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The company announced a new financing and offtake agreement with RK Mine Finance, or Red Kite.
The new agreement, which is specific to the Stage 1 underground mine at Pumpkin Hollow only, will provide additional capital and will allow for greater flexibility in repayment when compared to an older facility from March 28, 2013. That facility was repayable starting in April 2015, but the new arrangement replaces that facility and includes a “principal repayment holiday” until September 30, 2017.
Under the terms of the agreement, Nevada Copper has received US$90 million to start, of which US$57.1 million was used to repay the previous facility with Red Kite. The company will get another US$110 million upon the completion of certain project and financing milestones.
At present, that means the company now has enough funding to: complete the current production-sized shaft at its Stage 1 underground mine; begin underground lateral development; and begin targeted drilling at both the Stage 1 and 2 deposits. The funds will also be used to complete permitting for Nevada Copper’s Stage 2 open-pit mine and to complete an updated feasibility study.
“During an extended period of challenging capital markets in the mining sector, we are now well positioned to advance Pumpkin Hollow without diluting our current shareholders at a share price that does not properly reflect value for our fully permitted Stage 1 underground operation and soon-to-be-permitted open pit operation,” said Nevada Copper’s president and CEO, Giulio Bonifacio, in Tuesday’s release.
To be sure, Joseph Gallucci of Dundee Capital Markets has previously said that the company could be “poised for a rerating” pending the completion of a shaft at Pumpkin Hollow and developments regarding the Yerington Land Bill. Earlier this month, the bill was passed in the US Senate as part of the country’s National Defense Authorization Act, allowing for a much quicker permitting path for Stage 2 of Pumpkin Hollow.
At close of day on Tuesday, shares of Nevada Copper were up 2 percent, or 3 cents, trading at $1.52.
Securities Disclosure: I, Teresa Matich, 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.
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