Nevada Copper—Near-Term Production of Large-Scale Copper Project in Nevada
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Nevada Copper (TSX:NCU) is an emerging copper company focused on bringing its wholly-owned Pumpkin Hollow copper project in the mining-friendly jurisdiction of Nevada, US to near-term production. The property hosts a total mineral reserve of over 5 billion pounds of copper and measured and indicated resource of over 6 billion pounds. The project is the only large-scale copper project fully permitted within the US and is well positioned to enter a copper market with a looming supply deficit and rising prices.
The property hosts two potential copper-gold-silver projects that were outlined in the company’s 2017 NI43-101 Technical Report. This TR discloses: A) a Prefeasibility level Study (PFS) on a 5,000 tons/day underground operation; and, B) a Feasibility-level Study (FS) for an integrated open-pit and underground production of 70,000 tons per day. The company plans to bring the underground project to production by mid-2019, during which time it will continue to advance evaluations of a smaller, enhanced open-pit project, using revenue from the former to fund the latter. Once both project streams are underway, integrated production has the potential to be in excess of 250 million pounds of copper per year.
Nevada Copper is led by a management team with vast experience in the mining industry and is supported by a team of board members that bring both mining and financial expertise. The management team is also significantly invested in the company and is supported by a number of institutional investors including Pala Investment Limited, a long-term cornerstone investor of the company.
- US-based copper project ready for near-term production within Nevada’s mining-friendly jurisdiction
- Plan for fully-funded underground production supported by robust 2017 prefeasibility study
- Underground project post tax NPV (5 percent) of US$301 million and IRR of 25 percent
- Total mineral reserve of 5 billion pounds of copper and measured and indicated resources of over 6 billion pounds of copper
- Combined production potential of over 250 million pounds per year
- Underground production set to begin in mid 2019 and revenue used to fund open-pit operation
- Recently closed financing package of $128.2 million
- Exceptional management team with notable experience in permitting, financing, and operating large mining projects
The Pumpkin Hollow project is an advanced-stage, fully permitted copper property with resources and reserves that also include gold, silver and iron. The project measures 10,680 acres and is located eight miles away from Yerington, Nevada, a town with a history of copper mining. As such, the project has easy access to existing mining infrastructure, low cost of power and support from the nearby community.
The Pumpkin Hollow project was first discovered in 1960 by US Steel, using airborne magnetic surveys. Leading up to 2001, 180,000 meters were drilled by previous owners and managers of the project, leading to the discovery of large copper and magnetite resources. Up until that time, a number of economic studies were also conducted alongside vast metallurgical, geotechnical and geophysical studies.
In 2005, Nevada Copper acquired the property and has since completed a further 180,000 meters of drilling and complementary ground work to support permitting and feasibility efforts. They also published four separate NI 43-101-compliant resource estimates, a preliminary economic assessment (PEA) in 2008 and three separate feasibility studies.
To date, US$220 million of capital has been invested in the project. Construction for the underground operation began in 2012, during which time the company built of a 24-foot production-sized shaft to the 1,900-foot main haulage level. Additionally, 644 feet of lateral development were completed, setting the stage for production on the property. Above ground, the company has also built a head-frame and hoist.
Near-term underground production potential
In November 2017, Nevada Copper redefined its project by releasing an updated PFS for two potential projects on the Pumpkin Hollow property: a high-grade 5,000 tonne-per-day underground operation and a 70,000 tonne-per-day integrated project of both open pit and underground mining.
The underground project PFS was developed with a focus on reduced capital costs and the extraction of higher-grade, higher-margin ore from a 23.9 million-tonne reserve at 1.74 percent copper. The designed approach would make combined use of the existing shaft and hoist on the property and an EPC construction and mining contracts, thus de-risking the project.
Details from the underground project PFS include:
- Low initial pre-production capital requirements of US$182 million
- Post tax NPV (5 percent) of US$301 million and an IRR of 25 percent
- Estimated 15 months to production (end of 2019)
- Mine life of 13.5 years
- Average annual copper production of 50 million pounds
Having received full permitting from the state and federal governments, Nevada Copper plans to begin construction in mid-2018 and production of the underground project in mid-2019. This positions the company favourably as the copper market is entering an expected supply deficit and as Pumpkin Hollow is currently the only permitted large-scale copper project in the US.
The combined open-pit and underground operation outlined in the 2017 PFS outlined an open-pit and underground reserve of 5 billion pounds of copper, 0.76 million ounces of gold and 27.6 million ounces of silver.
