NCU Nevada Copper Corp

Nevada Copper (TSX: NCU) (OTC: NEVDF) (FSE: ZYTA) (“Nevada Copper” or the “Company”) refers to its news releases dated August 25, 2022 and September 26, 2022 with respect to the proposed financing package expected to provide up to $93 million of liquidity to the Company in order to support the restart and ramp-up of its Pumpkin Hollow underground copper mine (the “Underground Mine”) (the “Restart Financing Package”). As announced in the Company’s news release dated September 26, 2022, the closing of the Restart Financing Package was expected to occur on or about October 5, 2022.

Since the Company’s news release of September 26, 2022:

1. the Company has made positive progress with the Toronto Stock Exchange (“TSX”) to advance its previously announced financial hardship application with respect to the Restart Financing Package;
2. the Company’s largest shareholder, Pala Investments Limited (“Pala”), has offered additional financial support in the form of a US$25 million backstop commitment to supplement the Restart Financing Package (on top of Pala’s US$20 million equity investment under the Restart Financing Package), thereby increasing the liquidity available to the Company under the Restart Financing Package from up to US$93 million to up to US$118 million, which is expected to provide sufficient funding of the restart plan through to positive cashflow; and
3. the Company has been discussing a non-binding term sheet proposal received from a third-party strategic investor for a separate investment that would be implemented following the Restart Financing Package. This transaction, if implemented, would provide additional funding and result in a change of control of the Company (the “Change of Control Proposal”). 

In connection with consideration of the Change of Control Proposal, the Company is in discussions with its various financing parties to complete the Restart Financing Package as soon as possible. This will allow the Company additional time to evaluate, negotiate and, if appropriate, finalize the Change of Control Proposal together with the implementation of the Restart Financing Package. If agreement can be reached on the Change of Control Proposal, such a transaction together with the Restart Financing Package is expected to provide the Company with new financing resources sufficient to complete the restart plan through to positive cashflow.

There can be no assurance that the Change of Control Proposal will be agreed upon by the parties, the terms and conditions thereof or that any required approvals of the Company’s stakeholders and applicable regulators will be obtained.

Operations Update

The Company has continued to make significant progress with its previously announced restart plan which is intended to de risk the restart process, including:

• Completion of the Dike Crossing: In a major milestone, the Company has substantially completed the second and most critical dike crossing and is continuing lateral development beyond the dike feature in order to access the larger stopes in the higher-grade East North Zone.
• Contractor Tender Process Advanced: The tender has been issued for a new mining contractor for underground mine development. Confirmations of interest have been received from a number of highly qualified contractors that have reviewed the tender documentation and plan to visit the site with a ‘bid walk’ to take place next week. The contract is expected to be awarded in December.
• Restart Execution Plan: The Company has completed a detailed Project Execution Plan (the “PEP”) to accompany the third-party independently reviewed mine plan which was completed in Q3 2022. The PEP details how the phased approach to restart will be achieved, the recruitment plan, how capital projects will be managed, and how key risks will be mitigated, including key learnings from the previous operations. Both the mine plan and PEP have been reviewed in detail and approved by all of the Company’s financing parties in their due diligence processes.

Additional Financing Support from Pala

From April 2022 to the date hereof, Pala has provided an aggregate of US$48.5 million of financing support to the Company, including to bridge to the closing of the Restart Financing Package. Pala has informed the Company that, in light of ongoing consideration of the Change of Control Proposal, it is willing to provide additional financing support to allow additional time for the evaluation and negotiation of the Change of Control Proposal and the corresponding delay in the closing of the Restart Financing Package.

In this respect, Pala has agreed to provide additional funding of up to US$5 million (as pre-funding of its US$20 million equity investment under the Restart Financing Package) pursuant to a promissory note. Draws by the Company are subject to agreed use of proceeds and the Company reaching satisfactory arrangements with certain creditors and vendors. The promissory note has a maturity date of October 31, 2022 and bears interest at 12% per annum on amounts drawn. The promissory note is subject to approval by the TSX.

The board of directors of the Company has formed a special committee (the ”Special Committee”) consisting of independent directors to consider and oversee the negotiation of the Restart Financing Package, the Change of Control Proposal and the backstop commitment and promissory note to be provided by Pala. The Special Committee has met continuously throughout the evaluation and negotiation of all of such transactions and has approved the promissory note.

