Nevada Copper rides red metal optimism

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The headframe at Nevada Copper’s Pumpkin Hollow copper project 100 miles southeast of Reno, Nevada. Source: Nevada Copper Corp.

Nevada Copper Corp. [NCU-TSX] said Friday June 29 that it is upsizing a previously announced offering of common shares. Due to significant demand from institutional and retail investors, the company said it is increasing the value of the offering to $96 million from $80 million.

Net proceeds from the offering will be used to swiftly advance Nevada Copper’s underground project to first production, and to continue to develop the re-engineered open-pit project at its 100%-owned, fully permitted Pumpkin Hollow Project in Nevada.

“We are very pleased with the strong demand from investors to participate in the offering, and would like to thank our existing shareholders and new institutional and retail investors for their support,” said Nevada Copper President Matt Gill.

“Delivery of the Pumpkin Hollow underground project and the execution of our strategy of capital-efficient phased growth from our base in Nevada remains our key focus, and this financing is a key milestone in achieving this objective.”

In connection with the offering, the company has entered into an agreement with a syndicate of underwriters led by National Bank Financial Inc., BMO Capital Markets, and Scotiabank acting as joint bookrunners, and including Numis Securities Ltd., TD Securities Inc. and Haywood Securities Inc. to sell 160 million shares at 60 cents a share.

Nevada shares eased 1.64% or $0.01 to 60 cents on Friday. The 52-week range is 45 cents and 84 cents.

The company has also granted the underwriters and overallotment option to purchase an additional amount equal to 15% of the number of shares sold in the offering. The overallotment option is exercisable in whole or in part any time up to 30 days from the closing of the offering.

Closing is expected to occur by July 9, 2018.

News of the expanding offering follows reports that mining giant Rio Tinto PLC [RIO-NYSE] wants copper really badly and will pay top dollar to get it. According to a report by Reuters news service, Rio Tinto is ready to pay a 30-40% premium over any prime target’s stock market value to secure a prime asset as it tries to reduce its reliance on iron ore.

The Reuters article, citing sources, notes that if Rio can’t land a big copper project, it is weighing the cumulative power of a series of more modest acquisitions to increase its exposure.

According to Reuters, possible targets might include Nevsun Resources Ltd. [NSU-TSX; NYSE AMERICAN], the target of a takeover proposal by Euro Sun Mining Inc. [ESM-TSX, CPNFF-OTC] and Lundin Mining Corp. [LUN-TSX; LUMI-Sweden].

Another possible target, Reuters says, is First Quantum Minerals Ltd. [FM-TSX], which holds a 90% stake in the Cobre Panama mining project. The company recently said the $5.5 billion project is over 60% complete and on schedule for a gradual start-up beginning in 2020.

Cobre Panama is a large open-pit copper development project located in the Panama jungle, about 120 km west of Panama City.

First Quantum also holds a 100% interest in the Taca Taca Project in Argentina. Taca Taca is a copper-gold-molybdenum porphyry deposit which is currently in the advanced exploration stage.

Another key asset is Haquira, a large undeveloped copper deposit, located in southern Peru.

Copper assets currently account for about 80% of First Quantum’s revenue.


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