The PFS for the integrated project depicted the following:
- Annual production of 311 million pounds of copper for the first five years
- Mine life of 23 years with significant expansion potential from the northern deposit
- NPV (5 percent) of US$1.2 billion and IRR of 16 percent at consensus metal prices
- Low capital expenditure of US$4.73 per annual pound of copper production
Nevada Copper sees additional growth opportunities for the open-pit operation, which is made up of two large-scale deposits. There is significant upside potential within the Northern Deposit, which remains open on its eastern and southeastern boundaries. There is also region within the Northern Deposit—the Northern Extension—that has yet to be drilled and it potential value opportunities as the high-grade, near-surface mineralization of the deposit is demonstrated to continue into the area. Having received the permitting to do so, the company will focus its next stage of drilling on this area to further understand the resource.
Path to production
Nevada Copper’s strategy for bringing the project to near-term production and unlock long-term value is based on bolstering the experience of the team and generating cash flow for the project. To this effect, the company has recently completed a financing initiative in which they raised C$128.2 million that helps fully fund the underground portion of the project. Moving forward, the company will deploy its next drilling program for the open-pit project in order to continue developing it while launching the underground operation in mid-2019.
Abraham Jonker—Interim President and Chief Executive Office, Director
Abraham Jonker, currently a non-executive director of the Company, will assume Mr. Bonifacio’s responsibilities as interim President & Chief Executive Officer, effective from February 15, 2018, and will work closely with Mr. Bonifacio to ensure an orderly transition until a new President & Chief Executive Officer has been appointed by the Company.
Abraham Jonker is a registered Chartered Accountant in British Columbia (Canada), England and Wales as well as South Africa. He is also a member of the Chartered Institute of Management Accountants in the United Kingdom and holds a Master’s Degree in South African and International Tax from the Rand Afrikaans University. He has more than 20 years of extensive management, accounting and corporate finance experience across five continents, mostly in the mining industry. He currently serves as Chairman of the Board of Golden Reign Resources and is Lead Independent Director of the Board of Directors of Mandalay Resources Corporation. He was Chief Financial Officer of Western Coal Corporation at the time of its take-over by Walter Energy for $3.3 billion. During his career he has played a pivotal role in several business recoveries, has been a key team member at management level in the strategic growth of several public companies, has raised and overseen the raising of more than $500 million in the form of equity and debt instruments and has been involved in corporate transactions aggregating several billion dollars.
Robert McKnight—EVP and CFO
Robert McKnight is a Professional Engineer and MBA with over 30 years of experience in the resource business with a wealth of knowledge in project finance, mergers and acquisitions, feasibility studies and valuations. He is a geological engineer with broad experience in the mining industry having held senior roles with Brascan Resources, Wright Engineers, Getty Resources, TOTAL S.A., Endeavour Financial, Pincock Allen & Holt Ltd., AMEC, Yukon Zinc and most recently Selwyn Resources. He is a graduate of the University of British Columbia and Simon Fraser University with degrees in Geological Engineering and Business Administration.
Phillip Day has significant project delivery and operating experience, and brings key project management skills required to advance the Underground Project into construction phase. His project construction experience includes senior roles with AMEC Americas, where he managed a number of major projects, including the brownfields expansion of Corrego do Sito Gold Project and the $1 billion Gramalote gold study for AngloGold Ashanti. Previously he worked in managerial, operational and technical roles for BHP Billiton and WMC Resources as well as commissioning and operation of the Minara Resources Murrin Murrin Nickel Laterite project. He is presently Head of Technical and Operations at Pala Investments.
Greg French—VP Exploration and Project Development
Greg French is a geologist with over 25 years of exploration experience in the Western US and Canada . He has worked in various capacities for Homestake Mining Co, Atlas Precious Metals and Cornerstone Industrial Minerals as well as consulting for numerous junior mining companies. He has a Nevada gold discovery to his credit and extensive project development experience including two projects taken through feasibility and production.
Timothy Dyhr—VP Environment and External Relations
Timothy Dyhr has 35 years of experience in mining. He has led multidisciplinary teams to successfully permit copper and gold mines in Nevada since 1983, and worked on projects in Arizona, California, Washington, Montana, Wyoming, Peru, Chile, Argentina, Australia, Africa, Turkey, China and Papua New Guinea. His experience includes environmental, regulatory, land and legal affairs; and government, media, NGO and public relations. He has worked as a mine site environmental manager, environmental consultant, natural resources manager, and group environmental manager for BHP Copper.
Gus McDonald—VP Controller
Gus McDonald is a chartered accountant with over ten years of accounting, administration, and systems experience. His work experience includes international accounting experience in the USA and England. During the last seven years he has focused on the mining industry. Prior to joining the Nevada Copper team he worked in a financial reporting role at the KGHM Canadian subsidiary (formerly Quadra FNX Mining Ltd).
