|October 03, 2013|
Nevada Copper Announces Positive Open Pit Feasibility Study Results
|October 3, 2013 - Nevada Copper Corp. (TSX: NCU) ("Nevada Copper" or "Company") is pleased to announce the results of a National Instrument 43-101 Technical Report Feasibility Study ("Feasibility Study") for its 100%-owned Pumpkin Hollow Copper Project located in Yerington, Nevada. This Feasibility Study reports the results of a stand-alone open pit operation (the "Stage 2 Open Pit Operation" or "Stage 2"). The Feasibility Study builds upon the previously released feasibility studies in February, 2012 and December, 2012 which were prepared under the direction of Tetra Tech, Inc. ("Tetra Tech"), an industry leading international engineering firm.|
The Feasibility Study confirms the technical and economic viability of constructing and operating a stand-alone 70,000 ton-per-day open pit copper mining and processing operation. The Stage 2 Open Pit Operation would be located approximately 4 kilometers west of our 6,500 ton-per-day Stage 1 underground operation (the "Stage 1 Underground Operation" or "Stage 1") that is currently under construction. Development of the Stage 1 Underground Operation is supported by a feasibility study filed on SEDAR in December 2012. The Stage 1 Underground Operation will initially access ore from the East deposit and, if warranted, the E2 deposit. With all Stage 1 permits received on September 5, 2013 and a significant portion of project capital funding arranged, Nevada Copper is advancing towards production from the Stage 1 operation and, subject to receipt of permits and project funding, construction of the Stage 2 Open Pit Operation.
Production for the Stage 1 Underground Operation is expected to commence in 2015 with Stage 2 Open Pit Operation targeted for 2016, subject to the successful passage of the Lyon County Economic Development Land Bill (the "Land Bill"). It is anticipated that the Land Bill will be passed by Congress in 2013.
The following positive Stage 2 Feasibility Study results further support the Company's decision to proceed with a two-staged development of Pumpkin Hollow as reported in the Company's News Release dated April 23, 2013.
Upon successfully establishing production from both Stage 1 and Stage 2 operations, Nevada Copper's projected annual average production for the first five years will be approximately 285 million pounds of copper; 45,000 ounces of gold, 1.1 million ounces of silver resulting in annual operating cash-flow of approximately $500 million which assumes a forward price curve reducing to a long term price of $2.75 per pound copper.
"The completion of our Stage 2 stand-alone open pit Feasibility Study is yet another significant milestone achieved by Nevada Copper since the Company was formed in 2006," commented Giulio Bonifacio, President and CEO. "We are extremely pleased with these results as it further confirms that the Pumpkin Hollow project will support an economically-robust, large copper mine built on a staged basis which is unlike any other copper project currently in construction.
Mr. Bonifacio further commented, "It is our view that cash flows from Stage 1 will enhance the available financing alternatives for the much larger open pit operation which, once constructed, will transform Nevada Copper to a mid-tier copper producer. On a combined basis, Stage 1 and Stage 2 currently represent proven and probable mineral reserves of approximately 5 billion pounds of copper and annualized average production in the first five years of 285 million pounds of copper on a project that has an ideal geographic location with an extremely low risk profile."
Highlights of the Stage 2 Open Pit Feasibility Study (all amounts are stated in United States dollars):
Project opportunities that will further enhance the economic value of the Pumpkin Hollow project will be included in future mine designs and would reflect the following:
The 29% increase in mineral reserves incorporated the results of a further 44,000 meters of drilling from the previously published mineral reserve in February 2012. This drilling resulted in the merging of the North and South open pits producing improvements in pit scheduling and equipment utilization.
Subsequent drilling has encountered new mineralization and extensions, particularly along the south border of the North open pit deposit. Mineralization outside the North and South current pit design limit continues to be intersected and remains open. Drill Hole NC 12-34 which is not included in the current mineral resource and reserve intersected 690 feet (210.3 meters) grading 1.17% copper and is located along the southern edge of the current North pit.
Further drilling is being planned and expected to expand the current mineral resources and reserves at the project which will have a further positive effect on the strip ratio and economics.
A magnetite separation plant was not considered for the process circuit as initially contemplated, as mining the iron-rich South deposit has been delayed from year 8 to year 14 as a result of the increased mineral reserves in the North Deposit. While this represents a significant opportunity (See Iron Mineral Resource Summary below), the Company has determined that this study will be deferred as the North deposit still warrants additional drilling which may further delay access to the iron-rich South deposit.
Updated costs, mine design, marketability, and additional iron metallurgical testing will be reviewed in the future.
