Nevada Copper Corp. (TSX: NCU) (OTC: NEVDF)
(“
Nevada Copper” or the
“
Company”) today provided an operations update and
announced filing of its Q2 2021 financial statements and the
related management’s discussion and analysis.
Operations Update
- Mining
of First Stope: During Q2 2021 the Company successfully
mined approximately 9,500 tons at a grade of 1.5% Cu out of the
first stope mined since the restart of the mine in the East South
area. Tons mined and ore breakage was consistent with the plan,
indicating that the mining method was appropriate for the ground
conditions where the stope is located, although mining of the stope
was later than originally planned. Subsequently, the stope was
successfully back-filled and the Company is now preparing to mine
the next stope in the East South area.
- Mine
Infrastructure: Mine infrastructure works were further
advanced during the quarter albeit slower than expected, including
the final two sets of underground fans installed and commissioned
as planned in Q2 2021, allowing for an increase in development
rates. Commissioning of the surface ventilation fans continues to
be planned for Q4 2021.
- Material Hoisting:
Following completion of the Main Shaft material handling system in
Q4 2020, the Underground Mine achieved a peak daily hoisting rate
of over 3,000 tons by February 2021 and has since achieved a
hoisting rate equivalent to 5,000 tons per day (“tpd”) on a shift
basis, demonstrating capacity of the shaft and associated materials
handling system. Due to slower development rates in Q2 2021 through
the water-bearing dike structure, the Company now expects to reach
sustainable hoisting rates of 3,000 tpd in Q4 2021 and for hoisting
rates to continue to ramp-up beyond that.
- Lateral
Development: Lateral development continued on multiple
headings, providing access to ore mining zones in the East South
orebody and advancing development towards the East North orebody.
During the Q2 2021 the Company continued development of the East
North area through a dike structure located between the East South
and East North orebodies. A second heading crossing the dike is 90
feet below the first heading. Additional ground support was
required to complete dike crossing and the Company is almost
through the water-bearing dike structure.
-
Processing: The process plant maintained average
concentrate grade over 21% along with 81% recoveries. While batch
processing ore through the processing plant, the Company achieved a
weekly average of 3,271 tpd. 87,211 tons of ore was processed
through the concentrator in Q2 2021 with an average feed grade of
0.51%. Approximately 1,514 tons of concentrate was produced at a
21% average copper grade for Q2 2021. During June, Sedgman
successfully completed C5 testing of the processing plant for grind
size and moisture of concentrate and tailings.
- Production ramp-up and Mine
Planning: The Company continues to advance its mine
planning process and has made revisions to the mine plan. The
revised mine plan incorporates the recent experiences during mine
development, including the geotechnical conditions of the East
South area. In light of the impact of the water-bearing dike
structure, expected equipment utilization rates and the remaining
infrastructure projects to be completed the Company now expects
that the Underground Mine will reach a hoisting rate of 3,000 tpd
in Q4 2021 and 5,000 tpd in H1 2022.
Property Development Plans
- Underground: The
Company has progressed its life-of-mine planning aimed at operating
its underground mine at an ultimate production rate in excess of
the originally contemplated 5,000 tons per day rate. Mine planning
work further supports the potential for the mine, once ramped-up to
steady-state, to operate at higher long-term rates of 6,500 tons
per day milled, increasing long-term annual copper production
potential.
-
Open Pit: The Company reviewed its longer-term
development targets for its Pumpkin Hollow property, including a
solar power study, electrification and emissions reduction
analysis, follow up work on scaling opportunities to improve
economics and plans for infill and extension drilling.
- Exploration: The Company plans to follow up on
new exploration targets added through recent expansion of the
Company’s properties to the east and analysis of geophysical
surveys.
Corporate
- Payroll Protection Program
Loan (“PPP Loan”) Forgiveness: on August 6, 2021, the
Company received confirmation for the approval of the forgiveness
of the PPP Loan in the amount of $2.4 million. The loan was
received in 2020 as part of a United States government COVID-19
pandemic program to assist companies to retain their
employees.
- KfW Credit Facility
Amendment Discussions: On June 30, 2021, the Company
received a waiver from KfW IPEX-Bank (“KfW”), the lender under its
amended and restated senior credit agreement (the “Amended KfW
Facility”), which provided for a 60-day extension to the project
completion longstop date (the final date to meet the requirements
of the project completion test under the Amended KfW Facility) (the
“Project Longstop Date”) from June 30, 2021 to August 31, 2021. The
Company has requested and expects to receive a further short-term
extension of the Project Longstop Date from KfW. The Company is
also in discussions with KfW to achieve a longer-term extension of
the Project Longstop Date to a date in 2023, the deferral of debt
servicing by twelve months and the temporary deferral of compliance
with certain financial covenants under the Amended KfW Facility as
the Underground Mine continues to ramp-up. The Company expects to
have the short-term extension finalized in the next few weeks and
the other proposed amendments finalized in the next few months.
