After U.S. financial markets closed for trading yesterday, Vancouver, B.C.-based Nevada Copper Corp. (NEVDF:OTC; NCU:TSX; ZYTA:FSE), announced that "it has agreed to non-binding terms with its key financing partners to provide up to US$93 million of liquidity to the company in order to support the restart and ramp-up of the company's Pumpkin Hollow copper mine located in Yerington, NV."
The firm used the opportunity to outline several of the key components and timelines for restarting the mine and processing facility. The company indicated that it anticipates that underground production at the site will gear up to around 3,000 tons per day (tpd) during Q3/23 and will increase to about 5,000 tpd in Q4/23.
Meaningful Changes Ahead
Nevada Copper's CEO Randy Buffington remarked, "The current pause of production allows the company to make meaningful changes to address challenges that were impeding the final stages of the Underground Mine ramp-up. This is intended to de-risk the business plan and build a more profitable long-term business from the Underground Mine."
"We also continue to advance the open pit project at Pumpkin Hollow through the ongoing pre-feasibility study update process … I look forward to working toward a resumption of full operations," CEO Buffington added.
The company commented that in conjunction with securing the restart financing package, it has taken steps to strengthen its board of directors.
The firm stated that its plan to restart the Pumpkin Hollow copper mine is designed to de-risk the path to full-scale production. The company explained that the restart plan aims at de-bottlenecking operations at the mine and rapidly completing critical capital projects. The firm stated that it intends to commence with the build-up of significant stope ore inventory, which it believes will be more economical and efficient when the mill at the property is restarted.
Nevada Copper stated that the new financing arrangement will allow it to perform some of the underground development and mining operations work in-house, which is expected to improve performance and accelerate the commencement of production. The company noted that the second dike crossing should be completed in Q3/22, and the final dike crossing should be finished by YE/22.
The firm anticipates that stopping will begin in the higher-grade East North mining zone in Q2/23, and the mill will be recommissioned for processing extracted material in Q3/23.
The company's stream and royalty partner Triple Flag Precious Metals Corp., will also be adding another US$30 million to finance the project by increasing its current net smelter returns royalty on Nevada Copper's open pit project up to 2% from 0.7% for a price of US$26.2 million.
The company commented that in conjunction with securing the restart financing package, it has taken steps to strengthen its board of directors. Nevada Copper advised that CEO Randy Buffington will be joining the Board as a director. In addition, Mercuria Energy and Triple Flag Precious Metals Corp. (TRFPF:OTCMKTS) will each have the right to nominate a director and to appoint a representative to serve on the Board's Technical Committee.
The company advised that it has entered into a non-binding agreement with its senior lender, working capital provider, the largest shareholder, and another prominent shareholder, and its streaming and royalty partner for a funding package of up to US$93 million to restart operations at the Pumpkin Hollow project.
Nevada Copper plans to utilize the proceeds from the financing to restart and ramp up production at the Underground Mine. The company stated that its largest shareholder Pala Investments Ltd. and another key stockholder Mercuria Energy will each provide US$20 million in exchange for Nevada Copper common shares. The firm noted that Pala Investments has already disbursed US$7.5 million of its US$20 million commitment.
Even More Royalty Streams
The company's stream and royalty partner Triple Flag Precious Metals Corp., will also be adding another US$30 million to finance the project by increasing its current net smelter returns royalty on Nevada Copper's open pit project up to 2% from 0.7% for a price of US$26.2 million. Triple Flag will also contribute another US$3.8 million by accelerating some existing metals purchase and sale agreements.
The firm's senior lender, KfW IPEX-Bank (KfW), has also agreed to provide an additional US$15 million in funding by upping the company's senior credit facility from US$10 million to US$25 million. As part of the increase in the credit line, Pala, Triple Flag, and Mercuria are required to commit the first US$15 million as a backstop.
The company stated that the remaining US$8 million balance would be funded through deferrals under its Senior Project Facility and Working Capital credit facilities from its working capital provider, Concord Resources Ltd.
The company stated that completion of the funding package is still pending and remains subject to the determination of the final terms, execution of definitive documentation, and certain regulatory requirements. The funding package is expected to be finalized in mid-September and will then be subject to the approval of the Toronto Stock Exchange.
The firm mentioned that "given the urgency of the company's liquidity situation, the company intends to rely on certain exemptions from the shareholder approval requirement that might otherwise apply under TSX rules and applicable securities laws."
Nevada Copper is domiciled in Vancouver, B.C., Canada, and is focused on the exploration, development, and operation of mineral properties in Nevada. The company holds a 100% interest in the Pumpkin Hollow copper project in Yerington, NV. The company indicated that Pumpkin Hollow has substantial copper, gold, and silver reserves and resources with two fully permitted projects, the firm's high-grade underground mine, and s processing facility.
Nevada Copper started the day with a market cap of around US$109.3 million with approximately 446.1 million shares outstanding. NEVDF shares opened unchanged today at US$0.2530 (+US$0.0001, +0.04%) over yesterday's US$0.2529 closing price. The stock has traded today between US$0.2530 and US$0.2915 per share and is currently trading at US$0.2781 (+US$0.0252, +9.98%).
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