Nevada Copper continues Pumpkin Hollow ramp-up despite virus

Nevada Copper has entered into non-binding arrangements for a proposed balance sheet strengthening package to support the continued production ramp-up at its Pumpkin Hollow mine in Nevada amid the coronavirus pandemic, the company said Thursday.

"This proposed financing package is expected to provide significant balance sheet strength and positions our business to weather this period of unprecedented market uncertainty," Nevada Copper CEO Matt Gili said in a statement. "We are working with our financing partners to conclude these arrangements."

Building on the preliminary non-binding arrangements, Nevada Copper said it is working to reach binding agreements within the next two weeks as it attempts to reach steady-state commercial production at Pumpkin Hollow during the current climate of market uncertainty.

The arrangements include a $35 million royalty and stream financing plan with Triple Flag, $30 million in credit facility refinancing provided by Pala Investments and other investors, debt re-sculpting with KfW IPEX-Bank, and an expected $20 million capital backstop commitment provided by Pala and other shareholders.

"When implemented, these measures will provide Nevada Copper confidence regarding its positioning to weather the current environment and execute its stated business objectives," Nevada Copper said.

Nevada Copper expects concentrate production and sales volumes to increase during the first half of 2020.

Analysts at Commerzbank said copper prices have continued to suffer heavy losses this week as fears regarding the coronavirus grow.

"After the heavy losses seen yesterday (copper dropped by nearly 8%), prices are continuing to fall sharply this morning," the analysts said in a research note. "Copper on the LME shed another 8% for a time in early trading, and even dipped below $4,400/mt."

Amid the uncertainty surrounding the virus outbreak, the COMEX copper spot price settled at 216.05 cents/lb on Monday, down from 283.3 cents/lb on January 2.

Nevada Copper said the uncertainty made it impossible to predict the future impact on its operations.

"It is possible that reduced working rates or temporary stoppages, as has been the case at other operations, could occur in the future depending on how events unfold," Nevada Copper said, adding that exploration activities have been reduced at this time.

Nevada Copper expects to produce 65 million lb of copper equivalent annually over a current estimated mine life of 13.5 years at Pumpkin Hollow, with further expansion potential including 636 million lb of inferred resources.