However, there can be no assurance that such extension and
amendments will be finalized by such times or at all. Failure to
finalize the extension or these amendments would result in the
Company being in default under the Amended KfW Facility.
- 2021
Promissory Notes: The Company received a loan of $15
million under a promissory note with Pala Investments Limited
(“Pala”), the Company’s largest shareholder, in June 2021 (the
“2021 Promissory Note”) providing additional liquidity for the
ramp-up of the Underground Mine and addressing the reduced
development rates associated with crossing the water-bearing dike
structure. The 2021 Promissory Note has a maturity date of June 30,
2022, and bears interest at 8% per annum on amounts drawn.
Subsequent to the end of Q2 2021, Pala agreed to provide the
Company with additional loans of up to $27 million (of which $19
million has been received) pursuant to a series of amendments and
restatements of the 2021 Promissory Note (the “Amended and Restated
Promissory Note”) on the same terms and conditions as the original
2021 Promissory Note. Further draws by the Company are subject to
agreed use of proceeds and regulatory approval of the Amended and
Restated Promissory Note.
- 2021
Credit Facility: On February 3, 2021, the Company entered
a credit facility with Pala, for $15 million to be drawn by the
Company (the “2021 Credit Facility”). The 2021 Credit Facility also
provided $15 million under an accordion feature. The full $30
million has been drawn by the Company.
Senior Management Changes
Mike Ciricillo will be stepping down from the role of President
and Chief Executive Officer of the Company, effective August 14,
2021.
Mike Brown will assume the role of Interim President and Chief
Executive Officer. Mr. Brown has been a non-executive director of
Nevada Copper since 2013 and has over 35 years of underground and
open pit mining experience, including as Chief Operating Officer of
De Beers Consolidated Ltd., where he was responsible for five
operating mines. Mr. Brown has also managed a number of major
projects, including the $750 million Finsch block 4 project, the
$1.3 billion Venetia underground feasibility study, and a $200
million construction and commissioning of the Voorspoed mine.
Mr. Ciricillo will continue to provide support at the Pumpkin
Hollow site for a transition period.
“The board of directors would like to thank Mr. Ciricillo for
his contributions to the Company, including execution on ramp-up of
the Underground Mine, and look forward to his ongoing support,”
stated Chairman Mr. Gill. “The board of directors is pleased to
welcome Mr. Brown as interim President and CEO and look forward to
his leadership in that role.”
Q2 2021 Financial Statements
The Company has filed on SEDAR its condensed
interim financial statements and the related management’s
discussion and analysis for the quarter ended June 30, 2021. These
documents are available on the Company’s website at
www.nevadacopper.com and the Company’s SEDAR profile at
www.sedar.com.
Qualified Persons
The technical information and data in this news
release was reviewed by Greg French, C.P.G., and Norm Bisson,
P.Eng., for Nevada Copper, who are non-independent Qualified
Persons within the meaning of NI 43-101.
About Nevada Copper
Nevada Copper (TSX: NCU) is a copper producer
and owner of the Pumpkin Hollow copper project. Located in Nevada,
USA, Pumpkin Hollow has substantial reserves and resources
including copper, gold and silver. Its two fully permitted projects
include the high-grade underground mine and processing facility,
which is now in the production stage, and a large-scale open pit
project, which is advancing towards feasibility status.
NEVADA COPPER CORP.www.nevadacopper.com
Mike Ciricillo, President and CEO
For further information contact:Rich Matthews,
Investor RelationsIntegrous Communicationsrmatthews@integcom.us+1
604 757 7179
Cautionary Language
This news release includes certain statements
and information that constitute forward-looking information and
forward-looking statements within the meaning of applicable
Canadian and United States securities laws. All statements in this
news release, other than statements of historical facts are
forward-looking statements. Such forward-looking statements and
forward-looking information specifically include, but are not
limited to statements and information that relate to: Nevada
Copper’s plans for the Project; negotiations with KfW regarding
amendments to the Amended KfW Facility and waivers thereunder; the
Company’s mine development, production and ramp-up plans and the
expected timing, costs and results thereof; the need for additional
funding; the resolution of hydrogeological issues; the impacts of
the COVID-19 pandemic on the global economy and the Company; future
ore and concentrate production rates; expected commencement of
positive cash flow from operating activities; the ongoing
exploration activities and the objectives and results thereof; and
the other plans of Nevada Copper with respect to the exploration,
development, construction and commercial production at the
Underground Mine.
