VANCOUVER, BRITISH COLUMBIA -- (Marketwired) -- 04/23/13 -- 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:
1. 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;2. Future cash flows from the Underground Operation in 2015 would support and facilitate financing of a larger open pit operation;3. The stand-alone open pit feasibility study would assist potential strategic partners in assessing a possible investment;4. Recent expansion of the mineral resource base for the open pit Western Deposits (see resource table below); and,5. 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).