Maurice Jackson: Joining us for a conversation is Matthew Gili, the president and CEO of Nevada Copper, North America's next copper producer.
Matthew, who is Nevada Copper Corp. (NCU:TSX), and what is the value proposition you present for investors?
Matthew Gili: All right, who is Nevada Copper? Nevada Copper is a developing copper producer in western Nevada. Its chief asset is Pumpkin Hollow, which is located near the town of Yerington. It's a fully permitted, shovel-ready, copper project with 5 billion pounds of copper. We're targeting initial production from the underground in late 2019. Run by a team of mine builders, supported by strong copper fundamentals, we will be the next copper producer.
There's three legs to the value proposition. I like to talk about the first being the underground, and that's what our announcement earlier today really brings to light, the development of our underground operations.
The second of the three legs of the value proposition is about the open pit, the deposits adjacent to the underground deposit that has the potential. This really will be the next phase of growth for Nevada Copper.
And lastly, the region of Yerington that historically was a major copper producer from Anaconda, and there's a lot of potential in that region. So we see ourselves with that first mover advantage in Yerington district.
Maurice Jackson: Nevada Copper just released some breaking news, which I know your entire team is proud to announce. What can you share with us?
Matthew Gili: It's a very exciting and a very monumental day for Nevada Copper. What we announced is that the Board of Directors for Nevada Copper has approved the construction decision, and authorized the expenditure of $197 million to bring the underground and associated processing facility to full production. That work has started, but will now commence in full earnest, such that we're able to start producing concentrate in the fourth quarter of 2019.
Maurice Jackson: Allow me be the first to congratulate Nevada Copper on this monumental accomplishment. Mr. Gili, what are the economics of the underground mine?
Matthew Gili: At full production, will be 5,000 tons a day, producing about 27,000 tons of copper in concentrate. The NPV at 5% is about $301 million. The yield as far as free cash flow is about $80 million per year over the first five years, with about a 13-year mine life.
Maurice Jackson: Now, I understand that Nevada Copper has taken an extra measure of protection by adding a standby loan facility. Can you explain the benefits of this standby loan facility?
Matthew Gili: One of the positives of Nevada Copper is that we have such a strong and experienced Board of Directors. And what they bring to this is knowing how to manage and mitigate risks, something that we feel very strongly about. And one risk for any project is making sure that you are fully funded towards the end, when you're starting to wrap up your production.
So this is a facility that was brought on by our largest single shareholder, Pala. It is a subordinated standby of up to $25 million such that, if there are any hiccups, if there any needs for additional funding, we have that facility available ahead of time. It also allows Nevada Copper to be able to pursue that open pit and regional strategies as I alluded in my previous response, such that we can grow the company and really make it a broad based company, not focusing solely on the underground.
Maurice Jackson: Not to undermine what we've discussed so far in today's interview, but does Nevada Copper have any updates on its pre-feasibility study?
Matthew Gili: The schedule for the pre-feasibility study for the open pit is first quarter of January of 2019. What we are doing right now is completing the Preliminary Engineering Assessment, the PEA, for the open pit, that we can insert into our current technical report. That PEA will really outline our strategy for the open pit. It's markedly different than the previous strategy for the open pit in that we're really focusing on a smaller capital expenditure, smaller pit, but focusing on the high grade portion deposit. That PEA will come out in this quarter. It won't have all of our current drilling. So as you know, Maurice, we've been actively exploring on the property this year. We've completed 26 new holes. That assay data and that geologic interpretation is being worked into the resource model, and that new information will go into the resource model with the submission of the PFS in the first quarter 2019.
Maurice Jackson: What is the next unanswered question for Nevada Copper? When should we expect results, and what determines success?
Matthew Gili: So the next unanswered question for Nevada Copper would really be when do we bring that open pit online. When do we start to develop that? Right now, we're planning on the end of 2020 to begin construction. That's going to depend upon a lot of different factors. What determines success for that? Well, it's really shareholder value, right? When is the right time to bring that on? What is the right configuration for that open pit, and how do we get the most shareholder value for the assets that we own?
Maurice Jackson: If Plan A doesn't work, what is Plan B?
Matthew Gili: So Plan A is the open pit, is a reduced volume focused on the high-grade copper mine. Really, what would cause that not to work would be an increase in copper price that would want us to develop that faster. So what we do is pursue the necessary facilities so we can bring that open pit online sooner. Plan B is actually a really good case, and that is that there's so much interest in copper that we actually want to accelerate the development of the open pit.
Maurice Jackson: Matthew, what keeps you up at night that we don't know about?
Matthew Gili: What I focus on the most is personnel, making sure that I am able to bring together the right team to really bring this forward. I wouldn't say that it keeps me up at night, but it's something that I'm very focused on and something that is always in my mind. How can we bring on the highest quality talent, and how can we develop that quality talent within the organization?
Maurice Jackson: Last question. What did I forget to ask?
Matthew Gili: We've touched on the standby facility, touched on the open pit. We are also excited about region, Yerington as a district, historically a very large producer, lots of interesting prospects in the region, and really this, Pumpkin Hollow is the base by which we will grow Nevada Copper.
Maurice Jackson: Matthew, for someone who wants to get more information about Nevada Copper, please share the contact details.
Matthew Gili: Simple contact details, nevadacopper.com, and there's a lot of information in there. You'll be able to see our latest investor presentations, and really get a good understanding of what I've touched on today in this discussion.
Maurice Jackson: For our audience today, we wish to remind you that Nevada Copper trades on the TSX symbol NCU, and on the OTC symbol NEVDF. For additional inquiries, please contact Richard Matthews at (604) 683-8992, or you may email [email protected].
Matthew Gili of Nevada Copper, thank you for joining us today, on Proven and Probable.
And as a reminder for our listeners, Nevada Copper is a sponsor of Proven and Probable, and that we are proud shareholders of Nevada Copper for the virtues conveyed in today's message. And last but not least, please visit our website www.provenandprobable.com where we interview the most respected names in the natural resource space. You may reach us at [email protected].
Maurice Jackson is the founder of Proven and Probable, a site that aims to enrich its subscribers through education in precious metals and junior mining companies that will enrich the world.
[NLINSERT]Disclosure:
1) Matthew Gili: I, or members of my immediate household or family, own shares of the following companies mentioned in this article: Nevada Copper. I personally am, or members of my immediate household or family are, paid by the following companies mentioned in this article: Nevada Copper.
2) Maurice Jackson: I, or members of my immediate household or family, own shares of the following companies mentioned in this article: Nevada Copper. I personally am, or members of my immediate household or family are, paid by the following companies mentioned in this article: None. My company has a financial relationship with the following companies mentioned in this article: Nevada Copper is a sponsor of Proven and Probable. Proven and Probable disclosures are listed below.
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