Forward-looking statements and information
include statements regarding the expectations and beliefs of
management. Often, but not always, forward-looking statements and
forward-looking information can be identified by the use of words
such as “plans”, “expects”, “potential”, “is expected”,
“anticipated”, “is targeted”, “budget”, “scheduled”, “estimates”,
“forecasts”, “intends”, “anticipates”, or “believes” or the
negatives thereof or variations of such words and phrases or
statements that certain actions, events or results “may”, “could”,
“would”, “might” or “will” be taken, occur or be achieved.
Forward-looking statements or information should not be read as
guarantees of future performance and results. They are subject to
known and unknown risks, uncertainties and other factors which may
cause the actual results and events to be materially different from
any future results, performance or achievements expressed or
implied by such forward-looking statements or information.
Such risks and uncertainties include, without
limitation, those relating to: the ability of the Company to
complete the ramp-up of the Underground Mine within the expected
cost estimates and timeframe; requirements for additional capital
and no assurance can be given regarding the availability thereof;
the impact of the COVID-19 pandemic on the business and operations
of the Company; the state of financial markets; history of losses;
dilution; adverse events relating to milling operations,
construction, development and ramp-up, including the ability of the
Company to address underground development and process plant issues
and penetrate the dike at the Underground Mine; failure to obtain
extensions under and amendments to the Amended KfW Facility; ground
conditions; cost overruns relating to development, construction and
ramp-up of the Underground Mine; loss of material properties;
interest rates increase; global economy; limited history of
production; future metals price fluctuations; speculative nature of
exploration activities; periodic interruptions to exploration,
development and mining activities; environmental hazards and
liability; industrial accidents; failure of processing and mining
equipment to perform as expected; labour disputes; supply problems;
uncertainty of production and cost estimates; the interpretation of
drill results and the estimation of mineral resources and reserves;
changes in project parameters as plans continue to be refined;
possible variations in ore reserves, grade of mineralization or
recovery rates from management’s expectations and the difference
may be material; legal and regulatory proceedings and community
actions; accidents; title matters; regulatory approvals and
restrictions; increased costs and physical risks relating to
climate change, including extreme weather events, and new or
revised regulations relating to climate change; permitting and
licensing; volatility of the market price of the Company’s
securities; insurance; competition; hedging activities; currency
fluctuations; loss of key employees; other risks of the mining
industry, as well as those risks discussed in the Company’s
Management Discussion and Analysis in respect of the year ended
December 31, 2020 and in the section entitled “Risk Factors” in the
Company’s Annual Information Form dated March 18, 2021. Should one
or more of these risks or uncertainties materialize, or should
underlying assumptions prove incorrect, actual results may vary
materially from those described in forward-looking statements and
information. The forward-looking statements and information
contained herein are based upon assumptions management believes to
be reasonable, including, without limitation: no adverse
development in respect of the property at the Project; no material
changes to applicable laws; the ramp-up of operations at the
Underground Mine in accordance with management’s plans and
expectations; no worsening of the current COVID-19 related work
restrictions; reduced impacts of the COVID-19 pandemic in the
medium-term and long-term; no material adverse change to the price
of copper from current levels; and the absence of any other factors
that could cause actions, events or results to differ from those
anticipated, estimated or intended. The forward-looking information
and statements are stated as of the date hereof. Nevada Copper
disclaims any intent or obligation to update forward-looking
statements or information except as required by law. Readers are
referred to the additional information regarding Nevada Copper’s
business contained in Nevada Copper’s reports filed with the
securities regulatory authorities in Canada. Although the Company
has attempted to identify important factors that could cause actual
actions, events, or results to differ materially from those
described in forward-looking statements, there may be other factors
that could cause actions, events or results not to be as
anticipated, estimated or intended. For more information on Nevada
Copper and the risks and challenges of its business, investors
should review Nevada Copper’s filings that are available at
www.sedar.com.
Nevada Copper provides no assurance that
forward-looking statements and information will prove to be
accurate, as actual results and future events could differ
materially from those anticipated in such statements or
information. Accordingly, readers should not place undue reliance
on forward-looking statements or information.
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