FORM 51-102F3
MATERIAL CHANGE REPORT
1. | Name and Address of Company |
PolyMet Mining Corp. (the “Company”)
First Canadian Place
100 King Street West
Suite 5900 Toronto, Ontario
M5X 1C7
Tel: 416-915-4189
2. | Date of Material Change |
April 24, 2014
3. | News Release |
On April 25, 2014, the Company issued a news release disseminated through the facilities of Marketwired and SEDAR announcing the renegotiation of its debenture financing from Glencore AG, a wholly-owned subsidiary of Glencore Xstrata plc (“Glencore”). A copy of such news release is attached as Appendix A.
4. | Summary of Material Change |
On April 25, 2014, the Company announced that it had renegotiated its existing secured exchangeable debenture (the “Debenture”) financing from Glencore (the “Financing Amendments”) to extend the maturity date of the outstanding securities issuable under the Debenture financing.
5.1 | Full Description of Material Change |
Renegotiated Debenture
The Company renegotiated its Debenture financing from Glencore in the current amount of US$32.208 million (total initial principal of the Debenture is US$25 million with US$7.208 million of accrued interest as at April 24, 2014). The Financing Amendments, which remain subject to regulatory approvals being confirmed, are as follows:
• | The maturity date of the Tranche A-D Debentures (collectively, the “Issued Debentures”) has been extended from the earlier to occur of: i) the Company giving Glencore ten days' notice that the Company has received permits necessary to start construction of the NorthMet project and availability of senior construction finance, in a form reasonably acceptable to Glencore (the “Early Maturity Event”), and ii) September 30, 2014, to the extended maturity date (the “Extended Maturity Date”) of the earlier to occur of i) the Early Maturity Event, and ii) September 30, 2015. |
• | Upon occurrence of the Extended Maturity Date, the initial principal and capitalized interest will be exchanged into common shares of the Company at US$1.2920 per share (the “ExchangeWarrant”). The Issued Debentures were issued in four tranches between October 2008 and September 2009. The total initial principal of the Debenture is US$25 million with US$7.208 million of accrued interest as at April 24, 2014. |
Multilateral Instrument 61-101
The Financing Amendments are “related party transactions” within the meaning of Multilateral Instrument 61-101 -Protection of Minority Security Holders in Special Transactions (“MI 61-101”) as Glencore owns and/or controls, directly or indirectly, in excess of 10% of the issued and outstanding common shares of the Company and is therefore a “related party” in its capacity as the sole holder of the Issued Debentures.
The Company has relied upon exemptions from the requirements to obtain a formal valuation and minority shareholder approval under MI 61-101 set out in subsection 5.5(a) and 5.7(1)(a) of MI 61-101 in respect of the Financing Amendments. The Financing Amendments qualify for the exemptions contained in sections 5.5(a) and 5.7(a) of MI 61-101 because the fair market value of the Financing Amendments as they relate to any interested parties (i.e. Glencore) was less than 25% of the market capitalization of the Company (as determined under MI 61-101).
The Board of Directors of the Company (the “Board”) was provided with, and considered detailed information prepared by management concerning the valuation of the Financing Amendments.
The Board, with Stephen Rowland not participating in the approval as he is also an executive of Glencore, considered the availability of the exemptions contained in sections 5.5(a) and 5.7(a) of MI 61-101 with respect to the Financing Amendments and unanimously determined that the fair market value of the Financing Amendments was less than 25% of the market capitalization of the Company (in each case as determined pursuant to MI 61-101) and unanimously approved (with Mr. Rowland abstaining ) the Financing Amendments.
