Embattled miner Nevada Copper on Monday announced nonbinding terms with its senior lender, KfW IPEX-Bank, and its biggest shareholder, Pala Investments, for a loan of up to $70-million.
The copper producer, which at the weekend suspended mining activities at Pumpkin Hollow, reported that the lenders would commit to advance $50-million and that $20-million would be available for future draw on an uncommitted basis.
Nevada Copper said it aimed to execute binding agreements during the month of July.
“If implemented, the proposed financing package will provide access to significant further liquidity for the company to maintain the assets at the Pumpkin Hollow underground copper mine and pursue certain projects such as completing the dike crossing and advancing openpit project feasibility study work, and to explore and advance discussions on further financing and strategic options,” said the cash-strapped company.
While negotiating the financing package, Nevada Copper would make further draws under the previously disclosed $20-million promissory note from Pala in order to meet its immediate cash needs.
The miner cautioned, however, that if further draws were not available, the financing package was not completed, or satisfactory arrangements were not implemented with vendors, it would not be able to continue carrying on business in the ordinary course and might need to pursue proceedings for creditor protection.
Nevada Copper has already received a notice of default from its mining contractor, Redpath, after it failed to make payments that were due. Redpath has indicated that it intended to pursue its available remedies.
Despite the default, the company and Redpath have reached agreement on the suspension of mining work at the underground project and the limited work to be completed going forward in order to protect the company’s assets.