PolyMet Mining Corp. has announced an offering of rights for existing shareholders to purchase new common shares of the company to raise approximately $265 million in gross proceeds.

All eligible shareholders will receive one right for every common share of PolyMet owned on the record date of June 3. For each right, holders are entitled to acquire 2.12 new common shares of PolyMet at 38.81 cents per share. Holders of rights may also subscribe for additional common shares, if available. Glencore AG has agreed to purchase remaining shares. 

The company intends to use the proceeds of the rights offering to repay debt owed to Glencore. Currently, it totals $165 million plus accrued interest of $77.7 million. 

“Proceeds from the rights offering, which is fully back stopped by Glencore, will be used to pay off our outstanding debt. This strengthening of our balance sheet will help clear the pathway to construction financing for the NorthMet Project, a process which is likely to take several months,” said Jon Cherry, president and CEO. “Work is currently underway to advance project planning and development, which was helped considerably by the issuance of the federal wetlands permit in March, which brought the project to a fully permitted status.

“As one of the world’s leading mining companies and our largest shareholder, we appreciate Glencore’s longstanding technical and financial support of the project,” Cherry added. “We look forward to working with Glencore to establish Minnesota’s first copper-nickel mine.”

Glencore already owns 28.8 percent of PolyMet’s shares.

The rights offering is exempt from the formal valuation and minority shareholder approval requirements.