PolyMet Mining Corporation may soon receive $4 million in funding from a Minnesota agency-the next step toward commencing the first copper-nickel mining operation in Minnesota.

The board of Eveleth-based Iron Range Resources, a state economic development agency, will meet Thursday afternoon to vote whether to extend the loan to Richmond, British Columbia-based PolyMet.

LaTisha Gietzen, a spokeswoman for PolyMet, confirmed the details of the deal on Thursday.

Terms of the proposed five-year loan include 5 percent interest, and Iron Range Resources will receive stock warrants-potentially giving it a stake in the company. The warrants would allow Iron Range Resources to purchase 400,000 shares of PolyMet's stock at $2.50 per share, according to Iron Range Resources' board agenda.

Iron Range Resources' spokespeople were not immediately available for comment on Thursday morning, but Senator David Tomassoni, chairman of the agency's board, told the Star Tribune that he expects the deal to be approved.

PolyMet's stock was trading at $2.11 per share on Thursday morning, but it hit $3.68 in January and peaked at $4.70 within the past five years-meaning that if stock prices climb again, the deal could result in a profit for Iron Range Resources.

PolyMet plans to use the loan to purchase two land parcels within the Superior National Forest, which it intends to exchange with the U.S. Forest Service for land at the proposed mining site. However, the land exchange cannot occur until the environmental review process is completed, Gietzen said.

In the area near the proposed mine, PolyMet controls the mineral rights but does not own all of the land.

PolyMet's proposed project-which has been under environmental review for five years-involves nonferrous mining, or the mining of copper, nickel, and other precious metals. It includes an open-pit operation near Babbitt and carries a $600 million price tag. The company plans to ship the ore via an existing track and rail system to a plant that it owns in Hoyt Lakes.

Proponents of the proposed operation say that there are vast resources untapped in the area, and the project could revitalize the region.

PolyMet has indicated that the operation-dubbed NorthMet-would require approximately 1.5 million hours of construction labor and create 400 long-term jobs.

According to Iron Range Resources' documents, the project could also lead to “500 spin-off jobs and hundreds of construction jobs, as well as other development opportunities that will feed off PolyMet.”

Those opposing the project cite significant environmental impacts of the large-scale operation. Earlier this year, the Minnesota Department of Natural Resources issued a draft of its environmental impact statement (EIS), outlining the effects of the proposed PolyMet operation. The report found that the mine would affect the quality of surface and ground water, with discharges in some cases exceeding water quality standards.

Gietzen said “key improvements, modifications, alternatives, and mitigation measures to minimize the environmental impacts will be incorporated in the upcoming supplemental EIS,” although the company didn't outline the specific changes.

“This loan represents a business relationship between [Iron Range Resources] and PolyMet to create jobs, diversify, and expand the regional economy,” Gietzen said.