land and obtained most of its permits. The environmental groups are asking the court to now hear their claims on the merits and order the Forest Service to take back the land.

The NorthMet mine will supply copper, nickel and other metals needed for the global transition to clean energy technologies.

The debentures will be issued in four tranches throughout 2022, all of which are due on March 31, 2023. Interest will accrue on the unsecured debentures at 4% per annum on the balance drawn.

The company also agreed to pay a facilitation fee of 5% of the principal amount plus interest of each convertible debenture.

The principal amount of the debentures is convertible into common shares of the company at a conversion price equal to $$2.57, which represents the five-day volume weighted average price on the NYSE American at the time of issue.

The first tranche in the amount of $26-million was issued on February 14, 2022, with $18-million used to repay the promissory note maturing February 28, 2022. The remainder of the funds will be used for general working capital purposes of the company.

- with reporting by Reuters