Nevada Copper Corp. (TSX: NCU) (“Nevada Copper” or the “Company”)
is pleased to announce the execution of binding agreements with
respect to a financing package that will provide liquidity for the
continued ramp-up of operations at the Company’s underground
project (the “Underground Project”).
Financing
Package Highlights:
- The Company has entered into binding agreements with several of
its existing financing partners to provide substantial additional
liquidity to the Company for completion of the ramp-up of its
Underground Project. The financing package will consist of the
following components:
- new cash resources of $31,000,000 with a blended headline
interest rate margin of 7%, of which approximately $9,000,000 has
already been advanced to the Company since the beginning of
November 2020;
- amendments to the Company’s senior credit facility providing a
further $26,000,000 in increased liquidity in the form of deferral
of debt service payments; and
- up to an additional $25,000,000 of undrawn liquidity (including
the accordion feature described below), available to the Company to
assist as required with completing the ramp-up of operations at the
Underground Project.
- The financing package provides a significant increase in
balance sheet flexibility through four complementary facilities.
The financing package includes the following elements:
- $15,000,000
increase to
senior credit facility:
the Company’s senior lender, KfW IPEX-Bank (“KfW”), has agreed to
provide an additional $15,000,000 under the existing senior credit
facility (the “KfW Facility”) and defer $26,000,000 of planned debt
service under the KfW Facility until 2023;
- $5,000,000 increase to working capital
facility: the Company’s offtaker, Concord Resources
Limited (“Concord”), has agreed to provide access to an additional
$5,000,000 under the existing working capital facility (the
“Working Capital Facility”);
- $26,000,000
extension of
unsecured debt: the Company’s
largest shareholder, Pala Investments Limited (“Pala”), has agreed
to provide a three-year $26,000,000 unsecured loan facility, which
extends and replaces existing loans, including those under
promissory notes, advanced by Pala to the Company and provides a
new advance of $7,000,000; and
- $5,000,000 cost overrun facility: in
connection with the increase to the KfW Facility, Pala has also
agreed to provide a corporate guarantee for a committed cost
overrun contingency of $5,000,000 in connection with the completion
of the ramp-up of the Underground Project (the “COF”).
Mike Ciricillo, Chief Executive Officer of
Nevada Copper stated: “On behalf of the entire Company, I want to
sincerely thank KfW for its ongoing support of the Company. The
package not only meets the projected requirements of the ramp-up,
but provides additional contingency headroom for the Company.”
Commenting on the ramp-up plans he added: “With
the Main Shaft materials handling system on track for mechanical
completion in December, we expect to see hoisting rates increase
significantly as planned in the coming weeks during final
commissioning. Along with this significant milestone, the positive
conclusion of KfW’s independent engineer review further validates
our ramp-up plans.”
As previously announced, the Company completed a
geotechnical review and elected to reduce the size of certain early
stopes in a localized area where initial ramp-up ore is planned.
While the move to initially smaller stopes in the Upper East South
zone will further de-risk the Underground Project and does not
affect the life of mine resource, the change has increased the
Company’s costs in the short-term. The Company expects that the new
financing package will address the cost increases resulting from
the geotechnical changes and enable the Company to complete the
ramp-up of the Underground Project.
The Company expects to close the financing
package by the end of 2020 and will continue to review
opportunities to supplement and optimize the financing package.
Further Details of the Financing
Package:
Increase in KfW Facility
The Company’s wholly-owned subsidiary, Nevada
Copper, Inc. (“NCI”), and KfW have entered into an amendment and
restatement of the KfW Facility (the “Amended KfW Facility”)
whereby KfW has agreed to provide an additional $15,000,000 loan
with a three year term, 12-month grace period and interest of LIBOR
plus of 4.9% and a 12-month grace period for principal payments and
cash sweeps. Under the Amended KfW Facility, KfW has also agreed to
defer $26,000,000 of planned debt service until 2023, including
deferring the funding of the debt service reserve account from
January 2022 to January 2023 and the deferral of the first and
second amortization payments to be made in July 2022 and January
2023 to be made in pro rata installments over the remaining term of
the facility starting at the end of July 2023.
Increase in Working Capital Facility
Concord has agreed to increase the availability
under the Working Capital Facility by $5,000,000. Following this
increase, which the Company expects to be effective at the end of
March 2021, the Working Capital Facility will have a total capacity
of $40,000,000 through its maturity date in 2023.
