Copper junior Nevada Copper hopes to overcome struggling start-up
After bolstering its technical leadership team over the past six months, including the appointment of Randy Buffington as CEO in October, development rates are up 50% from late summer and are expected again. increase by 50% in the coming month. Other productivity improvements included increasing equipment uptime from 65% to 74% and improving the performance of contractors with productivity up 31%.
âWe didn’t have a complete organization, so we didn’t have all the human capabilities we needed. We didn’t have a supply chain we could rely on or warehouse inventory because we weren’t an established business, then bang! COVID-19 strikes, âTom Albanese, independent director of Nevada copper, told the Mining Journal. âBut in 2021 we’ve done a good job, especially since August-September and we’re seeing the numbers, the KPIs are definitely spinning now,â he said.
Now that the worst is behind it, the company is pushing Pumpkin Hollow to realize its potential and benefit from historically high copper prices. âAs we look to 2022, with the ramp-up rate and expected increase in production, there is a line of sight over the next few months to be around the watershed level of 3,000 tonnes. per day and we plan to be there by the end of the Every week we get closer and so every week the rate of cash consumption decreases as we generate more cash, âsaid the non-executive chairman of Nevada Copper, Stephen Gil, at the Mining Journal.
The technical and mining aspects being more and more efficient, Nevada Copper has also “reset” its balance sheet, according to Gil, which was hammered by the start-up in difficulty. In November, she closed a C $ 125 million share offer that allowed her to redeem a June promissory note from major shareholder Pala Investments and amend a credit facility, which now contains an accordion feature. allowing it to draw up to an additional US $ 15 million. The lead lender, German Development Bank KfW-IPEX, has also postponed the first debt repayment under the senior credit facility for two years until July 2024.
The capital structure now includes $ 68 in cash, $ 165 million in debt, of which $ 130 million is KfW’s senior facility and 446 million shares outstanding.
âThe November funding was a reset. The company has done a good job securing shareholder funding in an undiluted way as it went through some of the setbacks and we have now done a good sized capital raise which resets the balance sheet. We have only one senior lender in KfW which is 10 year silver at LIBOR plus 1.6%. We have a little kidnapping working capital facility, which is only partially used. Thus, the balance sheet is simplified and there is additional liquidity beyond what the ramp-up should require, which allows us to move the surface mine and exploration more broadly on the property â, said Gil said.
The first task in realizing the potential of the district is to bring the underground mine to the level of 5,000 tpd envisaged in the pre-feasibility study, and then to go beyond. “Our strategic plans are based on significantly higher production rates. The plant is a 5,000 t / d factory but we believe it can produce 6,500 t / d and can expand further. with capital expenditure. The well has been rated at 7,000 t / d and we have a decline so we have a huge amount of options within the asset. We have a reserve of 24 million tonnes, which is about a 50 Mt resource, so while we would like to see this operation at 5,000 tpd for 15 years, we also think 20 years and more at 7,000 tpd, âsays Gil.
Next year, the company will also continue to advance the potential of the surface mine with infill drilling, extension drilling and potentially a feasibility study. âWe have many tasks ahead of us in 2022. By the end of next year, I would like to highlight the work we have done on the surface mine. known deductions and extensions so that we can get an idea of ââthe size of the surface mine. The pit shell needs to be optimized for the current price of copper, as the existing pit is costing us US $ 2.45 per pound of copper. At $ 4 of copper, you’re going to have a very different looking shell, âGil said.
Gil said the higher price of copper is causing the company to view the surface mine as a one-time 70,000 tpd development rather than a phased approach. âWe can add about 50% to the net present value (NPV) of the project with the fruits at hand. By including known inferred resources we add 10% to the NPV and going directly to 70,000 tpd we add an additional 40% to the NPV. That’s before adding solar power or the autonomous fleet, âhe said.
Nevada Copper will also begin to examine the broader potential of its land package beyond the underground and surface scenarios. âWe have a number of exploration prospects and the real price at Pumpkin Hollow is not the star deposits like the surface mine and underground, but the possibility of a large porphyry deposit. We have more. of 20,000 acres and real porphyry prospects that we haven’t drilled a hole yet. We would definitely like to do that as we move forward, “Albanese said.
Decarbonization and being a low-carbon copper producer are back on the company’s agenda, which Albanese said is part of the plan before joining the board in 2018. . “In 2018, some of the pre-feasibility study work was aimed at a pit with self-driving trucks and the basement with electric trucks and battery chargers. At startup we thought it was a bit risky, we got therefore chose to opt for conventional diesel equipment. Now there is more confidence that electric trucks will work underground and autonomous trucks in the pit, “Albanese said.
Studies with a renewable energy consultancy group have also demonstrated the viability of developing a dedicated Pumpkin Hollow solar project with a capacity of up to 200 MW, sufficient for the needs of the surface mine, which could also have a significant impact on cost reduction. âFor grid electricity, we take five cents per kilowatt hour while the cost of solar energy is between 2.5 and 2.5 c / kWh. For a project of our scale, that’s a huge saving. We have done the follow-up work with feasibility around the automated and electric fleets and they are commercialized at this point, âsaid Gil.
Nevada Copper shares are trading at C59c, valuing the company at $ 263 million.