April 23, 2013 - Nevada Copper Corp. (TSX: NCU) ("Nevada Copper" or "Company") is pleased to announce that it will be proceeding with a two-stage approach to developing its 100%-owned Pumpkin Hollow copper project located near Yerington, Nevada.
In late 2012, it became apparent that the Company was capable of financing a 6,500 tons/day Stage 1 Underground Operation ("Underground Operation") without the resulting dilution of bringing in a strategic partner and reducing its current 100%-owned Pumpkin Hollow project. A feasibility study examining this option was published on December 12, 2012 and indicated an initial capital cost of US$329 million. The Underground Operation is considered as Stage 1 of a larger, two-stage Pumpkin Hollow project development plan.
On March 28, 2013 Nevada Copper closed a US$200,000,000 loan facility and copper concentrate off-take agreement with RK Mine Finance ("Red Kite") with proceeds to be allocated to the construction of the standalone Underground Operation. The initial tranche of funding from the loan facility, additional funding on receipt of key State permits allowing for commencement of full construction of an underground mining operation, combined with current treasury, is more than sufficient to support project development work through Q2-2014. This work includes sinking of the 2,200 foot production-sized shaft, construction of the head frame and associated surface works, and commencement of detailed engineering work. The engineering work will allow for placement of key equipment orders by Q3-2013, and first production in 2015. Ore from the Eastern underground deposit will feed a concentrator located in close proximity to this deposit.
The below summary of results for the Underground Operation on the East Deposit were released in a SEDAR filed National Instrument 43-101 Technical Report Feasibility Study filed on December 12, 2012:
- The Base Case economics reflecting a three year trailing average price of $3.59/lb. copper, $1,419/oz. gold and $27.14/oz. silver;
- Production commencing in 2015, with and initial mine life of 12 years;
- Average Annual copper production in concentrate:
Year 1 to 5: 75 million pounds;
Year 1 to 10: 67 million pounds;
- Net Present Value at 5% is $419 million, pre-tax;
- Net Present Value at 8% is $309 million, pre-tax;
- Internal Rate of Return is 28.6% pre-tax and payback of 2.5 years; and,
- Annual operating cash flow of US$149 Million.
See News Release of November 19, 2012 for complete details including a summary of project opportunities which are briefly discussed below under "Shaft Construction Update and Underground Project Activities".
In deciding to proceed immediately with the Underground Operation of a two-stage approach, the Company considered the following factors:
- Stage 1 Underground Operation is largely financed, with State permits expected this quarter and key construction activities that can commence without delay, including the already well-advanced construction of a production-sized shaft;
- Future cash flows from the Underground Operation in 2015 would support and facilitate financing of a larger open pit operation;
- The stand-alone open pit feasibility study would assist potential strategic partners in assessing a possible investment;
- Recent expansion of the mineral resource base for the open pit Western Deposits (see resource table below); and,
- The Company's expectation that the open pit could be permitted in 2013 with targeted production to commence in 2016 contingent upon project funding (see News Release dated April 17, 2013 for further information).
As a result, the Company has decided that the current update to the Integrated Feasibility Study will be modified to reflect a standalone open pit mine. In view of the recently increased mineral resources, TetraTech, an industry leading international engineering firm, will also evaluate higher throughput production rates in the range of 70,000 to 90,000 tons/day. Completion of the updated feasibility study for the open pit is now targeted on, or before, August 2013.
Mr. Giulio Bonifacio, President and CEO commented: "As a result of closing the Red Kite Transaction, Nevada Copper will move towards a fully permitted and funded underground operation in the short term while maintaining 100% ownership of the Pumpkin Hollow project. We believe this is a superior strategy that will allow for the commencement of commercial production and cash flow in 2015 while also further facilitating funding of the larger open pit operation. We will also continue to move forward with the Lyon County Land bill and receipt of open pit permits expected in 2013, which will be a significant step in beginning the development of the second stage of Pumpkin Hollow."
Shaft Construction Update and Underground Project Activities
Commissioning of the hoist and head frame is underway. Hoist commissioning will allow for resumption of shaft sinking which is expected to continue through 2013 with completion by Q1-2014. Shaft progress can be seen on the project website: www.pumpkinhollowcopper.com.
Detailed mine design work is underway for the high-grade East deposit to provide the framework for mine planning. Once the production-sized shaft is completed to a total depth of 2,200 feet, drilling will resume from underground drill stations. This drilling program will target areas of higher grades with an initial objective of allowing for early production from the highest-grade stopes. For example, in the northern pod of the East deposit, drill holes NC 09-05 and NC 08-49 returned intervals grading 114.5 feet of 3.20% copper and 125 feet of 3.24% copper, respectively. In the south pod of the East deposit, adjacent drill holes NC08-14 and KM-21 returned intervals grading 52 feet of 6.79% copper and 84 feet grading 4.93% copper respectively. With mineralization in the East deposit currently open in several directions, management expects that further drilling from underground drill stations will also extend the current mine life of 12 years. Ore from the E2 deposit will be mined after the East deposit which will further add to the current mine life.
