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Copper, Nickel & Precious Metals in the U.S.
June 2013 Jon Cherry & Douglas Newby
Cautionary Statement
This presentation contains certain forward-looking statements concerning anticipated developments in PolyMet Mining Corp. (“PolyMet”)’s operations in the future. Forward-looking statements are frequently, but not always, identified by words such as “expects,” “anticipates,” “believes,” “intends,” “estimates,” “potential,” “possible,” “projects,” “plans,” and similar expressions, or statements that events, conditions or results “will,” “may,” “could,” or “should” occur or be achieved or their negatives or other comparable words. These forward-looking statements may include statements regarding our beliefs related to the expected project timelines, exploration results and budgets, reserve estimates, mineral resource estimates, continued relationships with current strategic partners, work programs, capital costs and expenditures, actions by government authorities, including changes in government regulation, the market price of natural resources, estimated production rates, costs, ability to receive environmental and operating permits, construction costs and hours created, job creation and other economic benefits, or other statements that are not a statement of fact.
Forward-looking statements address future events and conditions and therefore involve inherent known and unknown risks and uncertainties. These risks, uncertainties and other factors include, but are not limited to, adverse general economic conditions, operating hazards, inherent uncertainties in interpreting engineering and geologic data, fluctuations in commodity prices and prices for operational services, government regulation and foreign political risks, fluctuations in the exchange rate between Canadian and US dollars and other currencies, as well as other risks commonly associated with the industry. Actual results may differ materially from those in the forward-looking statements due to risks facing PolyMet or due to actual facts differing from the assumptions underlying its predictions.
In connection with the forward-looking information contained in this presentation, PolyMet has made numerous assumptions, regarding, among other things: the geological, metallurgical, engineering, financial and economic advice that PolyMet has received is reliable, and is based upon practices and methodologies which are consistent with industry standards. While PolyMet considers these assumptions to be reasonable, these assumptions are inherently subject to significant uncertainties and contingencies.
PolyMet’s forward-looking statements are based on the beliefs, expectations and opinions of management on the date the statements are made, and PolyMet does not assume any obligation to update forward-looking statements if circumstances or management’s beliefs, expectations and opinions should change.
Specific reference is made to PolyMet’s most recent Annual Report on Form 20-F for the fiscal year ended January 31, 2012 and in our other filings with Canadian securities authorities and the U.S. Securities and Exchange Commission for a discussion of some of the risk factors and other considerations underlying forward-looking statements.
PolyMet’s financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS"). All amounts are in U.S. funds.
PolyMet has filed a registration statement (including a prospectus) with the U.S. Securities and Exchange Commission, for the offering to which this communication relates. Before investing, prospective investors should read the prospectus in that registration statement and other documents the issuer has filed with the U.S. Securities and Exchange Commission, for more complete information about PolyMet and this offering. The documents are available free of charge by visiting EDGAR on the U.S. Securities and Exchange Commission website at www.sec.gov. Alternatively, PolyMet will arrange to send you the prospectus if you request it by calling 1-416 915-4149.
Overview
•! 100% of NorthMet Ore Body •! Copper-nickel-precious metals
•! Located in established mining district - +100 years history
•! 100% of existing Erie Plant •! Adjacent to NorthMet ore body
•! 100,000 t/d processing capacity + infrastructure
•! Low initial capital costs & staged development
•! Well financed (after Rights Offering)
•! Advanced stage environmental review •! Permitting 20 year project processing 32,000 t/d of ore
•! Draft preliminary EIS completed
•! DEIS mid-summer 2013
•! Strong community/political support
•! Strategic alliance with Glencore
•! The world’s largest commodities trading company
•! $118 million invested
•! Standby commitment to Rights Offering
•! Marketing of all products
3
NorthMet Project Location
4
NorthMet Project
5 5
Existing Infrastructure In Place
Tailings basin Road and Railroad Crushing and Grinding Mills Water System Electrical System Warehouses and workshops
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Mill Capacity
34 parallel rod/ball mill circuits – mine plan uses only 12 Each circuit ~ 3,000 tons per day capacity
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NorthMet Ore body
Disseminated, polymetallic deposit Low strip (waste:ore) ratio (1.4:1 life-of-mine), minimal over-burden
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Reserves and Resources
9
m lbsGlobal Resource (2)
Measured 234.4 212.6 0.73% 3,431 0.263% 0.077% 0.010 0.33 Indicated 654.2 593.5 0.63% 8,202 0.223% 0.066% 0.008 0.27
M + I 888.6 806.1 0.65% 11,633 0.234% 0.069% 0.008 0.29 Inferred 289.6 262.7 0.66% 3,813 0.246% 0.068% 0.009 0.32
TOTAL 1,178.2 1,068.8 0.66% 15,446 0.237% 0.069% 0.009 0.29 Mineral Resources (3)
Measured 202.5 183.7 0.79% 3,204 0.285% 0.083% 0.011 0.37 Indicated 491.7 446.1 0.72% 7,052 0.256% 0.075% 0.010 0.33
M + I 694.2 629.8 0.74% 10,255 0.264% 0.077% 0.010 0.34 Inferred 229.7 208.4 0.75% 3,445 0.273% 0.079% 0.011 0.37
TOTAL 923.9 838.1 0.74% 13,701 0.267% 0.078% 0.010 0.35 Reserves 274.7 249.2 0.79% 4,340 0.284% 0.082% 0.011 0.38 Mine Plan (4) 231.1 209.7 0.77% 3,565 0.273% 0.080% 0.011 0.38 Notes