Nevada Copper reminds shareholders that the terms of the Restart Financing Package are currently non-binding and closing is subject to, among other things, finalization of the specific terms thereof, negotiation and execution of definitive documentation and the satisfaction of various regulatory requirements including approval of the TSX.  There can be no assurance that binding agreements will be entered into or completed (or that the regulatory and third-party approvals will be obtained) with respect to Restart Financing Package, the Change of Control Proposal, the backstop commitment or the promissory note on terms satisfactory to the Company and within the required timeframe, or at all. If the Restart Financing Package is not completed, absent other financing, the Company will not be able to continue carrying on business in the ordinary course and may need to pursue proceedings for creditor protection. The Company’s creditors may also seek to commence enforcement action, including realizing on their security over the Company’s assets.

Qualified Person

The technical information and data in this news release has been reviewed by Steven Newman, Registered Member – SME, Vice President, Technical Services for Nevada Copper, who is a non-independent Qualified Person within the meaning of NI 43-101.

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.

Randy BuffingtonPresident & CEO

For additional information, please see the Company’s website at www.nevadacopper.com, or contact:

Tracey Thom | Vice President, IR and Community Relationstthom@nevadacopper.com+1 775 391 9029

Cautionary Language on Forward Looking Statements

This news release contains “forward-looking information” and “forward-looking statements” 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 information and forward-looking statements specifically include, but are not limited to, statements that relate to the completion of the funding package described above, including the terms and timing thereof, the plans and requirement for supplementary financing and the expected amounts thereof, regulatory requirements, the Company’s “financial hardship” exemption application, the use of proceeds from the Restart Financing Package, creditor protection proceedings, mine planning, the execution of the mine restart plan and expected development schedule, and the expected costs of the restart and ramp-up process, expectations regarding the Company’s restart and mine plans, the agreement of Pala to provide additional funding and the terms thereof, and statements that relate to the Change of Control Proposal. There can be no assurance that transactions relating to the Restart Financing Package, the Change of Control Proposal, the backstop commitment or the promissory note will be completed or that the cost estimates for the Restart Package will be accurate.

Forward-looking statements and information include statements regarding the expectations and beliefs of management. 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 should not be read as guarantees of future performance and results. They are subject to known and 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.

Such risks and uncertainties include, without limitation, those relating to: requirements for additional capital and no assurance can be given regarding the availability thereof; the outcome of discussions with creditors and vendors; potential creditor protection proceedings; the ability of the Company to complete the ramp-up of the Underground Mine within the expected cost estimates and timeframe; the impact of COVID-19 on the business and operations of the Company; the state of financial markets; history of losses; 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 Mine; loss of material properties; interest rate increases; 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; labour 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; 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; dependence on management information systems and cyber security risks; volatility of the market price of the Company’s securities; 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, 2021 and the quarter ended March 31, 2022 and in the section entitled “Risk Factors” in the Company’s Annual Information Form dated March 31, 2022. The forward-looking statements and information contained in this news release are based upon assumptions management believes to be reasonable, including, without limitation: no adverse developments in respect of the property or operations at the project; no material changes to applicable laws; the ramp-up of operations at the Underground Mine in accordance with management’s plans and expectations; no worsening of the current COVID-19 related work restrictions; reduced impacts of COVID-19 going forward; the Company will be able to obtain sufficient additional funding to complete the ramp-up, no material adverse change to the price of copper from current levels; and the absence of any other factors that could cause actions, events or results to differ from those anticipated, estimated or intended.

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. Although the Company has attempted to identify important factors that could cause actual actions, events, or results to differ materially from those described in forward-looking information and statements, there may be other factors that could cause actions, events or results not to be as anticipated, estimated or intended. Specific reference is made to “Risk Factors” in the Company’s Management’s Discussion and Analysis in respect of the year ended December 31, 2021 and the quarter ended March 31, 2022 and “Risk Factors” in the Company’s Annual Information Form dated March 31, 2022, for a discussion of factors that may affect forward-looking statements and information. Should one or more of these risks or uncertainties materialize, should other risks or uncertainties materialize or should underlying assumptions prove incorrect, actual results and events may vary materially from those described in forward-looking statements and information. For more information on the Company and the risks and challenges of its business, investors should review the Company’s filings that are available at www.sedar.com.

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 or information. Accordingly, readers should not place undue reliance on forward-looking statements or information.