Eugene Toffolo—VP Investor Relations and Communications
Eugene Toffolo has over 25 years of experience in the investment sector. He has an in-depth understanding of public companies in the resource industry, raising capital and is responsible for the liaison with Investment Advisors, Retail and Institutional investors. He joined the company in 2006.
Catherine Cox—Corporate Secretary
Catherine Cox has over 15 years of experience in the management and administration of public companies in the resource sector, including extensive experience in public company governance and regulation. She has served as Corporate Secretary to Nevada Copper since 2005. Prior to her role as a Corporate Secretary, she was a paralegal for a US law firm specializing in corporate and securities law. She holds a Bachelor degree from the University of British Columbia.
Evgenij Iorich—Non-Executive Chairman
Evgenij Iorich has over 15 years of investment and asset management experience and is currently Managing Partner at Pala Investments Ltd. His commodity experience extends across a broad range of bulk commodities, as well as precious and base metals. He has worked with a number of Pala’s portfolio companies, including, Peninsula Energy, Sierra Rutile and Asian Mineral Resources on a range of strategic initiatives, M&A opportunities, operational and financial planning and structuring. He is a director of Peninsula Energy and, in addition, with his considerable experience in oil and gas, is also a director of Serinus Energy. Prior to joining Pala in 2006, he held senior roles at Mechel. He graduated from the University of Zurich with a Masters of Arts degree.
Giulio Bonifacio has over 30 years in senior executive positions in the mining industry. Among his many accomplishments he has been instrumental in providing over $400 million of capital to projects of merit while being involved with and having a very good understanding of every stage of development from exploration to production. He is a Chartered Professional Accountant with extensive experience and knowledge in areas of corporate finance, securities matters, project finance and mergers and acquisitions. He has held senior executive roles with Getty Resources Limited, TOTAL S.A. and Vengold Inc.
Michael Brown is Managing Director, Technical and Operations at Pala Investments AG, the exclusive advisor to Pala Investments Holdings Ltd, a multi-strategy investment company dedicated to investing in, and creating value across, the mining sector in both developed and emerging markets. Prior to joining Pala, he worked for De Beers Consolidated Mines Ltd where in his role of Chief Operating Officer he was responsible to the Chief Executive Officer and Board for all operations in South Africa, including production at five mines, the planning and execution of construction projects, strategic business development and health, safety and environmental control. He previously held the position of Head of Strategic Business Development at De Beers, where he was responsible for the full value chain from resource evaluation to strategic business planning, concept studies, feasibility studies and project implementation. He managed a number of major projects, including the $750 million Finsch block 5 feasibility study, the $1.3 billion Venetia underground mine pre-feasibility study; the $35 million Venetia resource extension project, and a $200 million construction project at Voorspoed.
Lucio Genovese has 28 years of experience in both the merchant and financial sector of the metals and mining Industry. He is the CEO of Nage Capital Management in Baar, Switzerland. He is also Chairman of Firestone Diamonds plc and a member of the board of Mantos Copper S.A., Ferrous Resources Limited, Ferrexpo AG and Nevada Copper Inc. He was previously employed at Glencore International AG where he held several senior positions including CEO of the CIS region and manager of the Moscow office. He is a Chartered Accountant and has a B.Comm and B.Acc from the University of Witwatersrand, Johannesburg (South Africa).
Stephen Gill is currently Portfolio Manager at Pala Investments Ltd. He has been at Pala since 2008, during which time he has been involved in many of Pala’s principal investments covering a range of commodities, as well mining services and consumables sectors. Key transactions include, Pala’s investments in Sierra Rutile, Asian Mineral Resources and African Thunder Platinum. He has also supported many of Pala’s investee companies in defining and implement strategic initiatives, including the expansion of Dumas Mining’s business through a series of acquisitions, the turn-around of Asian Mineral Resources’ Ban Phuc nickel project, and the evolution of Sierra Rutile’s dry mining business model. He is also involved in the oversight of Pala’s liquid portfolio. Prior to joining Pala, he was at AMEC Plc, an engineering consulting firm, where he advised on a range of natural resources transactions, including the IPO of the Kazakhstan state oil company and CITIC Resources’ acquisition of the Karazhanbas oilfield. He also acted as an advisor across a range of private equity transactions, including investments in businesses spanning mining, metals processing, and mining consumables manufacturing industries. He holds an MBA from the IE Business School in Madrid. He also holds an MSc from the University of North Carolina and a BSc from the University of Wales. Mr.Gill is currently a director of Sierra Rutile.
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