Glencore’s current holdings are as follows:
(i) | owns 78,724,821 common shares of the Company; | |
(ii) | is entitled to exchange US$32.208 million (including capitalized interest as of April 24, 2014) of Debentures for an additional 26,829,014 common shares at US$1.2920 per share pursuant to the Financing Amendments; and | |
(iii) | is entitled to acquire an additional 6,458,001 common shares for US$1.3007 per share at any time until December 31, 2015 subject to certain mandatory exercise provisions, |
resulting if all such common shares are acquired, in Glencore owning 112,011,827 common shares representing approximately 36.3% of the Company’s issued common shares after giving effect to the foregoing issuances of common shares of the Company.
Reference is made to the early warning report issued by Glencore on April 29, 2014regarding the current shareholdings of the Company.
Prior Valuation
After reasonable inquiry, to the knowledge of the Company and its directors and senior officers, there are no prior valuations (as such term is defined in MI 61-101) of the Company relating to the securities involved in the Financing Amendments described in this material change report or otherwise relevant to the Financing Amendments that are required to be disclosed by MI 61-101.
Date of the Material Change Report
This material change report is being filed less than 21 days before the date of the execution of the Financing Amendments, which in the Company’s view, is both reasonable and necessary in the circumstances as the terms of the Financing Amendments were settled and approved by the Company and Glencore just prior to the announcement of the Financing Amendments on April 24, 2014 and the exercise of the securities is extended to September 30, 2015.
5.2 | Disclosure for Restructuring Transactions |
Not applicable.
6. | Reliance on Subsection 7.1(2) or (3) of National Instrument 51-102 |
Not applicable.
7. | Omitted Information |
Not Applicable.
8. | Executive Officer |
Douglas Newby, Chief Financial Officer
Telephone: (651) 389-4105
9. | Date of Report |
April 30, 2014.
POLYMET MINING CORP. | ||
Per: | “Douglas Newby” | |
__________________________________ | ||
Douglas Newby, Chief Financial Officer |
Schedule A
100 King Street West, Suite 5700, Toronto, Ontario, Canada, M5X 1C7 | |
Tel: +1 (416) 915-4149 | |
444 Cedar Street, Suite 2060, St. Paul, MN 55101 | |
Tel: +1 (651) 389-4100 | |
www.polymetmining.com |
TSX: POM, NYSE Amex: PLM
NEWS RELEASE | 2014-2 |
POLYMET ANDGLENCOREAGREE TOEXTENDTERM OFUS$32.2MILLIONCONVERTIBLEDEBENTURES
St. Paul, Minn., April 25, 2014–PolyMet Mining Corp. (“PolyMet” or the “Company”) TSX: POM; NYSE MKT: PLM – today announced that it has renegotiated its debenture financing with Glencore AG, a wholly-owned subsidiary of Glencore Xstrata plc (together “Glencore”) to extend the maturity date of the outstanding securities issuable under the debenture financing. The agreed amendments (collectively, the “Financing Amendments”), which are subject to approval for the listing additional shares from the NYSE MKT and the Toronto Stock Exchange, are as follows:
• | The maturity date of the TrancheA-D Debentures (collectively, the “Issued Debentures”) has been extended from the earlier to occur of: i) PolyMet giving Glencore ten days' notice that PolyMet has received permits necessary to start construction of the NorthMet project and availability of senior construction finance, in a form reasonably acceptable to Glencore (the “Early Maturity Event”), and ii) September 30, 2014, to the extended maturity date (the “Extended Maturity Date”) of the earlier to occur of i) the Early Maturity Event, and ii) September 30, 2015. |
• | Upon occurrence of the Extended Maturity Date, the initial principal and capitalized interest will be exchanged into common shares of PolyMet at US$1.2920 per share (the “ExchangeWarrant”). The Issued Debentures were issued in four tranches between October 2008 and September 2009. The total initial principal of the Debentures is US$25 million with US$7.208 million of accrued interest as at April 24, 2014. |
Glencore currently holds 78,724,821 common shares of PolyMet representing approximately 28.6% of PolyMet’s issued and outstanding common shares.
