The company, which plans to spend an estimated $380 million to get the project up and running, plus an additional $72 million in sustaining capital over the course of a projected 20-year mine life, began the permitting process in 2004 and initially expected the state’s Department of Natural Resources and the U.S. Army Corps of Engineers to complete their evaluation of its operating plans in November 2007. However, the agencies were unable to meet that target and said they needed another few months of study time.

During a conference call with analysts and investors in early November following the extension, company executives expressed confidence that the evaluation would be completed in January 2008 and downplayed any concerns that the regulators were deliberately prolonging the process or encountering unanticipated problems. LaTisha Gietzen, vice-president of public, government, and environmental affairs for PolyMet, said that during a meeting with Minnesota Governor Tim Pawlenty, the company had been assured of the state’s interest and support for the project. Chief Financial Officer Douglas Newby noted that the agencies had been previously engaged in similar studies for two other large projects and that “we had the [misfortune] to be third on the list.”

Concurrently with the extension, Polymet said that in the latter half of 2007 it had focused on improving certain environmental aspects of the project. The company modified its proposed mining schedule to allow waste rock backfilling in minedout portions of the pit, and eliminated plans for an overburden stockpile to reduce impact on nearby wetlands. In addition, mine-site water will be collected, treated, and pumped to the plant site where it will be used as process water, resulting in zero surface water discharge and a reduced requirement for makeup water.

PolyMet’s project is located just south of the northeastern end of the famous Mesabi Iron Range. The project comprises the NorthMet orebody—containing copper, nickel, cobalt, platinum, palladium and gold with traces of zinc and silver—and a large former taconite processing complex situated 6 miles to the west of the deposit and connected by a private railroad. The orebody is in the center of a trend of polymetallic nonferrous metal deposits on the northwestern contact of the Duluth Complex, a mineral belt that is believed to be one of the three largest known concentrations of nickel in the world, behind the Norilsk district in Siberia and the Sudbury Basin in Ontario, Canada.

Nickel Poses a Processing Pitfall
U.S. Steel first discovered NorthMet in the late 1960s, initially targeting high-grade mineralization at depth before moving up dip into lower-grade material that outcropped. However, prior to the autocatalyst market and significant industrial demand for platinum group metals, the only metals of relevance were copper and nickel—and nickel contamination of copper concentrate made the economics of existing flotation technology unattractive. U.S. Steel, after conducting widely spaced drilling along the deposit’s 3-mile strike length, ultimately sold an automatically renewable 20-year lease for it to PolyMet in 1989.

Cross-sectional view of the NorthMet deposit.

Proven and probable reserves as of the September 2007 update totaled 275 million t (within the measured and inferred resource) grading 0.90% Cu equivalent. Infill drilling has been ongoing and Polymet expects to release another update in 1Q 2008 that it says will expand its resource figure and convert more resource tons to reserves.

On September 6, 2007, Polymet announced that it had signed a project labor agreement with 15 construction trade unions defining ground rules for working conditions, schedules, overtime and safety during the project’s construction phase. In addition, NorthMet’s location near the Iron Range allows Polymet to exploit the advantages of an established regional infrastructure and a large, experienced local mine labor pool, said company officials.

URS Corp., Denver, Colorado is lead contractor for project EPCM. Construction will comprise four phases, beginning with refurbishment of the existing Erie plant facilities; followed by construction of the mine and a new hydrometallurgical plant; reactivation of some existing mine infrastructure; and implementation of environmental safeguards.

Key to the project’s viability was Polymet’s purchase in 2005 of the nearby, inactive LTV Steel Mining Co. Erie ore processing facilities from iron ore producer Cleveland Cliffs. Assets acquired in that transaction—which cost Polymet about $8 million in cash and stock—included crushing, milling and flotation facilities, spare parts, plant and mine shops and other buildings, and tailings impoundments. At the time of the announcement, PolyMet President and CEO William Murray said, “Acquisition of this large complex provides PolyMet with about 80%-85% of the physical plant assets needed to develop the NorthMet project. This acquisition will save nearly $200 million in capital development costs.”

In December 2006, Polymet closed an additional purchase from Cleveland Cliffs that included a railroad connection linking the mine development site and the Erie plant, plus a 120-railcar fleet, locomotive fueling and maintenance facilities, water rights and pipelines, administrative office facilities at the site, and approximately 6,000 acres to the east and west of and contiguous to PolyMet’s existing tailing facilities—adding extra tailings storage capacity should the company choose to expand its production in the future. These assets cost Polymet another $15 million and 2 million shares, giving Cleveland Cliffs ownership of about 7.7% of Polymet’s issued stock.

The Erie plant, built in the 1950s for about $350 million, is an enormous facility— the main concentrator building alone is one-quarter mile long—that was originally designed to process 100,000 t/d of tough taconite ore. It includes a railcar dumper building; dual primary, secondary, tertiary and quaternary crushing lines; a large number of rod and ball mills; and a large magnetic separation section that will be superseded by a new flotation circuit. Joseph Scipioni, Polymet’s COO, is confident that the plant, which has been idle since 2001, can be restarted without major mechanical difficulty. But as Scipioni, who formerly was plant manager at U. S. Steel Corp.’s taconite plant in Keewatin, said last fall, “Since we only plan to run the plant at one-third of its capacity, we’ll have plenty of spare parts available no matter what.” An existing pellet plant on site is being demolished.

