Nevada Copper moving to close US$123 million financing

Nevada Copper moving to close US$123 million financing
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VANCOUVER – Nevada Copper Corp. [NCU-TSX] on Wednesday released a proposed financing package that is expected to provide US$123 million in liquidity to support the restart and ramp-up of the company’s Pumpkin Hollow copper mine, which is located in Yerington, Nevada.

The company said its key financing partners intend to enter into definitive documents in respect of and close the restart financing package concurrently on October 28, 2022.

In a press release on Wednesday, Nevada Copper warned that if the package is not completed, absent of other sufficient financing, the company may need to pursue proceedings for creditor protection. The company’s creditors may also seek to commence enforcement action, including realizing on their security over the company’s assets.

On October 25, 2022, Nevada Copper shares closed at 24 cents and currently trade in a 52-week range of $1.09 and 20 cents.

In the latest update, the company said that the restart package contains significant changes to the dilutionary components of the package as compared to key components disclosed in the September 26, 2022 prior announcement.

It was previously stated that Pala Investments Ltd., the company’s largest shareholder, and Mercuria, a significant shareholder of the company and commodity trading house would each provide US$20 million in exchange for shares.

However, Pala is expected to fund its equity investment by the cancellation of US$20 million in short term debt as opposed to US$13.5 million in short-term debt and US$6.5 million in cash. The company said dilution is expected to increase as a result of the lower market price of the common shares

Pala and Mercuria have agreed to accept shares in settlement of their respective reimbursable expenses.

Other details of the revised restart financing package are contained in the latest press release.

Pumpkin Hollow is a high-grade skarn/iron oxide copper gold (IOCG) deposit located within a porphyry copper district within the Walker Lane mineral belt of western Nevada.

The project hosts an underground mine as well as a permitted open pit development project located four kilometres west of the underground mine.

The company has said the current pause of production has allowed it to make meaningful changes to address challenges that were impeding the final stages of underground ramp-up.

The company said it expects the costs of the restart and ramp-up process to be in the range of U$70-US$75 million. In addition, the company needs to satisfy and/or defer various outstanding vendor payables. Together, these costs and payables are expected to exceed the amount of the new cash proceeds of the of the restart financing package, the company said. As a result, the company continues to evaluate other additional financing options, including a public offering.

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