Nevada Copper Corp. is pleased to announce that it has completed, and SEDAR-filed, a Technical Report prepared in accordance with National Instrument 43-101 (“NI 43-101”) for its 100%-owned Pumpkin Hollow Copper Project located near Yerington, Nevada.
The Technical Report, entitled “NI43-101 Technical Report: Pumpkin Hollow Development Options - Pre-feasibility Study 5,000 tons/day Underground Project; Feasibility Study for a 70,000 tons/day Open Pit/Underground Project”, has an effective date of September 15, 2017.
The Technical Report discloses the proposed development of a 5,000 tons/day underground project (the “Underground Project”) at a preliminary feasibility (“PFS”) level. This is the primary focus of the Technical Report.
The Technical Report also includes feasibility-level information on the potential development of a large 70,000 tons/day mine at Pumpkin Hollow with feed mainly from the nearby open pit deposits, but also from the same Mineral Resources as accessed in the Underground Project. This is referred to within the Technical Report as the Integrated Project (the “Integrated Project”). The Integrated Project, that was originally disclosed in a NI 43-101 2015 Feasibility Study Technical Report (“2015 IFS”) for which the scientific and technical information is materially unchanged, remains a viable development option.
Highlights of the Underground Project Pre-Feasibility Study
The Pumpkin Hollow Property encompasses the only fully-permitted copper project of scale in the United States, comprising two potential copper projects both of which are disclosed in the Technical Report:
- the high-grade Underground Project; and
- the Integrated Project, a large scale open pit and underground project with reserves of 5 billion pounds of copper, 0.76 Mozs. of gold and 27.6 Mozs. of silver1.
The two projects, which are mutually exclusive and are each viable development options, benefit from over $220 million of prior expenditures which funded a significant amount of engineering work and technical studies, and construction of a production-sized headframe and hoist, warehouse, a 1,900 foot deep, 24-foot diameter concrete-lined production size shaft and over 600 feet of lateral development.
The PFS for the Underground Project leverages upon the substantial existing infrastructure at the site, including power, water, road access, plus a production shaft and lateral mine development. The objective of the PFS has been to optimize the previously-defined underground portion of the Mineral Resources at Pumpkin Hollow 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
- A philosophy on focusing on “margin-over-tons”, while maintaining expansion and extension optionality.
The Technical Report was prepared under the direction of Sedgman Canada Limited (part of the Cimic Group) (“Sedgman”) as lead, along with Mining Plus Limited (“Mining Plus”). Sedgman and Mining Plus are both industry-leading international engineering firms. Sedgman and Mining Plus have taken advantage of the existing infrastructure to improve capital cost accuracy and reduce development risk, and worked with Nevada Copper’s project team, supported by Pala Investments as technical advisor, on preparation of the PFS.
A detailed overview of the Underground Project within the Technical Report is provided below. Highlights include:
- Robust project economics:2
- 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%;
- Low initial capital requirements: $182M
- Short lead time to first production:
- Fully permitted for construction and operation;
- Planned commencement of construction by mid-2018 (subject to board approval and financing);
- Target first production in mid-2019;
- Development plan focused on minimizing execution risk:
- Utilizes the existing 1,900 foot deep, 24-foot diameter concrete-lined, production-sized shaft, associated headframe and hoist, and existing surface infrastructure;
- Process plant construction under fixed price engineering, procurement and construction (“EPC”) contract for which engineering designs are well advanced;
- Experienced mining contractor to be utilized for underground development and mine ramp-up, for which initial contractor tenders have been completed;
- Full optionality retained over large-scale fully-permitted open pit:
- Underground Project does not impact Nevada Copper’s ability to develop a future project on the adjacent deposits accessible by open pit methods;
- Significant optimization opportunities identified for open pit project, including potential to:
- Convert assumed waste material to potential mineral resources, and eventually ore, through drilling in Northern Extension and Connector Zones and additional engineering studies;
- Reduce project costs through updated project estimation; and
- Reduce capital costs by optimizing project scale.
Note that a future stand-alone open pit project development option is not part of the Technical Report. Both the underground and open pit projects are located within privately-held land inclusive of surface and mineral rights.
In early 2017, Nevada Copper commissioned Sedgman as lead, along with Mining Plus, to complete a Technical Report including a PFS level study on the Case A Underground Project, and including the previous disclosure from the 2015 IFS, in accordance with NI 43-101 standards. The scientific and technical information in this news release has been reviewed and approved by Mr. John Grady Ch.Eng. IEA, Project Manager with Sedgman, and overall manager for the PFS. Mr. Grady is an Independent Qualified Person within the meaning of NI 43-101.
The information and data contained in this news release insofar as Case A in the Technical Report has been reviewed by the independent Qualified Persons, John Grady Ch.Eng. and Steve Rossetti Ch.Eng. of Sedgman, and Neil Schunke P.Eng. of MiningPlus.
The information and data in this news release was also reviewed by Gregory French, P.G., Vice-President & Project Manager of Nevada Copper and Robert McKnight, P. Eng., Executive Vice-President of Nevada Copper, both of whom are Non-independent Qualified Persons within the meaning of NI 43-101.