Though not considered in the Feasibility Study, should the inclusion of iron in the mine operation prove to be economic it is expected to greatly improve strip ratios and project economics as iron bearing material is currently considered waste in the Feasibility Study mine plan.
Permits and Land Transfer
The Pumpkin Hollow project is located on both on private land, and on unpatented mining claims located on Bureau of Land Management ("BLM") administered federal lands ("Federal Lands"). The City of Yerington (the "City") has proposed to acquire the Federal Lands ("Land Transfer") at fair market value. Nevada Copper has agreed to collaborate with the City to support the Land Transfer. If successful, the Land Transfer would convey all Federal Lands associated with the project from BLM jurisdiction to the City. This would allow the City to receive a portion of both property tax and Nevada net proceeds tax. It would also provide additional lands around the project for sustainable development, including current and long-term, post-mining commercial and industrial development, recreational opportunities, and expansion of community and cultural events. Subject to successful completion of the Land Transfer in 2013, all project permitting would come under the jurisdiction of the State of Nevada and the City, with receipt of permits targeted in 2014.
In the event the Land Transfer is not completed as anticipated the project activities would require a Plan of Operations with the BLM and compliance with the National Environmental Policy Act of 1969 ("NEPA"). NEPA compliance would entail preparation of an Environmental Impact Statement ("EIS") pursuant to BLM guidelines.
Regardless of the land status and permit process, the environmental, engineering and baseline technical studies associated with the entire project are either completed or in progress and will conform to all Federal, State and local standards. This will assure that the project is designed, constructed and operated to meet those standards and that either permitting process, including preparation of an EIS, would not be delayed. If BLM approval is required, BLM process and State permits for the project would be expected to be complete in 2016.
For the Stage 2 Open Pit Operation, pre-stripping the North deposit and construction of the mill and related facilities will commence in 2015 assuming all development permits have been obtained. Production is anticipated to commence in 2016.
The Stage 1 Underground Operation is located approximately 4 kilometers east, received all its required permits in September 2013 and is currently under construction. A 2,200 foot, 24 foot diameter production-sized shaft is being sunk to access the East underground deposit with further development to the E2 deposit if warranted. Detailed engineering and ordering of key long-lead-time mining and process equipment is currently in progress.
The project mineral resource was prepared by the mineral resource and mining division of Tetra Tech, incorporating the results of drilling up to July 2012 for the Feasibility Study. This resource was an update of a previous mineral resource estimate disclosed in September, 2012.
The mineral resource estimate was performed by or under the direction of Rex Bryan, Ph.D, Tetra Tech's Mineral Resource Division Senior Geostatistician. Dr. Bryan is an independent Qualified Person as set forth by Canadian National Instrument 43-101 ("NI 43-101").
The following Inferred Resources are in addition to the Measured and Indicated Resources:
Proven and Probable mineral reserves are the economically-mineable portions of the Measured and Indicated mineral resources above, respectively, as demonstrated by the Feasibility Study. The current reserves have increased the open pit reserves from 3.2 to 4.1 billion pounds representing a 29% increase. A base price of $2.80 per pound copper was used for the current pit design limit as compared to $3.00 per pound copper in 2012. The proven and probable reserves at Pumpkin Hollow are summarized below:
Resources Outside Current Pit Design Limit
The following table summarizes the measured and indicated resources that remained outside the current pit design limit at the time of the drill data cutoff for the resource calculation up to July 2012. The resources outside the current pit design limit are not included in the mineral reserves.
Drilling has continued since the reserve and resource drill cutoff date. Additional mineralization outside the North and South current pit design limit continues to be intersected and remains open.
Iron Mineral Resource
Though not considered in the Feasibility Study, the Pumpkin Hollow project also has considerable resources of iron in the form of magnetite. The following tables include only those iron resources amenable to open-pit mining methods in the North and South deposits. Possible mining, recovery and sale of a magnetite concentrate will be considered in future studies.
If an updated feasibility study demonstrates the iron resource to be economically viable, inclusion of iron in the open pit block model values is expected to significantly expand the size and tonnage of the North and South open pits, and lower waste tonnages and strip ratio.
The stand-alone open pit deposits will be developed sequentially starting with 1 ½ years of pre-stripping the North deposit. Open pit mill feed will come exclusively from the North deposit until year 12 when ore from the South deposit is added and is expected to eventually replace all North ore by the end of year 14. The current design pit limit will combine the two deposits into a single merged pit with an initial mine life of 22 years based on the current reserve.
