Nevada Copper faces challenges, CEO steps down
Nevada Copper Corp. [NCU-TSX] shares tumbled amid heavy trading Monday after the company said the ramp-up timeline for its Pumpkin Hollow copper mine in Nevada, has been delayed again due to ongoing operational challenges.
The company also said its President and CEO Mike Ciricillo has stepped down, effective immediately. Also, although Pala Investments Ltd. (the company’s largest shareholder) has recently loaned the company an incremental $27 million, Nevada Copper will need to secure additional sources of capital by this fall to complete the ramp-up.
As a result, it is expected that the company will need to secure new waivers and amendments from its lenders to avoid a credit default
The project and financial update as well as the announcement of Ciricillo’s departure, came after the close of trading on Friday 13, 2021.
On Monday, the shares sank on the news, falling 27% or $0.045 to 12 cents on volume of 11.8 million. The shares have previously traded in a 52-week range of 31.5 cents and $0.06. The made it the volume leader on the Toronto Stock Exchange.
Pumpkin Hollow is a high-grade skarn/iron oxide copper gold (IOCG) deposit located within a porphyry copper district within the Walker Lane mineral belt of western Nevada.
The project hosts an underground mine as well as a permitted open pit development project located four kilometres west of the underground mine.
Production at Pumpkin Hollow’s processing plant began on December 16, 2019, utilizing development ore stockpiled during the underground mine construction.
Nevada Copper was previously expected to produce up to 50 million pounds of copper in 2021 and 64 million pounds in 2022. That compares to an average of 50 million pounds over a projected 14-year mine-life. During the first five years of production, the all-in-sustaining cost is expected to be US$1.86 a pound. The life of mine all-in-sustaining cost is expected to be US$1.96 a pound.
However, due to ongoing operational challenges, the planned target for achieving steady-state production of 5,000 tonnes per day has been further delayed to the first half of 2022. That compares to an earlier target in the fourth quarter of 2021.
The processing plant operated for only 27 days in the second quarter of 2021 due to a lack of ore feed. Overall, the operation produce 1,514 tonnes of concentrate during the second quarter of 2021, containing only 600,000 pounds of copper.
This was due to slower-than-anticipated progress through a previously disclosed water-bearing dyke structure.
Nevada Copper now anticipates the operation reaching a sustainable hoisting rate of only 3,000 tonnes per day in the fourth quarter of 2021, with steady state design production rates of 5,000 tonnes per day delayed to the first half of 2020. No other details of the revised mine plan have been released.