As a result of the extension of the Exchange Warrant, the number of common shares issuable to Glencore under the Exchange Warrant would increase by 1,300,556 to 26,829,014 at September 30, 2015 (assuming US$ LIBOR at 1.0%), and which, if exercised, would result in Glencore holding 105,553,826 common shares representing approximately 34.9% of the outstanding common shares of PolyMet (assuming no other shares committed under existing compensation agreements were issued by PolyMet.)
Including 6,458,001 shares issuable upon exercise of other warrants held by Glencore but excluding issuance of shares committed to others under existing share compensation agreements, Glencore would hold a total of 112,011,827 common shares representing approximately 36.3% of PolyMet’s partially diluted common shares (again assuming no other shares committed under existing compensation agreements were issued by PolyMet.)
Glencore's decision to enter into the Financing Amendments was made for investment purposes. Glencore will continue to review its investment alternatives from time to time and may determine to increase or decrease its equity ownership in PolyMet through the acquisition or sale of additional outstanding common shares or other securities of PolyMet through open market or privately negotiated transactions in accordance with applicable securities laws. Persons who wish to obtain a copy of the early warning report to be filed by Glencore in connection with this transaction may obtain a copy of such report from www.sedar.com or by contacting Glencore's representative listed below.
For enquiries about Glencore, including to request a copy of the related early warning report, please contact:
Glencore Xstrata plc
c/o Glencore AG
Baarermattstrasse 3
CH-6340 Baar
Switzerland
* * * * *
About PolyMet
PolyMet Mining Corp. (www.polymetmining.com) is a publicly-traded mine development company that owns 100 percent of Poly Met Mining, Inc., a Minnesota corporation that controls 100 percent of the NorthMet copper-nickel-precious metals ore body through a long-term lease and owns 100 percent of the Erie Plant, a large processing facility located approximately six miles from the ore body in the established mining district of the Mesabi Range in northeastern Minnesota. Poly Met Mining, Inc. has completed its Definitive Feasibility Study and is seeking environmental and operating permits to enable it to commence production. The NorthMet project is expected to require approximately two million hours of construction labor, creating approximately 360 long-term jobs, a level of activity that will have a significant multiplier effect in the local economy.
About Glencore Xstrata plc
Glencore Xstrata plc is one of the world’s largest global diversified natural resource companies. As a leading integrated producer and marketer of commodities with a well-balanced portfolio of diverse industrial assets, we are strongly positioned to capture value at every stage of the supply chain, from sourcing materials deep underground to delivering products to an international customer base.
Glencore Xstrata plc’s industrial and marketing activities are supported by a global network of more than 90 offices located in over 50 countries. Glencore Xstrata plc's diversified operations comprise over 150 mining and metallurgical sites, offshore oil production assets, farms and agricultural facilities. Glencore Xstrata plc employs approximately 190,000 people.
POLYMET MINING CORP. | ||
Per: | "Jon Cherry" | |
________________________________________ | ||
Jon Cherry, CEO |
For further information, please contact:
Media
Bruce Richardson
Corporate Communications
Tel: +1 (651) 389-4111
brichardson@polymetmining.com
Investor Relations
Jenny Knudson
Investor Relations
Tel: +1 (651) 389-4110
jknudson@polymetmining.com
This news release contains certain forward-looking statements concerning anticipated developments in PolyMet’soperations 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 orbe achieved or their negatives or other comparable words. These forward-looking statements may include statements regarding the ability to receive regulatory approval for the Financing Amendments 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. 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.
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 ifcircumstances or management’s beliefs, expectations and opinions should change.
Specific reference is made to PolyMet’s most recentAnnual Report on Form 20-F for the fiscal year ended January 31, 2013 and in our other filings with Canadian securities authorities and the U.S. Securities and Exchange Commission, including our Report on Form 6-K providing information with respect to our operations for the three months ended October 31, 2013 for a discussion of some of the risk factors and other considerations underlying forward-looking statements.
The TSX has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.