The initial loading fleet will consist of three 43 to 45 cubic yard electric cable shovels and one 27 to 31 yard shovel excavator. The ore and waste haulage fleet will consist of 13 plus 350-ton electric or diesel haul trucks. The ore will transported from the pit via an in-pit crusher-conveyor system and the waste will be hauled.
Average strip ratios for the North and South deposits respectively 3.7 to 1, which includes the North and South deposit pre-strip.
Total ore mined and processed from the open pits, LOM, is 548.2 million tons grading 0.38% copper, 0.0013 oz./ton (0.045 g/tonne) gold and 0.048 oz./ton (1.65 g/tonne) silver.
Ore will be transported from the open pit to a nominal 70,000 tons-per-day concentrator located west of the open pits. A large semi-mobile in-pit crusher will reduce ore size before conveyance to the process facility. The concentration circuit is conventional with a single, large semi-autogenous grinding mill and secondary ball mill grinding and flotation of copper sulphide, followed by thickening and pressure filtration to produce a final copper concentrate grading 25.5% copper and containing payable gold and silver. The Bond Work index ranges between 12.5 to 13.7 and the Abrasion Index ranges between 0.230 and 0.263. Primary grind size is 150 microns with an overall copper recovery of 89.3%. Gold and silver recoveries to the copper concentrates are 67.3% and 56.3% respectively.
Projected assays for the copper concentrates produced from the North and South deposits are summarized below. Further metallurgical work will be performed focused on ores from the early years of production from the North deposit. Concentrates are expected to average 25.5% copper with payable levels of gold and silver. The concentrates contain no deleterious elements that would materially affect marketability.
Concentrates will be shipped by rail from to a west coast port facility then principally to Asian markets. Union Pacific tracks run approximately 13 miles north of the project.
Projected metals production to the copper concentrate is summarized below.
To minimize water usage, tailings will be de-watered, filtered and conveyed to a "dry-stack" on-site tailings storage facility ("TSF"). This water is then recycled to the process plant. This method is considered "best practice" for long term tailings storage in dry environments with finite water resources. It also lowers long term environmental monitoring costs. The TSF will effectively be an expansion of the Stage 1 project TSF.
The project area is well supplied with nearby local infrastructure. Project-related infrastructure expenditures include a new 6 mile (10km) 120kV power line and related substation. An energy cost of $0.055/kwh was used for Feasibility Study purposes, based on NV Energy expected rates. A 5-mile (8 km) mine access road connects the site to state Highway 95 to the North, and a rail load-out facility located on Union Pacific tracks. The rail tracks run approximately 13 miles (21 km) north of the project and connect with Union Pacific mainline tracks for connection to west coast ports. Process make-up water will be piped 6 miles (10 km) from the City of Yerington, county seat for Lyon County, where housing and regional services are available and most employees are expected to reside. The communities of Silver Springs, Smith Valley, Fernley, Dayton, Fallon, Carson City and Hawthorne are also all within commuting distance, and have a labor pool and existing housing, particularly for a construction workforce.
The project initial capital costs are estimated at $926.6 million with an accuracy of plus/minus 15% as of September 2013, including a contingency of $46 million. The contingency allowance is calculated based on assessed factors for each of the major Direct and Indirect cost categories. The major direct cost items include North deposit pre-stripping, process plant, tailing storage facility, site infrastructure and offsite rail load-out facility. Indirect costs include such major areas as engineering and procurement, construction management, freight and commissioning, spares inventory, first fills, and owner's costs.
Net working capital required for initial operations is estimated to be $23 million.
LOM sustaining capital totals $758 million, of which $425 million is incurred beyond Year 5, includes development of the South open pit deposit development costs; replacement of, and additions to, surface mobile equipment; lease costs for the initial mining fleet; reclamation costs; and expenditures on the tailings storage facility.
The merging of the North and South pits, along with an expanded North deposit reserve, has produced positive results in mine scheduling. The South deposit pre-stripping has been pushed from year 6 to year 10 and a second in-pit crusher has been eliminated.
LOM site unit operating costs, net of capitalized pre-stripping and other predevelopment costs, are $9.94 per ton-milled, as summarized in the table below:
Copper production costs per pound including site operating costs and copper smelter charges and concentrate transport, net of gold and silver credits, and excluding royalty, are estimated to average $1.58/lb. for Years 1 to 5 and $1.69/lb. for Years 1 to 10.
Economic Analysis Summary
The project economics were evaluated using a cash flow analysis, whereby revenues and costs are projected into the future on an annual basis. Annual net cash flows are then discounted at a rate of interest to reflect the time value of money to yield a Net Present Value ("NPV"). The analysis includes all site operating costs, smelter charges and transport costs, royalties, estimated local property taxes, Nevada Net Proceeds of Mining tax, and an estimate of U.S. Federal corporate income taxes. There are no Nevada corporate income taxes.