In addition, selection of firms to provide detailed engineering, procurement and construction services for the Underground Operation is in progress.
Feasibility Study - Open Pit Operation
On February 7, 2012, the Company SEDAR-filed a NI 43-101 Integrated Feasibility Study for the Pumpkin Hollow project. This Integrated Feasibility Study included ore reserves which were based on drilling results received to October 2010. During 2011 and 2012, the Company drilled 44,000 meters of additional definition drilling on the North and South open pit deposits ("Western Deposits"). This drilling was successful in expanding the measured and indicated mineral resources on the Western Deposits by 1.1 billion pounds to 5.4 billion pounds and a new updated mineral resource was SEDAR filed on October 19, 2012 (See resource table below and News Release dated September 13, 2012 for further information).
The large increase in mineral resources encouraged the Company to update the previous February 2012 Integrated Feasibility Study. This work has progressed into 2013 and, as discussed above, will now be modified to reflect a standalone open pit operation.
The mineral resources in the table below do not include results from drill hole NC 12-34, which encountered 690 feet grading 1.17% copper as previously disclosed in New Release dated September 13, 2012, or any results from the current follow-up drilling program.
*From NI 43-101 Technical Report filed October 19, 2012
*From NI 43-101Technical Report filed October 19, 2012
Note: Copper equivalency is based on $3.00 per pound for copper, $1400 per ounce gold and $20 per ounce silver and metallurgical recoveries of 92%, 78% and 57.5% for copper, gold and silver respectively.
For additional information about Nevada Copper please visit our website at www.nevadacopper.com
NEVADA COPPER CORP.
Giulio T. Bonifacio, President & CEO
This news release includes certain statements and information that may contain forward-looking information within the meaning of applicable Canadian securities laws. All statements in this news release, other than statements of historical facts, including the likelihood of commercial mining, securing as strategic partner, expanding the mineral resources and reserves and possible future financings are forward-looking statements. Such forward-looking statements and forward-looking information specifically include, but are not limited to, statements concerning: Nevada Copper Corp. (the "Company") plans at the Pumpkin Hollow Project; the timing of granting of key permits; from the Feasibility Study: the estimated metal production and the timing thereof; capital and operating costs, future metal prices and cash flow estimates derived from the foregoing.
Forward-looking statements or information relate to future events and future performance and include statements regarding the expectations and beliefs of management and include, but are not limited to, statements with respect to the estimation of mineral resources and reserves, the realization of mineral resources and reserve estimates, the timing and amount of estimated future production, capital costs, costs of production, capital expenditures, success of mining operations, environmental risks and other mining related matters. Often, but not always, forward-looking statements and forward-looking information can be identified by the use of words such as "plans", "expects", "potential", "is expected", "anticipated", "is targeted", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates", or "believes" or the negatives thereof or variations of such words and phrases or statements that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved. Forward-looking statements or information include, but are not limited to, statements or information with respect to known or unknown risks, uncertainties and other factors which may cause the actual industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements or information.
Forward-looking statements or information are subject to a variety of risks and uncertainties which could cause actual events or results to differ from those reflected in the forward-looking statements or information, including, without limitation, risks and uncertainties relating to: history of losses; requirements for additional capital; dilution; loss of its material properties; interest rates increase; global economy; no history of production; future metals price fluctuations, speculative nature of exploration activities; periodic interruptions to exploration, development and mining activities; environmental hazards and liability; industrial accidents; failure of processing and mining equipment to perform as expected; labor disputes; supply problems; uncertainty of production and cost estimates; the interpretation of drill results and the estimation of mineral resources and reserves; changes in project parameters as plans continue to be refined; possible variations in ore reserves, grade of mineralization or recovery rates may differ from what is indicated and the difference may be material; legal and regulatory proceedings and community actions; accidents, title matters; regulatory restrictions; permitting and licensing; volatility of the market price of Common Shares; insurance; competition; hedging activities; currency fluctuations; loss of key employees; other risks of the mining industry as well as those factors discussed in the section entitled "Risk Factors" in the Company's Annual Information Form dated September 26, 2012. Should one or more of these risks and uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in forward-looking statements or information. The Company disclaims any intent or obligation to update forward-looking statements or information except as required by law, and you are referred to the full discussion of the Company's business contained in the Company's reports filed with the securities regulatory authorities in Canada. Although the Company has attempted to identify important factors that could cause actual results to differ materially, there may be other factors that could cause results not to be as anticipated, estimated or intended. For more information on Nevada Copper and the risks and challenges of its business, investors should review Nevada Copper's annual filings that are available at www.sedar.com.
The Company provides no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements.
For further information call:
VP, Investor Relations & Communications
Toll free: 1-877-648-8266
|Robert McKnight, P.Eng., MBA|
Executive Vice President & CFO