Nevada Copper Corp (TSX:NCU, OTC:NEVDF) has told investors it will reduce costs at its underground mine in the US state and said it is poised to receive a further up to US$20 million of funding amid operational challenges at the project.
The miner's largest shareholder Pala Investments has agreed to provide the financing as a promissory note, the company said.
The company said challenges in the latter part of May this year are expected to delay stope mining in the East South mining area and result in reduced concentrate production for Q2.
"These challenges have caused an expected delay of most of the stope ore production until August," it added in a statement.
Management has begun to take steps to reduce costs, including reducing the contractor workforce, it reported, but added that work was advancing on the second dike crossing to the East North Zone as well as open-pit prefeasibility study and drilling.
READ: Nevada Copper reports production uptick, progress toward open pit feasibility in 1Q results
The East North Zone is expected to have significantly higher copper grades and better geotechnical conditions compared with East South.
Regarding the Pala funding, draws on the promissory note by the company are subject to agreed use of proceeds and Nevada Copper reaching satisfactory arrangements with certain creditors and vendors, the company said.
The note has a maturity date of December 31, 2023, and bears interest at 8% a year on amounts drawn. It is subject to approval by the Toronto Stock Exchange.
The company is in discussions with Pala and other third parties to obtain additional required financing and Pala has fully disbursed the US$15 million accordion to the firm under its existing credit facility with Nevada Copper.
Nevada Copper owns the Pumpkin Hollow copper project in Nevada, which has substantial reserves and resources including copper, gold and silver. Its two fully-permitted projects include the high-grade underground mine and processing facility, which is now in the production stage, and a large-scale open-pit project, which is advancing towards feasibility.
Contact the writer at giles@proactiveinvestors.com