1 Metals converted to copper based on 2008 DFS Update metal prices2 0.1% copper cut-off3 $7.42/lb net metal value cut-off4 20-year mine plan subject to permit applications
million st million mt (%) Copper Equivalent (1) Tonnage Copper
(%)Nickel(%)
Total Precious Metals(oz/st) (g/mt)
Global resource = 15.4 billion pounds copper equivalent
Measured & indicated resource = 10.3 billion pounds copper equivalent
Mine plan = 3.6 billion pounds copper equivalent
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Production/Project Economics
•! Production rate – first 5 years •! 32,000 tons of ore per day
•! 72 million pounds of copper per year
•! 15 million pounds of nickel per year
•! 106,000 oz combined precious metals per year
•! Low Capital and Operating Costs •! $312 million initial capital costs
•! Copper cash cost $1.05/lb (co-product basis)
•! Based on 2008 DFS Update
•! Robust Economics •! After tax IRR: 30.6%
•! Annual EBITDA: $217 million
•! Based on 2008 DFS Update 10
LME Metal Prices - US$ Average - 3 months to 3.31.2013 2008 DFS Update
Copper 3.60 /lb 7,937 /t 2.90 /lb Nickel 7.85 /lb 17,306 /t 12.20 /lb Cobalt 11.92 /lb 26,279 /t 23.50 /lb
Palladium 740 /oz 320 /oz Platinum 1,634 /oz 1,230 /oz
Gold 1,630 /oz 635 /oz
Construction & Operations
•! Construction
•! $475 million total investment •! $312 million – Phase I concentrates only
•! $163 million – Phase II metallurgical plant
•! 2 million construction hours
•! Operations
•! 360 high-quality, stable jobs
•! 600+ indirect jobs in St. Louis County*
* NorthMet Economic Impact 2011 Update UMD Labovitz School of Business and Economics
11 not PolyMet’s operation
Path Forward to Permits
Permits Issued
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Strong Political Support
•! State •! Governor Dayton (Dem)
•! State representatives from the Iron Range
•! Federal •! Senators Klobuchar and Franken (Dem)
•! Representative Nolan (Dem)
•! Local •! Mayors of local cities
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Glencore Strategic Relationship
•! Marketing •! Glencore will purchase 100% of production of concentrates and intermediate products
•! Market related terms – pass through of LME/COMEX prices
•! Financing •! $30 million (including capitalized interest) loan exchangeable into shares at $1.50 per share
•! PolyMet can force conversion at permitting/construction finance
•! $75 million equity at $1.99 per share weighted average
•! $53 million Standby Commitment in Rights Offering
•! 5.6 million warrants at $1.50 until December 31, 2015
•! Total Investment •! $105 million directly into PolyMet
•! $13 million purchase of all 9.2 million shares previously owned by Cliffs Natural Resources
•! 26% current ownership, 32% fully diluted
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$60.5 million Rights Offering
•! Why? •! Provides funding necessary to complete permitting AND discretionary spending on
detailed engineering and ordering of long lead-time equipment needed to minimize construction period
•! Treats all shareholders equally
•! What? •! All shareholders will receive one Right for every share owned on the Record Date
•! 2 Rights to subscribe to one new share at US$0.66 per share
•! Rights will trade until July 3, 2013 as NYSE MKT: PLM.R and TSX: POM.RT
•! Shareholders can subscribe for some or all of their Rights, or sell or assign some or all of their Rights
•! Glencore and Management guarantee minimum purchase of $55 million
•! When? •! Record Date: June 4, Last day of Rights Trading: July 3, Closing: July 5
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Copper Outlook CIBC Junior Copper Report, April 2, 2013
17
Copper Outlook CIBC Junior Copper Report, April 2, 2013
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Experienced Management
Jon Cherry President, CEO, Director Leader in mining environmental policy and new mining projects, 20 years with Rio Tinto in the U.S. 23 years experience in the industry
Douglas Newby Chief Financial Officer Mine finance expert, former Chairman/CEO of Western Goldfields (now New Gold) ~30 years experience
Joe Scipioni Chief Operating Officer Engineer, 30 years with US Steel, community leader in northern Minnesota
Brad Moore Executive VP – Environmental and Government Affairs Permitting and regulatory expert, former senior Minnesota government official
Andy Clark VP – Project Development
Engineer +35 years experience in mine and project construction. Formerly with Bateman Engineers
Ryan Vogt Corporate Controller CPA, formerly with Big 4 firm, subsequently controller of privately-held service company
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Key Statistics
Stock Snapshot
NYSE-MKT: PLM & PLM.R / TSX: POM & POM.RT
Recent Share/Rights Price (NYSE-MKT) $1.05 / 0.18
12-month range $1.25 – 0.67
Trading volume (NYSE-MKT / TSX) 165,000 / 41,000 (200-day average)
Market capitalization (shares + Rights) $225 million
Capital Structure
Shares outstanding 183.3 million
Rights 91.7 million
Glencore convertible debt $31 million at $1.50 per share Glencore Warrants 5.6 million @ $1.50 expire 12/2015
Other Warrants 1.5 million @ $1.77 expire 12/2015 Options 15.1 million @ US$1.90
Fully diluted (pre-Rights) 224.9 million (including out-of-money options/warrants) -! Glencore 72.6 million (32% fully diluted)
-! Insiders 18.5 million (8% fully diluted)
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Stock Price Chart
21 20
Summary
•! Pre-production US mining project differentiated by existing infrastructure in an existing mining district
•! Well financed upon completion of Rights Offering
•! Late stage of environmental review/permitting
•! Low risk construction and start-up
•! Future Growth •! expand production •! expand margins with value added products
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Investor Contacts
www.polymetmining.com
Chief Financial Officer Douglas Newby
(651) 389-4105 [email protected]
Vice President, Investor Relations Jenny Knudson (651) 389-4110
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