A new financing package brings Nevada Copper (TSX: NCU; US-OTC: NEVDF) closer to restarting and ramping-up its troubled Pumpkin Hollow underground copper mine in Nevada.
Pumpkin Hollow consists of two fully permitted projects — an underground mine and processing facility, now in the production stage, and an open-pit project, which the company is advancing towards a feasibility study.
Key components of the multi-pronged financing deal include equity investments of US$40 million by Pala Investments, Nevada Copper’s largest shareholder, and an agreement with Triple Flag Precious Metals to increase its existing net smelter return royalty on the Pumpkin Hollow open-pit project from 0.7% to 2% for a purchase price of about US$26.2 million.
In addition, Triple Flag accelerated the roughly US$3.8 million remaining to be funded under the company’s existing metals purchase and sale agreement. (Triple Flag will receive shares in satisfaction of its reimbursable expenses.)
KfW IPEX-Bank GmbH also amended its senior credit facility to provide for a new tranche of up to US$25 million. Of that amount, Pala, Triple Flag and Mercuria, another significant shareholder in the company, committed the first US$15 million as a backstop. The bank also deferred three interest payments (about US$13 million) under the facility.
Another element of the deal is a commitment from Pala to provide additional backstop support of about US$25 million (via shares, convertible and or non-convertible debt).
The Pumpkin Hollow mineral processing plant at night. Credit: Nevada Copper
In an earlier press release on Oct. 25, Nevada Copper estimated ramp-up costs would be in the range of US$70 million to US$75 million, in addition to satisfying or deferring payments to vendors, which it then estimated were about US$24.5 million. At the time it also estimated capital expenditures of about US$15.9 million, about US$35.9 million to fund operating costs, and about US$4 million for general corporate purposes and overhead.
Pumpkin Hollow is about 13 km southeast of the town of Yerington.
Over the last year Nevada Copper has traded in a range of 20¢ and $1.09, and at presstime in Toronto was trading at 26¢.
The company has about 449 million common shares outstanding for a market cap of roughly $117 million.
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