Nevada Copper Enters US$115 Million Funding Agreement

This week, Nevada Copper (TSX:NCU) entered a US$115 million credit agreement with Germany-based KfW IPEX-Bank through its subsidiary Nevada Copper (NCI). The money will help fund the underground mine at the company’s Pumpkin Hollow copper project.

According to Nevada Copper, funding from the agreement will take place once the company repays its pre-existing senior debt facility from Red Kite Mine Finance. The company stated that, by replacing the facility from Red Kite with bank project finance, it will reduce its debt service costs, extend senior debt maturity and enhance its financial flexibility.

Alongside the funding agreement, NCI simultaneously entered financing and offtake arrangements related to the underground mine. These include a US$35 million working capital facility with Concord Resources and offtake agreements with Concord, Aurubis (OTC Pink:AIAGY) and Aurubis Bulgaria.

NCI will also enter a US$26.4 million cost overrun facility to be provided by Nevada Copper.

“We are pleased to be working with our respective offtake partners and working capital providers, Aurubis and Concord Resources, as we bring the underground project into first production later this year,” Nevada Copper CEO Matthew Gili said in a statement.

“The execution of the underground project is progressing at a strong and steady pace with both underground development and surface works on track. Further, we have responded to our shareholders and intend to accelerate our exploration program both at the open pit and our newly defined targets around surface mineralization contained in the recently expanded land position.”

The offtake agreements entail Nevada supplying 40,000 dry metric tonnes per year to Aurubis for a term connected to the nine year agreement with KfW, and 30,000 dry metric tonnes per year to Concord for a 3.5 year term.

The company is striving to see first production from Pumpkin Hollow in Q4 2019. The asset includes an underground mine, which is still under construction, and an open pit development project. The latter has an estimated 23 year lifespan.

The company released a prefeasibilty study for Pumpkin Hollow’s open pit in April, which points to a post-tax net present value of US$829 million and peak annual copper production of 110,000 tonnes. Capital expenditure for the project came in around US$672 million.

As of Wednesday (May 8), copper was trading at US$6,102.50 per tonne on the London Metal Exchange. By 2:14 p.m. EDT on Thursday (May 9), Nevada Copper shares were up 1.27 percent on the TSX at C$0.40.

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Securities Disclosure: I, Olivia Da Silva, hold no direct investment interest in any company mentioned in this article.

Editorial Disclosure: Nevada Copper is a client of the Investing News Network. This article is not paid-for content.