Nevada Copper Corp (TSX:NCU, OTC:NEVDF) has announced a financing package providing up to $115 million to advance its Pumpkin Hollow underground mine, aiming for a nameplate production capacity of 5,000 tons per day by the end of 2023.
Randy Buffington, president and CEO, said in a statement that the company is moving quickly to complete the ramp-up of the underground mine.
“With significant copper mineral reserves and resources and once operating at nameplate capacity, the Underground Mine will support the global drive towards electrification and a renewable energy future. This financing positions us to advance our ramp-up of the Underground Mine and meet our goal of achieving steady state operations by the end of 2023,” he said.
The company said it entered an agreement with Scotia Capital Inc. on behalf of a syndicate of underwriters who have agreed to purchase 173,705,000 units of the company at C$0.27 each for aggregate gross proceeds of approximately C$47 million.
Each unit will consist of one common share of the company and one-half of one common share purchase warrant. Each warrant will be exercisable for one common share at C$0.34 per warrant share at any time for a period of 16 months after the offering closes.
The company also said there is an over-allotment option which the underwriters may exercise to purchase additional units. If the over-allotment is exercised in full, the aggregate gross proceeds of the offering will be approximately C$54 million.
The net proceeds will be used to continue funding the restart and ramp-up of the Pumpkin Hollow underground mine and for general corporate purposes, including working capital.
Pala, the company’s largest shareholder, has agreed to purchase an aggregate of C$33.5 million of units under the offering while Mercuria, another significant shareholder, has agreed to subscribe for an aggregate of C$6.7 million units.
Deferred Funding Agreement
Upon the closing of the offering, Pala and Mercuria have agreed to enter into a deferred funding agreement under which Pala and Mercuria will provide up to $15 million and $10 million, respectively, to be drawn pro rata by the company, if required, until June 30, 2024.
“To the extent that the gross proceeds of the offering, including any exercise of the over-allotment option, exceeds $39.5 million, the $25 million deferred funding amount will be reduced, pro rata, on a dollar-for-dollar basis. These funds, if required, will be advanced in exchange for common shares, convertible and/or non-convertible debt of the company,” Nevada Copper said.
Pala has also agreed to provide $10 million in debt funding to the company, some of which has already been advanced.
The company said it has agreed to grant Mercuria an option to acquire, for an aggregate purchase price of $5 million, call options on a portion of the company’s copper production on market terms to be agreed between the parties.
Nevada Copper also said the TSX confirmed that no remedial action is required by the company in respect of a delisting review and that it satisfied the TSX’s applicable requirements for continued listing.
“As a result of the foregoing, the delisting review has now been lifted by the TSX,” the company added.