The company has entered into an underwriting agreement with a syndicate of underwriters led by Scotiabank, as lead underwriter and sole-bookrunner, for the sale of 148.1 million units priced at 77 cents each. Each unit will consist of one share and half a warrant exercisable at a price of $1 for 18 months.
The company's largest shareholder, Pala Investments committed to purchase 89.3 million units to maintain its current shareholding percentage.
Proceeds will be used for the development and ramp-up of the underground mine, the repayment of bridge loans and accrued interest advanced under a promissory note issued Pala and open pit exploration and expansion studies.
Nevada Copper plans to retire and prepay an equivalent portion of the existing loans outstanding under the June Pala promissory note. The remaining balance of the June promissory note will be consolidated and extended under the Pala credit facility, which will see its maturity date extend from January 2024 to January 2026. Pala will receive an amendment and extension fee of 4% and 15 million warrants.
The financing will increase Nevada Copper's share count by an initial 80% from 185 million to 333 million, with the possible addition of a further 74 million shares if the warrants are exercised.
Nevada Copper expects to reach steady-state production of 5,000 tonnes per day, originally slated for 2020, in the first half of 2022. The original ramp-up was hobbled by COVID-19 impacts, the need for a geotechnical review and subsequent financial difficulties. A subsequent target of mid-2021 slipped to the third quarter, then the fourth quarter due to slow progress through a water-bearing dike and shipping delays for the final surface ventilation fans.
Shares in Nevada Copper are trading at C76c, valuing the company at $141 million.