Nevada Copper unveils US$115 million financing

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Nevada Copper Corp. [NCU-TSX] on Tuesday May 7 announced details of a US$115 million project financing facility and the launch of a public offering of common shares that is expected to raise an additional US$30 million.

News of the financing comes after Pala Investments Ltd. of Zug, Switzerland said it was spending $12.6 million to acquire an additional 31.4 million shares of Nevada Copper at 40 cents per share, leaving Pala with a 41.2% stake in the company.

Nevada Copper shares were unchanged at 39.5 cents Tuesday and trade in a 52-week range of 33 cents and 72 cents.

Nevada Copper recently announced the results of a Pre-Feasibility Study for an open pit mine at its 100%-owned, fully permitted Pumpkin Hollow Project, near Yerington, 100 miles southeast of Reno, 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 that is currently in construction and is expected to see first production by the fourth quarter of 2019.

The permitted open pit development project is located 4 km west of the underground mine.

On Tuesday, Nevada Copper said its wholly-owned subsidiary Nevada Copper Inc. has entered into a US$115 million credit agreement with KfW IPEX-Bank to provide an attractive, long-term project senior debt facility supported by a loan guarantee issued by the Federal Republic of Germany through Eurler Hermes for the underground mine at Pumpkin Hollow.

Nevada Copper has entered into a complementary financing and offtake arrangements in connection with the underground project, including:

  • A US$35 million working capital facility with Concord Resources Ltd.
  • Offtake agreements with Aurubis AG and Aurubis Bulgaria AD and Concord.

In addition, Nevada Copper will enter into a US$26.4 million cost overrun facility to be provided by the company to subsidiary Nevada Copper Inc. The cost overrun facility will be partially funded by proceeds of equity offerings (described below). The remainder will be covered by a third-party guarantee and backstopped by an equity standby facility.

Nevada also said Tuesday it will file a preliminary prospectus supplement to its short form base shelf prospectus dated June 13, 2018 in connection with a public offering of shares. The public offering will be conducted through a syndicate of underwriters. The company said it intends to sell additional shares by way of concurrent private placements.

Gross proceeds of the public offering and private placements are expected to be approximately US$30 million. Net proceeds of the equity offering are expected to be used to partially fund the cost overrun facility, satisfy the KfW IPEX-Bank Facility’s minimum equity to debt funding requirement and cover a portion of the costs associated with the financing arrangements, construction and ramp-up of the underground project and general corporate requirements.

Proceeds will also be used to facilitate the acceleration of the company’s 2019 exploration program in light of the previously announced significant potential demonstration by the mineralization discovered at its newly staked claims and extensions to the deposits at the open pit portion of the project.

The Pre-Feasibility Study (PFS) is based on open pit measured and indicated resources of 553 million tonnes, grading 0.45% copper, 0.07 g/t gold, and 1.85 g/t silver per ton. That amounts to 5.0 billion pounds of contained copper, 879,000 ounce of gold and 29.78 million ounces of silver.

The PFS for the open pit foresees a mine life of 19 years, with peak annual copper production of 11,000 tonnes (244 million pounds) at a cash cost of US$1.73 a pound net of by-product credits.

The initial Capex is forecast at US$672 million and envisages a phased production growth consisting of an initial production scale of 37,000 tonnes per day, rising to 70,000 tonnes and flexibility over timing of the expansion.

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