Polymet is installing a new flotation circuit inside the existing plant building and also plans to construct a new hydrometallurgical plant. It will sell a bulk concentrate from the flotation section to fund construction and commissioning of the hydromet plant which, when completed, will produce copper cathode, nickel-cobalt-zinc hydroxides or purified hydroxides of each metal, a gold/PGM precipitate for toll smelting, and synthetic gypsum which will be a by-product of the pressure leaching technology employed by the plant.

The project’s DFS projected a mining rate of 81,000 t/d of rock over the life of mine, with 32,000 t/d of ore delivered to the mill via the rail link. Mining costs presented in the DFS are $1.14/t of rock mined and $3.13/t of ore, but Polymet executives feel that these early-estimate figures are probably on the high side. The project staff has been examining opportunities for mining plan optimization and, according to the company, has been able come up with improvements that streamline pit scheduling, lower unit mining costs, reduce the overall strip ratio and extend reserve life. Mine preparation, including prestripping, will be handled by a contractor; Polymet will take over for fullscale operations, employing two large shovels and seven or eight 240-ton-capacity haul trucks. The final operational mine plan will be completed in parallel with the final stages of the permitting process.

Ore from the mine, after arriving at the plant by rail, will be unloaded into the coarse crusher dump pocket and subjected to four-stage crushing—using only about one-fourth of the facility’s total crushing capacity—down to a product sized at 80% minus 0.5 in. followed by rod and ball mill grinding to a coarse sandy texture of 100- 125 µm P80. Prior to commissioning of the hydrometallurgical plant, Polymet plans to sell concentrates, either as a bulk product or as separate Ni and Cu concentrates with precious metal values present in both products. During the time it is selling the bulk concentrate, it will additionally process the flotation product through a scavenging circuit after the cleaner stage, following by regrinding, to remove more gangue material and produce a higher-grade concentrate. One of the company’s current objectives, according to David Dreisinger, a Polymet director and metallurgical processing consultant, is to increase copper content in the concentrate to more than 20% with less than 0.3% Ni content.

Once the plant is operational, the company will process all concentrate using the Platsol process, which employs chlorideassisted pressure leaching to allow extraction of precious metals concurrently with the copper, nickel and cobalt. Platsol processing requires a conventionally designed autoclave operating at a moderately high temperature of 225°C and employing 30- 60 g/L of H2SO4, and 10 g/L NaCl.

At full production, Polymet intends to produce about 72 million lb/y cathode copper, 15 million lb/y of nickel, 700,000 lb/y of cobalt and more than 100,000 oz/y of combined precious metals.

Concentrating on the Complex
When compared with the world’s largest nickel/copper sulphide districts, various sources rank the Duluth Complex as third largest in nickel content, second in copper and second in PGM content. There are presently 13 known nickel/copper sulphide deposits in the Duluth Complex that combined, could host a theoretical resource of 4.4 billion tons of copper/nickel ore averaging 0.66% Cu and 0.20% Ni using a cutoff grade of 0.50% Cu equivalent. Not surprisingly, its economic potential has attracted a number of players.

The NorthMet project is by far the most advanced of its type in the area, but other companies are avidly pursuing exploration and development of additional polymetallic deposits throughout the Complex. Franconia Minerals Corp., an Alberta, Canada, company with its head office in Spokane, Washington, USA, holds more than 15,000 acres in the area and is focusing on its Birch Lake copper-nickel-PGM deposit located in the north-central part of the mineral belt. According to the company’s latest figures, Birch Lake contains resources of more than 100 million t grading 0.59% Cu, 0.19% Ni and 0.14 g/t Au, 0.65 g/t Pd and 0.32 g/t Pt. The company’s Maturi deposit, 3 miles to the north of Birch Lake, contains another 83.1 million t of similar but lower-grade mineralization, and its Spruce Road property is estimated to contain 124 million t of underground-minable and 376 million t of surface-minable inferred resources. Pre-feasibility studies are presently aimed at evaluating the viability of separate mines at Birch Lake and Maturi that would feed a single processing complex built near the Birch Lake deposit.

Another company active in the area is Ontario, Canada-based Duluth Metals, which reports that current estimated resources at its Nokomis deposit in the western portion of its Maturi Extension properties in the Duluth Complex consists of 347 million t of indicated resources grading 0.62% Cu, 0.20% Ni, and 0.52 g/t of platinum+palladium+gold (total precious metals, or TPM), plus an additional 108 million t of inferred resources grading 0.64% Cu, 0.18% Ni, and 0.70 g/t of TPM. In mid-January 2008, the company announced it had acquired a Platsol technology license from the process patent owner, International PGM Technologies Ltd., for future processing of these metals extracted from its properties along the Complex.