Pala Credit Facility
The Company has also entered into a binding
commitment letter with Pala for a three-year approximately
$26,000,000 unsecured loan facility (the “Pala Credit Facility”).
The Pala Credit Facility replaces and extends two outstanding
promissory notes provided by Pala to the Company in October and
November of 2020. The October promissory note in the amount of
$8,000,000 has been fully drawn. The promissory note provided in
November was in the amount of up to $15,000,000, of which
$9,000,000 has been advanced to the Company to date. The
outstanding amounts under these existing promissory notes will be
repaid with the proceeds of the Pala Credit Facility and the notes
will be cancelled. In addition, a portion of the proceeds of the
Pala Credit Facility will be used to pay Pala approximately
$1,700,000 as repayment for funds advanced by Pala to Concord on
behalf of the Company under the Working Capital Facility earlier in
2020. Approximately $7,000,000 in additional funds is expected to
be advanced to the Company under the Pala Credit Facility. The
definitive agreement for the Pala Credit Facility is expected to be
entered into prior to the closing of the Amended KfW Facility.
The Pala Credit Facility will be available for
an initial draw in the full amount of $26,000,000, as described
above, subject to the satisfaction of certain conditions. It will
be a direct obligation of the Company and will not be guaranteed or
secured by any of the Company’s subsidiaries. The Pala Credit
Facility will bear interest at LIBOR plus 9% per annum and will
include a 3% arrangement fee and a 4% disbursement fee. There will
be no common shares, warrants or other convertible securities of
the Company issuable in connection with the Pala Credit Facility,
other than the potential for interest and certain fees to be paid
in shares rather than paid in cash or capitalized. Pala will be
entitled to syndicate all or a portion of the Pala Credit Facility,
which may result in higher interest and fees.
If the Company raises additional funds after the
date hereof prior to June 30, 2021 (the “Availability Period”), in
certain instances, up to $15,000,000 will be required to be repaid
to Pala from the proceeds of the new financings. Upon a repayment
from a future financing, such amount may be reborrowed by the
Company, subject to certain conditions, including that the
Company’s financial resources plus any amounts drawable under the
Pala Credit Facility will be sufficient to complete the ramp-up and
achieve positive cash flows before the end of 2021. During the
Availability Period, Pala will be paid a 4% per annum commitment
fee on amounts available to be reborrowed. The Pala Credit Facility
will also include an accordion feature whereby, subject to the
agreement of the parties and the satisfaction of other applicable
conditions, additional drawings of up to $15,000,000 would be
permitted at any time prior to the maturity date. Voluntary
prepayments under the Pala Credit Facility will be subject to a
prepayment premium, which will also apply in the case of a change
of control.
Funds advanced under the Pala Credit Facility
will be primarily used to fund the construction and ramp-up of the
Underground Project, as well as for the general working capital
needs of the Company.
The negotiation and approval of the commitment
letter for the Pala Credit Facility and the fee for the guarantee
arrangements and the mechanics for the funding of the COF under the
guarantees (each as described below) in connection with the Amended
KfW Facility was supervised on behalf of the Company by a committee
of independent members of the Company’s board of directors. The
committee will also supervise the negotiation and approval of the
definitive agreement providing for the Pala Credit Facility.
Cost Overrun Facility
In connection with the Amended KfW Facility, the
Company will provide the COF to NCI for up to $5,000,000 on
substantially the same terms as the cost overrun facility that was
provided by the Company to NCI in May 2019 when the KfW Facility
was entered into. The COF may be drawn only once all other existing
sources of funding have been utilized and if construction costs at
the Underground Project exceed the current estimate.
Pala will provide a corporate guarantee to KfW
in respect of both the $15,000,000 additional loan amount under the
Amended KfW Facility and the $5,000,000 COF amount (collectively,
the “Guaranteed Amount”) and a pledge of certain of Pala’s assets.
The Company will compensate Pala for its commitments under the
corporate guarantee and related pledge arrangements at a rate of 8%
per annum of any outstanding Guaranteed Amount, which may be
payable in cash, shares or deferred to the next payment date and
will be subject to a prepayment premium in certain circumstances,
including on a change of control. If Pala is required to fund the
COF under its guarantee, it may elect to inject funds into the
Company by way of a loan on similar terms as the Pala Credit
Facility or by way of a subscription for shares at the maximum
discount permitted by the policies of the Toronto Stock Exchange
(the “TSX”).
