Nevada Copper Corp. (TSX: NCU) (“
Nevada Copper” or
the “
Company’’) is pleased to announce that it has
filed and obtained a receipt for a short form preliminary
prospectus with the securities regulatory authorities in each of
the provinces of Canada, except Quebec, in connection with its
previously announced offering whereby a syndicate of underwriters
comprised of Scotiabank, RBC Capital Markets and National Bank
Financial Inc., acting together as joint bookrunners, and Haywood
Securities Inc. (collectively, the
“
Underwriters”), 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 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.
Update on Offering
Nevada Copper is pleased to provide the following updates
regarding the Offering:
- Strong investor demand: The Offering has been
oversubscribed and includes a broad base of existing and new
shareholders.
- Improved cash position: The Company
expects to receive in excess of $48 million (approximately US$36
million) in net cash proceeds upon the closing of the Offering
(after full prepayment of the Convertible Loan, as described below,
Underwriter fees and expenses of the Offering and assuming no
exercise of the overallotment option).
- Simplified capital
structure: The Convertible Loan will be retired in full,
resulting in a strengthened balance sheet and simplified share
capital structure.
- Restart and ramp-up of
production: The Company intends to restart production at
its Pumpkin Hollow underground project in August and ramp-up
operations with a view to achieving full production by the end of
the year. Further details and a discussion of certain risks
are included in the preliminary prospectus.
Commenting on the Offering, Evan Spencer, Chief
Executive Officer, said:
“We are exceptionally pleased with the strong
support shown by our existing and new shareholders. Given the
strong demand, this offering brings multiple benefits to the
Company. With this new funding, we look forward to our mill restart
next month and commencing ramp-up to full scale production and
continuing to advance our other growth and exploration plans.”
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 Investments
Limited (“Pala”) and Castlelake L.P.
(“Castlelake”), to consider the proposed terms of
the Offering involving Pala and Castlelake, including the
prepayment of the existing US$30 million convertible loan facility
that the Company entered into with Pala on March 27, 2020 (the
“Convertible Loan”) of which Pala and Castlelake
own approximately 98% of the principal amount thereof, the
repayment of certain short-term financing provided by Pala and the
additional subscriptions under the Offering by Pala and certain
funds managed by Castlelake (the “Castlelake
Funds”). The Special Committee has met separately from the
full Board. After careful consideration, the Special Committee
unanimously recommended that the Board approve the terms of the
Offering relating to these matters.
The Offering Price was negotiated by the Company
and Scotiabank, on behalf of itself and the other Underwriters,
with such Underwriters all acting on an arm’s length basis from the
Company, Pala and Castlelake.
Potential Maximum Dilution in respect of the
Offering
Pala currently owns 332,179,447 Common Shares,
representing approximately 40.5% of the issued and outstanding
Common Shares on a non-diluted basis. The Castlelake Funds
currently own an aggregate of 136,632,313 Common Shares,
representing approximately 16.7% of the issued and outstanding
Common Shares on a non-diluted basis. In connection with the
Offering, Pala has agreed to subscribe for 289,202,677 Units (which
is approximately 27,000,000 Units less than previously disclosed in
the Company’s press release on July 13, 2020 following Pala
agreeing to reduce its participation due to the oversubscription of
the Offering) and the Castlelake Funds have agreed to subscribe for
an aggregate of 149,902,852 Units, which is approximately 35.3% and
18.3%, respectively, of the Common Shares outstanding before giving
effect to the Offering. Of such amounts, the proceeds from the
subscription of 180,262,677 Units by Pala and 122,714,852 Units by
the Castlelake Funds will be used by the Company to repay an amount
of US$19,890,6881 to Pala (being an aggregate of US$19,684,006 in
principal amount (inclusive of the US$2,400,000 arrangement fee
payable to Pala in connection with the entering into of the
Convertible Loan and interest of US$1,198,784, which amounts have
been capitalized) and US$206,682 of accrued interest to the
expected repayment date) and US$13,540,700 to the Castlelake Funds
(being an aggregate of US$13,400,000 in principal amount and
US$140,700 of accrued interest to the expected repayment date)
being all amounts outstanding to Pala and the Castlelake Funds
under the Convertible Loan. As noted in the Company’s press release
on July 13, 2020, each of Pala and the Castlelake Funds have agreed
to waive the applicable prepayment premium under the Convertible
Loan in connection with such proposed repayment. An arm’s length
third party lender previously acquired an aggregate principal
amount of US$500,000 of the Convertible Loan from Pala. In
connection with the Offering, this third party lender has agreed to
subscribe for 5,414,024 Units. As a result, the remaining principal
amount of the Convertible Loan, along with any accrued interest and
fees thereunder, will also be prepaid upon the closing of the
Offering.
Upon completion of the Offering, the
US$20,000,000 commitment provided by Pala to the Company pursuant
to the backstop agreement dated March 27, 2020 among Pala, the
Company and Triple Flag Mining Finance Bermuda Ltd. will expire in
accordance with its terms and the Company will no longer have
access to any amounts under such agreement.
The number of Common Shares that will be issued
as a result of the Offering to Pala and the Castlelake Funds is set
out below, as well as the number of Common Shares to be held by
Pala and the Castlelake Funds upon completion of the Offering
(assuming the exercise of all Warrants issuable in connection with
the Offering):
|
Total Numberof CommonShares issued |
Total Number ofCommon Sharesthat will be heldafter the
Offering |
% of CommonShares ownedrelative to CommonShares
currentlyoutstanding |
% of Common Shares ownedrelative to Common
Sharesoutstanding after the Offering |
Pala |
433,804,015 |
765,983,462 |
93.44% |
42.90% |
Castlelake Funds |
224,854,278 |
361,486,591 |
44.10% |
20.25% |
The total number of Common Shares to be issued
pursuant to the Offering (assuming the exercise of all Warrants
issuable in connection with the Offering) is 965,570,329, which
represents 117.79% relative to the number of Common Shares
currently issued and outstanding.
TSX Financial Hardship Exemption
Nevada Copper has applied 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, which will likely
lead to defaults under the Company’s working capital facility and
senior credit facility. The Offering, including the repayment of
the Convertible Loan, are designed to improve the Company’s
financial situation. The application was approved by the Board,
based upon the recommendation of the Special Committee and the
determination that the transactions are reasonable for Nevada
Copper in the circumstances. Under the policies of the TSX, on the
basis that the Offering was determined to be subject to the
provisions of Section 607 of the TSX Company Manual for private
placements, the Offering would have required shareholder approval
by the Company due to: (a) the number of Common Shares (including
the Common Shares issuable upon the due exercise of the Warrants)
issuable in connection with the Offering is in excess of 25% of the
number Common Shares outstanding; and (b) the number of Common
Shares issued to insiders (assuming full conversion of the
Warrants) is greater than 10% of the number of Common Shares
outstanding. The Offering Price represents a discount of 22.64% to
the market price of the Common Shares on the trading day prior to
the Offering being announced of $0.1939, which is within the
allowable discount limit in accordance with the private placement
rules of the TSX Company Manual. For the purposes of the TSX, the
“market price” of the Common Shares is the five-day volume weighted
average price of the Common Shares ending on July 10, 2020 (the
last complete trading day prior to the Offering being
announced).
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. 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 the United States. 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 unless registered under the U.S.
Securities Act and applicable state securities laws or an exemption
from such registration is available.
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 transitioning to 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.
1 The Company has agreed with Pala and the Castlelake Funds that
it will use the Bank of Canada exchange rate on July 10, 2020 of
US$1.00=$1.3594 in connection with the repayment of the Convertible
Loan from the equity subscriptions.
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