Nevada Copper unveils financing, mine restart plan

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Nevada Copper Corp. [NCU-TSX] said it has agreed to non-binding terms with its key financing partners to provide US$93 million worth of liquidity to the company to support the restart and ramp-up of the Pumpkin Hollow copper mine, which is located in Yerington, Nevada.

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.

“The current pause of production allows the company to make meaningful changes to address challenges that were impeding the final stages of underground ramp-up,” said Nevada Copper CEO Randy Buffington.

Highlights of the non-binding package are as follows:

  • Equity investments of US$40 million. Nevada Copper’s largest shareholder Pala Investments Ltd. and Mercuria (a commodity trading house) would each provide US$20 million in exchange for common shares of the company.
  • Streaming and royalty financing of US$30 million. Triple Flag Precious Metals Corp. [TFPM-TSX, TFPM.U-TSX] would increase its existing net smelter returns royalty on the open pit project from 0.7% to 2.0% for a purchase price of US$26.2 million, subject to a full buyback of the increased royalty percentage.
  • In addition, Triple Flag would accelerate the US$3.8 million remaining to be funded under the company’s existing metals purchase and sale agreement with Triple Flag.
  • The company’s senior credit facility with KfW IPEX-Bank (KfW) would be amended to provide for a new tranche of up to US$25 million, of which Pala, Triple Flag and Mercuria would commit the first US$15 million as a backstop.
  • The package also includes deferrals under senior project and working capital facilities. These deferrals are expected to be worth at least US$8 million.

Details of the financing package and a mine restart plan were announced after the close of trading on August 25, 2022, when Nevada Copper shares closed at 31.5 cents. The shares are currently trading in a 52-week range of $1.22 and 20 cents.

In a press release, Nevada Copper outlined key components of the restart plan, including:

  • Changes to the underground mining contractor arrangements in order to improve performance of ramp-up activities with the ultimate goal of transitioning certain underground mining activities to be company-performed.
  • The second dike crossing scheduled to be completed during the third quarter of 2022 and the final dike crossing scheduled to be completed by the end of 2022.
  • Stoping in the higher-grade East North mining zone scheduled to commence in the second quarter of 2023.
  • The mill restart scheduled to commence in the third quarter of 2023.

Nevada Copper said that if the restart plan is executed as planned and on schedule, management anticipates that underground production will ramp-up to hoisting rates of approximately 3,000 tons per day in the third quarter of 2023 and then further increase to 5,000 tons in the fourth quarter of 2023.

“This revised operating plan is designed to mitigate operating risks and enhance flexibility of the underground operations,’’ Nevada Copper said.

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