Conditions to the Financing Package
Completion of the closing of the Amended KfW
Facility and the drawdown of funds thereunder is subject to a
number of conditions, including NCI’s receipt of $6,000,000
pursuant to the Pala Credit Facility, the consent of the Federal
Republic of Germany through Euler Hermes for the Amended KfW
Facility and the provision of the guarantee and collateral package
by Pala referred to above. The effectiveness of the increase to the
Working Capital Facility is conditional upon the $15,000,000
drawdown under the Amended KfW Facility being completed. In
addition, the Pala Credit Facility is subject to the approval of
the TSX. Approval by the Company’s shareholders of the Pala Credit
Facility and the related guarantee arrangements, as well as a share
consolidation, is a requirement of the Pala Credit Facility.
Shareholder approval is not a condition for the closing of draws
under the Pala Credit Facility, but will result in an event of
default if not obtained at the Company’s next annual general
meeting. The Company expects that all conditions to funding under
the Amended KfW Facility and the Pala Credit Facility will be
satisfied by the end of 2020. However, there can be no assurance
that all such conditions to funding will be satisfied in this
timeframe, or at all.
Advisors
Torys LLP and Shearman & Sterling LLP acted
as legal counsel to the Company and Milbank LLP acted as legal
counsel to KfW.
About Nevada Copper
Nevada Copper (TSX: NCU) is a copper producer
and owner of the Pumpkin Hollow copper project. Located in Nevada,
USA, Pumpkin Hollow 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 status.
NEVADA COPPER
CORP.www.nevadacopper.com
Mike Ciricillo,
President and CEO
For further information contact:Rich Matthews,
Investor RelationsIntegrous Communicationsrmatthews@integcom.us+1
604 355 7179
Cautionary Language
This news release includes certain statements
and information that constitute forward-looking information within
the meaning of applicable Canadian securities laws. All statements
in this news release, other than statements of historical facts are
forward-looking statements. Such forward-looking statements and
forward-looking information specifically include, but are not
limited to, statements that relate to the completion of the
transactions described above and the timing in respect thereof,
other potential future financings and the completion of the ramp-up
of the Underground Project. There can be no assurance that the
transactions described above will be completed. If the financing
package is not completed, then absent obtaining other financing,
the Company may not be able to continue operations.
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 are subject to known or
unknown risks, uncertainties and other factors which may cause the
actual results and events 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: the ability of the
Company to complete the new financing package within the necessary
timeframe; the ability of the Company to complete the ramp-up of
the Underground Project within the expected cost estimates and
timeframe; the state of financial markets; the impact of COVID-19
on the business and operations of the Company; history of losses;
requirements for additional capital and no assurance can be given
regarding the availability thereof; dilution; adverse events
relating to milling operations, construction, development and
ramp-up, including the ability of the Company to address
underground development and process plant issues; ground
conditions; cost overruns relating to development, construction and
ramp-up of the Underground Project; loss of material properties;
interest rates increase; global economy; limited 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 from management’s expectations and the difference
may be material; legal and regulatory proceedings and community
actions; the outcome of disputes with the Company’s contractors;
accidents; title matters; regulatory approvals and restrictions;
increased costs and physical risks relating to climate change,
including extreme weather events, and new or revised regulations
relating to climate change; permitting and licensing; volatility of
the market price of the Company’s common shares; insurance;
competition; hedging activities; currency fluctuations; loss of key
employees; other risks of the mining industry as well as those
risks discussed in the Company’s Management’s Discussion and
Analysis in respect of the year ended December 31, 2019 and in the
section entitled “Risk Factors” in the Company’s Annual Information
Form dated May 15, 2020. 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 forward-looking
information and statements are stated as of the date hereof. The
Company disclaims any intent or obligation to update
forward-looking statements or information except as required by
law.
The Company provides no assurance that
forward-looking statements and information 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 and information.
Nevada Copper (TSX:NCU)
Historical Stock Chart
From Mar 2024 to Apr 2024
Nevada Copper (TSX:NCU)
Historical Stock Chart
From Apr 2023 to Apr 2024