PolyMet Mining (PLM) is working a copper and precious metals deposit in Minnesota's Mesabi iron range. This company deserves a fresh look. The CEO is not a geologist but it's good that he has tons (no pun intended) of mining experience. The rest of the D&O team has a decent amount of experience in the resource sector.
They have a very recent 43-101 report for their Northmet project. The Cu equivalent percentages in both their M&I and 2P categories look to be an above average discovery. The really good news is that they have an existing mill that is more than large enough to handle their projected production. Their IRR estimate of 30.6% would impress even Rick Rule. This is a sufficiently de-risked project that will enable production. My remaining concern is whether they can maintain a competitive cash cost of production over the mine's expected life span.
Massive financial backing from Glencore has been a boon for PolyMet and they still have to complete their permitting to get production started. Their most recent 10-Q dated April 30, 2013 shows that they have US$19M in cash on hand. Comparing their net losses for the two quarters depicted in those statements gives a burn rate of about $485K/month. They can survive for a couple of years but permitting will require significant cash outlays, so further capital raises are not out of the question. Existing convertible debt will significantly dilute existing shareholders if the company executes the remainder of its plan and impresses the market.
I kind of like this stock, although I'm not ready to invest just yet. I don't expect permitting to be a major problem, so I'm willing to revisit PolyMet in about six months to assess their progress.
Full disclosure: No position in PLM at this time.
