- All amounts herein are in United States Dollars unless otherwise indicated.
Yerington, NV – February 19, 2021 – Nevada Copper Corp. (TSX: NCU) (“Nevada Copper” or the “Company”) provides a corporate and operations update for the underground mine at its Pumpkin Hollow project (the “Underground Project”).
Shaft Commissioning and Hoisting
• Following completion of the main shaft material handling system, the Company achieved a peak daily hoisting rate of over 3,000 tons in February, and has achieved a hoisting rate equivalent to 5,000 tons per day on a shift basis.
• Despite the improving hoisting rates, the cumulative impact of a series of unplanned stoppages due to mechanical issues and other incidents in the main shaft has led to lower than expected ore production to date in 2021. Average hoisting rates for February to date were approximately 1,600 tons per day, compared to plan of approximately 3,000 tons per day. Retrofitting work to resolve these issues is expected to be completed in the coming weeks.
• Mill throughput has performed well at an average of approximately 3,100 tons of ore per day to date in 2021, with a peak of 4,000 tons per day.
• Recoveries have continued to increase, with average recoveries of approximately 90% in February.
• Product specifications remain consistent with expectations, with high-grade, clean copper concentrates being delivered to the Company’s offtaker.
• The mill continues to process development ore, with higher grade stope ore expected to be available in the coming months as planned.
• As a result of the shaft delays noted above, and delayed upgrade of the underground electrical and ventilation systems, production of copper concentrates during the first half of 2021 is expected to be significantly lower than planned.
• The resolution of the main shaft commissioning items, the ongoing installation of incremental underground power and ventilation upgrades and the deployment underground of additional mobile fleet equipment is expected to result in increased copper production rates beginning in the second quarter of 2021.
• The Company expects that, due to the delays noted above, steady state production of 5,000 tons of ore per day will be deferred from mid year into the third quarter of 2021.
“We are pleased with the continued improvements of the milling operations and the peak hoisting numbers achieved this month,” stated Mike Ciricillo, CEO of Nevada Copper. “We look forward to completing upgrades to the Main Shaft in the coming weeks and the resulting increases in hoisting and production.”
• The Company recently executed and closed the credit facility previously announced on December 9, 2020 (the “Credit Facility”), which allows for $15 million to be drawn subject to certain conditions. In addition, the lender has confirmed its intention to make the accordion feature available to the Company as required, which will expand the size of the Credit Facility by $15 million.
• The project delays highlighted above will reduce copper sales compared to the Company’s plan for the first half of 2021. The Company intends to address the resulting additional
cash needs to advance the ramp-up through the utilization of its cash on hand, the working capital facility, the $5 million of dedicated cost overrun funds, and borrowings under the Credit Facility.
• The Company’s wholly-owned subsidiary, Nevada Copper, Inc., has settled its legacy disputes with its contractors, Cementation USA Inc. and Sedgman USA Inc. Pursuant to the settlements, the Company has paid $1 million and issued $2 million in common shares and will make $14 million of cash payments via instalments beginning in September 2021.
In addition, the Company may be required to issue up to an additional $2 million in common shares if certain performance measures are achieved.
• These settlements result in an improvement of the Company’s working capital position by $16 million, including a reduction in amounts payable by $4.7 million from what was previously projected. The Company also received the return of cash from the release of its litigation bond.
There can be no assurance that the actual costs to complete the ramp-up will not be greater than expected by the Company. In the event of further cost overruns, the Company will need to seek additional funding. The Company continues to advance its medium and longer-term mine planning
analysis, including related costs and timing implications.
The information and data in this news release was reviewed by Greg French, C.P.G., and David Sabourin, P.E, for Nevada Copper, who are non-independent Qualified Persons within the meaning
of NI 43-101.
NEVADA COPPER CORP.