Nevada Copper (TSX:NCU) announced a developing plan for its Pumpkin Hollow copper deposit, located at the Walker Lane mineralized belt of Western Nevada. The new strategy includes a pre-feasibility study that envisions a high-grade underground mine and puts on hold development plans for the project’s larger open-pit deposit.
The Pumpkin Hollow property encompasses the only fully-permitted copper project of scale in the United States, comprising the high-grade underground project and a large scale open pit and underground project, also called the “integrated project,” with reserves of 5 billion pounds of copper, 0.76 Mozs of gold and 27.6 Mozs of silver.
The objective of the pre-feasibility study os to optimize the previously-defined underground portion of the mineral resources with a focus on reduced capital cost, higher mined ore grades, reduced operating cost profile, de-risked construction plan including brownfield assets, EPC construction approach and contract mining during ramp-up, and what the miner calls “a philosophy of focusing on ‘margin-over-tons’,” while maintaining expansion and extension optionality.
Subject to board approval and financing, a construction decision would be made around mid-2018 and first copper production would be set to start in 2019. The initial capital requirement is of $182 million.
Highlights from the pre-feasibility study include:
Average annual copper production of 50 Mlbs (60 Mlbs in Years 1 to 5);
First five-year copper grades averaging 1.81% (2.01% Cu-equiv.3);
First five-year C1 cash costs of $1.69/lb of payable copper;
Average annual operating margins of $67M per annum ($86M in Years 1 to 5);
Pre-tax NPV5% of $356M and IRR of 27.2%4;
After-tax NPV5% of $301M and IRR of 25.2%;
To carry on its plans, which officials expect will help the company transition into a mid-tier copper producer, Nevada Copper secured Pala Investments’ financial support, including the potential backstop of future equity financings, in connection with delivering a project financing package for the construction of the underground project.
On top of this announcement, which pushed the company’s shares by 7.81% on the Toronto Stock Exchange, Nevada Copper also named today a new Vice President, Chief Operating Officer. Phillip Day is the man in charge from now on and his main task would be to advance the underground project into construction phase. Currently Head of Technical and Operations at Pala Investments, he has also worked at AMEC Americas, BHP Billiton and WMC Resources, among other companies.
“I see significant opportunities at Pumpkin Hollow, as we now have a robust underground project ready to advance into construction in the near term. The ability to leverage the existing infrastructure and previous studies will allow us to significantly de-risk project development. Importantly, for the flagship Pumpkin Hollow Open Pit, I also see substantial scope for optimization and value creation that can be advanced in parallel with the near-term production from the underground mine,” Day said in a statement.