TORONTO (miningweekly.com) – Nevada Copper is considering modifications of its current state permits for its Pumpkin Hollow project to allow for an operation as envisaged in its recently released integrated feasibility study (IFS) and estimates that this fine-tuning will be completed during the current quarter.

Nevada’s reputation as a mining-friendly jurisdiction was underscored by Nevada Copper’s advanced-stage Pumpkin Hollow project making legal progress when it gained an unusual distinction at the end of 2014 with the passage of a Land Bill under its auspices through the US Congress.

Located close to Yerington City, the Yerington Land Bill, passed into law by US President Barrack Obama in December 2014, would transfer about 4 200 ha held by the federal government – and administered by the US Bureau of Land Management (BLM) – to municipal title.

Within this land package were the project’s North and South deposits, which would be transferred to Nevada Copper once the title acquisition between the City of Yerington and BLM had been completed. A target date had been estimated for the third quarter this year.

Nevada Copper president and CEO Giulio Bonifacio in a recent interview with Mining Weekly Online stressed that the Bill had secured bilateral support from both Republicans and Democrats. “It was a big win for us. To get a Bill passed through Congress – well, you’ll know what that represents if you follow US politics.”

He also noted that transference of the land in this manner would save Nevada Copper at least three years, compared with the company seeking permitting on federally held territory.

INTEGRATED EFFORT

Pumpkin Hollow comprised two main development areas – the underground East deposit, and the North and South deposits that would be mined as openpits. The company’s IFS, which was released in late May and filed with regulatory authorities on July 9, estimated a mine life of 23 years, with a production ramp-up targeted for 2018.

The company used a base case of $3.15/lb of copper, $1 200/oz of gold and $18/oz of silver, which reflected an integrated project with a $2.6-billion life-of-mine (LoM), after-tax net cash flow. Pumpkin Hollow would also have an after-tax internal rate of return of 15.5% with a 4.9-year payback.

LoM output had been estimated at 4.5-billion pounds, or 2.05-million tonnes of copper, 512 000 oz of gold and 15.6-million ounces of silver, in a quality copper concentrate. The IFS also outlined an average production rate of 275-million pounds copper a year for the operation’s first five years.

Once ramped up, the openpit would produce run-of-mine ore at an estimated 63 500 t/d, while the underground operation would produce 6 500 t/d, feeding a 70 000 t/d concentrator.

At a 0.47% copper equivalent, proven and probable mineral reserves for the openpit and underground deposits stood at 572-million tons, containing 5.05-billion pounds of copper, 761 000 oz of gold and 27.6-million ounces of silver.

Openpit mining would occur sequentially, starting with the North deposit and shifting to the South deposit after about 13 years. The operation would involve conventional truck-and-shovel work, with an ore crusher next to the North deposit.

Meanwhile, the company had built a 7-m-diameter concrete-lined shaft to a depth of almost 600 m at its underground East deposit. It had also installed a production-sized hoist, a hoist control room and a production-sized headframe.

“It was an expensive endeavour to sink the shaft and put a headframe in place; it was about $70-million, or thereabouts,” Bonifacio noted. However, Nevada Copper believed that these development decisions had embedded efficiencies to help accelerate future construction work at the deposit.

The shaft’s final depth had been planned at just over 640 m. At the 580 m level, the company had initiated lateral development, starting with the installation of stations for an underground drill campaign currently under way.

“We’re continuing to return good values, so the reserve is getting bigger,” Bonifacio explained, adding that the company knew there was a whole lot more in terms of grade and tonnage perspectives.

BIG COULD BE BEAUTIFUL
Nevada Copper had continued to assess the build and scale of Pumpkin Hollow, with initial capital costs to build the fully-integrated project estimated at $1.07-billion. However, the company could build a smaller operation first and grow in size through various development phases. 

“The nice thing about a big project is that the size would generate handsome returns,” Bonifacio advised. “We have that opportunity to look at a larger footprint and profile, although we’re not ruling out building a smaller operation.”

Additional financing could come from debt, a streaming transaction or some equity. “However, we are very mindful of dilution with equity,” Bonifacio said, highlighting that he founded the company in 2005 and was an 8% shareholder, and "I’ve been disciplined all the way through”.

He also noted that Nevada Copper already had a $200-million loan facility in place with Red Kite Mine Finance. In addition, the company had an offtake deal with Red Kite on the underground deposit, representing about 12% of its reserves.

“The payable factors are exactly what they should be; there are TC/RCs [treatment charges and refining charges] at spot [price] with a modest premium, and there’s a quotation period. There’s nothing there that should surprise,” Bonifacio added.

Streaming could come from by-product gold and silver, while the South deposit also contained high-grade iron-ore not within the economics of the project’s feasibility studies. “So we think there’s an opportunity for us here [and] we’ve signed a memorandum of understanding with a significant steel manufacturer,” Bonifacio said.

He also stressed that local infrastructure was robust and already in place. This was important as capital expenditures for remote projects often became more intensive if a company had to also build the necessary infrastructure in tandem with mine development, Bonifacio pointed out.

The local community of Yerington was supportive of Pumpkin Hollow, while being located in mining-friendly Nevada was a considerable boon. “It’s one of the best places to be if you’re a mining company,” he stated. “It’s a rock-solid state.”