Nevada Copper Secures New $200 Million Loan Facility and Offtake With Redkite Nevada Copper (TSX NCU)

Nevada Copper Secures New $200 Million Loan Facility and Offtake With Redkite

Tuesday December 30, 2014, 2:03pm PST

Nevada Copper (TSX:NCU) has completed a US$200 million senior secured loan facility and off-take agreement with RK Mine Finance, or Red Kite, replacing a previous facility closed in March 2013. Proceeds will be used to repay the previous facility and to advance the underground mine at Nevada Copper’s pumpkin hollow project.

As quoted in the press release:

  • US$90 million has been paid to Nevada Copper of which US$57.1 million was used to repay the Previous Facility. The net proceeds of approximately US$26 million, net of arrangement fee and closing costs, combined with the Company’s current treasury, provides approximately US$36 million to complete the current production sized shaft which is nearing completion; commence underground lateral development and start targeted drilling on both the underground and open pit deposits;
  • The initial funding will also allow for completion of permitting of the Stage 2 Open Pit resulting from the recent successful passage of the land transfer bill as more fully described in the Company’s press release dated December 22, 2014 and completion of an optimized and updated feasibility study as more fully described in the Company’s press release dated November 4, 2014;
  • A further US$110 million will be advanced on the completion of certain project and financing milestones;
  • The Loan Facility matures on December 31, 2020, with interest payable at an annual rate of LIBOR plus 10% during pre-completion and LIBOR plus 7.5% post completion;
  • Interest on the initial amount drawn, and subsequent draws, will be paid quarterly with a principal repayment holiday until September 30, 2017, following which US$82.5 million of outstanding principal will be repaid in 13 quarterly sculpted payments and the remaining outstanding principal will be repaid in one final balloon payment on the maturity date;
  • The Company has the ability to repay the loan in full without penalty prior to maturity. The loan is secured against all current and future assets of the Company and its subsidiaries. As part of the loan agreement, the Company has paid an arrangement fee of 3.5% of the principal amount of the loan;
  • Under the terms of the Concentrate Off-Take agreement, the Company will sell to Red Kite, for the life of the mine on the Underground Mine, up to 74.5% of copper concentrates produced from the Underground Mine. The percentage of offtake allocated is equal to the amount advanced by Red Kite to the Company under the loan agreement as a percentage of the US$200 million principal amount of the Loan Facility.

Nevada Copper president and CEO, Giulio Bonifacio, said:

We are extremely pleased with the closing of this financing with Red Kite, a new facility that will provide greater flexibility in repayment and will defer principal repayment from April 2015 to September 2017 when compared to the Previous Facility. Furthermore, this Loan Facility will provide additional capital to further de-risk and advance our Pumpkin Hollow project while allowing flexibility for Nevada Copper to move forward on funding the much larger open pit operation, as the Loan Facility and Concentrate Off-Take agreement are specific to the underground operation only.

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