Nevada Copper Corp. (TSX: NCU) (“
Nevada Copper” or
the “
Company’’) is pleased to announce that it has
entered into an agreement with Scotiabank, on behalf of a syndicate
of underwriters including RBC Capital Markets and National Bank
Financial Inc., acting together with Scotiabank as joint
Bookrunners, and including Haywood Securities (collectively, the
“
Underwriters”), pursuant to which the
Underwriters have agreed to buy on a bought deal basis 643,713,553
units of the Company (the “
Units”) at a price of
$0.15 per Unit (the “
Offering Price”) for
aggregate gross proceeds of approximately $97 million (the
“
Offering”).
Each Unit consists of one common share of Nevada
Copper (a “Common Share”) and one-half of one
Common Share purchase warrant (each whole Common Share purchase
warrant a “Warrant”) of Nevada Copper. Each full
Warrant will entitle the holder thereof to purchase one Common
Share at a price of $0.20 per Common Share, for a period of 18
months following the closing of the Offering.
The Company has granted the Underwriters an
option, exercisable at the Offering Price for a period of 30 days
following the closing of the Offering, to purchase up to an
additional 23,790,000 Units to cover over-allotments (the
“Over-Allotment Option”), if any, and for market
stabilization purposes, which if exercised in full would result in
additional gross proceeds to the Company of approximately $3.6
million. The Over-Allotment Option is exercisable to acquire Units,
Common Shares and/or Warrants (or any combination thereof) at the
discretion of the Underwriters.
The Units will be offered by way of a short form
prospectus to be filed in all provinces of Canada, except Quebec.
The Offering is expected to close on or about July 27, 2020,
subject to the receipt of all necessary regulatory and stock
exchange approvals, including the approval of the Toronto Stock
Exchange (“TSX”) and applicable securities
regulatory authorities.
The net proceeds from the Offering will be used
to fund the Company’s operations, including to continue its
previously-announced accelerated mine development plan and to
re-start and ramp-up production from its Pumpkin Hollow underground
mine (the “Underground Project”), to repay the
Convertible Loan (as defined below), to repay other outstanding
indebtedness (including short-term financing provided by Pala
Investments Limited (“Pala”), currently in the
amount of US$9.6 million) and for general corporate purposes. As
previously announced, concentrate production is temporarily
suspended at the Underground Project due to COVID-19 impacts and
the Company expects mill restart at the Underground Project in
August, subject to revision based on impacts of the COVID-19
pandemic and other factors.
As part of the Offering, the Company is pleased
to announce that it intends to prepay in full (including all
accrued interest and fees thereon of approximately US$4 million)
the existing US$30 million convertible loan facility that the
Company entered into with Pala, the Company’s largest shareholder,
on March 27, 2020 (the “Convertible Loan”) on the
closing date of the Offering. The Convertible Loan was entered into
as part of the Company’s balance street strengthening package that
was completed in March 2020. Subsequently, Pala syndicated a
portion of the Convertible Loan, including an aggregate principal
amount of US$13.4 million to an affiliate of Castlelake, L.P
(“Castlelake”), the Company’s second largest
shareholder. In connection with the prepayment of the Convertible
Loan, Pala and Castlelake have agreed to waive the applicable
prepayment premiums and have agreed to subscribe for an aggregate
of 302,977,529 Units for aggregate gross proceeds of approximately
$45.4 million pursuant to the Offering. In addition, Pala and
Castlelake have committed to subscribe for up to an additional
163,128,000 Units pursuant to the Offering for approximately $24.5
million of gross proceeds in the aggregate.
H.C. Wainwright & Co. and Jett Capital Advisors are acting
as financial advisors on the Offering.
Corporate Governance
The board of directors (the
“Board”) of Nevada Copper formed a special
committee (the “Special Committee”) consisting of
members of the Board who are independent of Pala and Castlelake, to
consider the proposed terms of the Offering involving Pala and
Castlelake, including the prepayment of the Convertible Loan, the
repayment of the short-term financing provided by Pala and the
additional subscriptions under the Offering by Pala and Castlelake.
The Special Committee has met separately from the full Board. After
careful consideration, the Special Committee unanimously
recommended that the Company approve the terms of the Offering
relating to these matters.
The involvement of Pala and Castlelake in the
transactions referred to above in connection with the Offering are
“related party transactions” within the meaning of Multilateral
Instrument 61-101 Protection of Minority Security Holders in
Special Transactions (“MI 61-101”) and the Company
is relying on the exemptions in sections 5.5(g) and 5.7(e) of MI
61-101 in connection with such transactions.
Nevada Copper intends to apply to the TSX,
pursuant to the provisions of Section 604(e) of the TSX Company
Manual, for a “financial hardship” exemption from the requirements
to obtain shareholder approval of the Offering, on the basis that
absent the Offering the Company is in serious financial difficulty
due to the lack of available cash and funding resources. The
Offering is designed to improve the Company’s financial situation.
The application will be made upon the recommendation of the Special
Committee and will be based on the determination that the
transactions are reasonable for Nevada Copper in the
circumstances.
Nevada Copper expects that, as a consequence of
its financial hardship application, the TSX will extend the
remedial delisting review which Nevada Copper is currently under
for a period of 120 days, which is normal practice when a listed
issuer seeks to rely on this exemption. Although Nevada Copper
believes that it will be in compliance with all continued listing
requirements of the TSX upon the closing of the Offering, no
assurance can be provided as to the outcome of such review or
continued qualification for listing on the TSX. There can be no
assurance that the TSX will accept the application for the use of
the financial hardship exemption from the requirement to obtain
shareholder approval described above.
This news release does not constitute an
offer to sell or a solicitation of an offer to buy any of the
securities in any jurisdiction where it would be unlawful. The
securities have not been and will not be registered under the
United States Securities Act of 1933, as amended, (the “U.S.
Securities Act”) or any state securities laws and may not be
offered or sold within the United States or to U.S. persons other
than to “qualified institutional buyers” (as defined in Rule 144A
under the U.S. Securities Act) pursuant to an exemption from
registration under the U.S. Securities Act provided by Rule 144A
thereunder.
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
Evan Spencer, 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
Offering and the timing in respect thereof, the anticipated use of
proceeds from the Offering, regulatory approvals, mine development
and ramp-up plans and the expected results in respect thereof and
the timing of expected restart of concentrate production.
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 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 state of
financial markets; regulatory approvals; the impact of COVID-19 on
the business and operations of the Company; history of losses;
requirements for additional capital; dilution; adverse events
relating to 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, completion and ramp-up of the Pumpkin Hollow
Underground Mine; loss of material properties; interest rates
increase; global economy; no history of production; future metals
price fluctuations and the continuation of the current low copper
price environment; 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;
the outcome of disputes with the Company’s contractors; accidents;
title matters; regulatory 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 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-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 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.
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