The most significant input which affects project economics are projected future metals prices. The following three metal price scenarios were used:
Summary of Economic Results
Key economic indicators extracted from the Feasibility Study are summarized below:
Royalties and Nevada Mining Taxes - The economic results include the costs of all third party royalties, and an estimate of local property taxes and Nevada Net Proceeds Tax payable on income from operations. Nevada has no corporate income taxes. Federal corporate income taxes are estimated for a fully taxable company with a single, standalone project.
The scientific and technical information in this release has been reviewed and approved by Ed Lips, P.E., of Tetra Tech, overall manager for the Feasibility Study. Mr. Lips is an Independent Qualified Person within the meaning of NI 43-101.
This release was also reviewed by Gregory French, P.G., Vice-President & Senior Project Manager of Nevada Copper and Robert McKnight, P. Eng., Executive Vice-President and CFO of Nevada Copper, both of whom are Non-independent Qualified Persons within the meaning of NI 43-101.
Readers should refer to the Feasibility Study NI43-101 Technical Report for further details of the project development. The Feasibility Study Technical Report will be filed in accordance with NI 43-101 on SEDAR (www.sedar.com) within the required 45 day statutory period and will be made available on Nevada Copper's website (www.nevadacopper.com).
An updated PowerPoint presentation will be available on the Nevada Copper website.
NEVADA COPPER CORP.
Giulio T. Bonifacio, President & CEO
This news release includes certain statements and information that may contain forward-looking information within the meaning of applicable Canadian securities laws. All statements in this news release, other than statements of historical facts, including the likelihood of commercial mining, securing a strategic partner, expanding the mineral resources and mineral reserves and possible future financings are forward-looking statements. Such forward-looking statements and forward-looking information specifically include, but are not limited to, statements concerning: Nevada Copper Corp. (the "Company") plans at the Pumpkin Hollow Project; the timing of granting of key permits; from the Feasibility Study: the estimated metal production and the timing thereof; capital and operating costs, future metal prices, cash flow estimates, and economic indicators derived from the foregoing.
Forward-looking statements or information relate to future events and future performance and include statements regarding the expectations and beliefs of management and include, but are not limited to, statements with respect to the estimation of mineral resources and reserves, the realization of mineral resources and mineral reserve estimates, the timing and amount of estimated future production, capital costs, costs of production, capital expenditures, success of mining operations, environmental risks and other mining related matters. 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 include, but are not limited to, statements or information with respect to known or unknown risks, uncertainties and other factors which may cause the actual industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements or information.
Forward-looking statements or information are subject to a variety of risks and uncertainties which could cause actual events or results to differ from those reflected in the forward-looking statements or information, including, without limitation, risks and uncertainties relating to: history of losses; requirements for additional capital; dilution; loss of its material properties; interest rates increase; global economy; no 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; labor 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 may differ from what is indicated and the difference may be material; legal and regulatory proceedings and community actions; accidents, title matters; regulatory restrictions; permitting and licensing; volatility of the market price of Common Shares; insurance; competition; hedging activities; currency fluctuations; loss of key employees; other risks of the mining industry as well as those factors discussed in the section entitled "Risk Factors" in the Company's Annual Information Form dated September 19,2013. Should one or more of these risks and uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in forward-looking statements or information. The Company disclaims any intent or obligation to update forward-looking statements or information except as required by law, and you are referred to the full discussion of the Company's business contained in the Company's reports filed with the securities regulatory authorities in Canada. Although the Company has attempted to identify important factors that could cause actual results to differ materially, there may be other factors that could cause results not to be as anticipated, estimated or intended. For more information on Nevada Copper and the risks and challenges of its business, investors should review Nevada Copper's annual filings that are available at www.sedar.com.
The Company provides no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements.
Alternative Performance Measures
"Copper Production Costs", "LOM Operating Costs", "LOM site unit operating costs" and similar terms are alternative performance measures. These performance measures are included because these statistics are key performance measures that management may use to monitor performance. Management may use these statistics in future to assess how the Company is performing to plan and to assess the overall effectiveness and efficiency of mining operations. These performance measures do not have a meaning within International Financial Reporting Standards ("IFRS") and, therefore, amounts presented may not be comparable to similar data presented by other mining companies. These performance measures should not be considered in isolation as a substitute for measures of performance in accordance with IFRS.
For further information call:
VP, Investor Relations & Communications
Toll free: 1-877-648-8266
Robert McKnight, P.Eng., MBA
Executive Vice President & CFO
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