Vancouver-headquartered Nevada Copper on Thursday announced a new restart plan for the Pumpkin Hollow underground copper mine, in Yerington, Nevada, having agreed nonbinding terms with key financing partners for up to $93-million.

The restart plan should derisk the path to full-scale production by focusing on debottlenecking and completion of critical capital projects, in addition to the build-up of significant stope ore inventory, the company stated.

CEO Randy Buffington said the current pause of production allowed Nevada Copper to make changes to tackle challenges that were impeding the final stages of the underground mine ramp-up.

“This is intended to de-risk the business plan and build a more profitable long-term business from the underground mine,” he said.

Nevada Copper also continued to advance the openpit project at Pumpkin Hollow through the ongoing prefeasibility study update process.

“I would also like to thank our team and key suppliers for the commitment and support through the recent challenges and I look forward to working towards a resumption of full operations.”

Provided that the funding package is completed on the expected timeline, the second dike crossing will be completed during the third quarter and the final dike crossing will be completed by the end of 2022. Stoping in the higher grade East North mining zone will begin in the second quarter of 2023, and the mill restart will commence in the third quarter of 2023.

If the restart plan is executed as planned, underground production will ramp up to hoisting rates of about 3 000 t/d in the third quarter of 2023 and then further increase to 5 000 t/d in the fourth quarter of 2023.

In conjunction with the restart financing package, the board of directors would be strengthened with the appointment of Buffington to the board as a director. Triple Flag and Mercuria would each have the right to nominate a director and would have representatives on the technical committee of the board.

FINANCING PACKAGE
Nevada Copper has agreed nonbinding terms with senior lender, KfW IPEX-Bank, its working capital provider, Concord Resources, its biggest shareholder, Pala Investments, another significant shareholder, Mercuria Energy and its stream and royalty partner, Triple Flag Precious Metals, for a restart funding package of up to $93-million.

The package comprises equity investments of $40-million from Pala and Mercuria, each providing $20-million in exchange for common shares of the company. Pala has already provided an early disbursement of $7.5-million from its commitment.

Triple Flag will increase its existing net smelter returns royalty on the company’s openpit project from 0.7% to 2% for a purchase price of $26.2-million, subject to a full buyback of the increased royalty percentage. In addition, Triple Flag will accelerate the $3.8-million remaining to be funded under the company’s existing metals purchase and sale agreement with Triple Flag.

Nevada Copper’s senior credit facility with KfW will be amended to provide for a new tranche of up to $25-million, of which Pala, Triple Flag and Mercuria will commit the first $15-million as a backstop.

KfW will also defer three interest payments under the KfW facility and Concord will defer interest and principal payments under the company’s working capital facility.