Embattled mining giant Nevada Copper on Monday announced non-binding terms with its main lender, KfW IPEX-Bank, and its largest shareholder, Pala Investments, for a loan of up to $70 million.
The copper producer, which halted mining activities at Pumpkin Hollow over the weekend, reported that lenders would commit to an advance of $50 million and that $20 million would be available for future drawings with no commitment.
Nevada Copper said it intends to finalize binding agreements in July.
“If implemented, the proposed financing package will provide the Company with access to significant additional liquidity to maintain assets at the Pumpkin Hollow underground copper mine and to proceed and explore certain projects such as the completion of the levee crossing and the advancement of feasibility study work for the open pit project and preliminary talks about further financing and strategic options,” said the clammy company.
During negotiations of the financing package, Nevada Copper would make additional drawings under Pala’s previously announced $20 million promissory note to meet its immediate liquidity needs.
However, the miner warned that if no further drawings are available, the financing package is not completed, or satisfactory arrangements are not reached with the sellers, it will not be able to continue its operations as normal and may have to initiate bankruptcy protection proceedings.
Nevada Copper has already received a formal notice of default from its mining company, Redpath, after it failed to make payments due. Redpath has indicated that it intends to pursue its available remedies.
Despite the outage, the Company and Redpath have reached an agreement to suspend mining operations at the underground project and the limited work that needs to be completed going forward to protect the Company’s assets.