Three Valley Copper trades heavily on loan talks
Three Valley Copper Corp [TVC-TSXV, TVCCF-OTCQB] shares rallied strongly in heavy trading Friday after the company released an update on discussions with senior lenders.
The company had previously warned that the cessation of mining activities at its open pit mine in Chile may result in one or more events of a default under an amended and restated senior secured lending facility.
On Friday, after the company said discussions with senior lenders are continuing, the shares jumped 22% or $0.02 to 11 cents on volume of 6.63 million, making Three Valley the most actively traded stock on the TSX Venture Exchange. The shares are currently trading in a 52-week range of $1.02 and $0.03.
Three Valley’s key asset is the 95.1%-owned Minera Tres Valles (MTV) mining complex in Salamanca, Chile, where the company is focused on bringing the Papomono block caving mine into production this year. The company has said the initial construction at Papomono has been completed and has reached the stage where the caving operation can begin. However, MTV has chosen to temporarily halt the start of block caving as its expected cash flows are not sufficient to fully support the planned ramp-up.
It said the move is designed to ensure Papomono is preserved until such time as the company, MTV, and its senior secured lenders finalize a solution to begin the ramp-up at Papomono as soon as possible. MTV’s senior secured lenders include Anglo American Marketing Ltd. and a fund managed by Kimura Capital LLP.
On Friday, the company said discussions with senior lenders are ongoing, and collectively the company, its MTV unit, and senor secured lenders agreed that it is in each party’s best interests to ensure Papomono comes into production responsibly, with the full support of all stakeholders and with minimal delay.
This development follows the recent suspension of operations at MTV’s Don Gabriel open pit mine, which has continued to deliver less ore tonnes at lower grades than forecasted, the company said.
It said the increasing production input costs and the continued underperformance of its open pit operation at Don Gabriel has significantly impacted MTV’s ability to generate cash.
On January 24, 2022, the company issued a statement saying it was retracting its revised preliminary operating outlook for 2022 and 2023.
The company said it produced 4,209 tonnes of copper cathodes last year, an amount that represents less than 25% of MTV’s overall copper cathode production capacity.
Three Valley also said that in order to further preserve liquidity, it was temporarily suspending its exploration program, and halting certain sustaining and expansion capital expenditures.
“Notwithstanding these actions, based on MTV’s current cash flow forecast, MTV will require additional financing in the next several months,” the company said. “Three Valley Copper currently maintains working capital of approximately US$7 million separate from MTV but this is not sufficient to finance the expected funding gap at MTV and fund the company’s ongoing corporate requirements,” the company added.