Shares in Nevada Copper Corp (TSX:NCU) jumped on Thursday after the company's board gave the go-ahead for the construction of its Pumpkin Hollow underground mine.
In more than three times the usual trading volumes, Nevada Copper popped 12% higher at the open, before paring some of those gains, for a market value of C$304m.
Nevada Copper said in a statement that the decision follows the company's recently completed C$108.5 million public offering of common shares and pre-construction activities, which have been ongoing since May this year. The full-scale production decision allows the company to draw down C$70 million from its precious metal streaming agreement.
President and CEO Matt Gili, who joined Nevada Copper earlier this year from Barrick Gold, said The Pumpkin Hollow underground project, which will include the processing plant and completion of the underground mine, is the first key step in the company's strategy of capital-efficient, phased growth from its base in Nevada
Roughly US$220m have already been sunk into the Pumpkin Hollow project. Nevada Copper has an aggressive schedule to start producing first concentrate in the fourth quarter of next year. Pre-production capex is pegged at $197 million.
The 5,000 tonnes-per-day underground mine will produce 60m pounds of copper (~27,000 tonnes) in the first five years of operations, as well as 9,000 ounces of gold and 173,000 ounces of silver.
The mine plan is based on total reserves of 23.9m tonnes grading 1.74% copper equivalent, with the grade averaging just over 2% copper during the first five years of production.
Pumpkin Hollow boasts an initial mine life of 13-and-a-half years with "significant extension potential from identified resources" according to Nevada Copper.
The company's November 2017 NI 43-101 Technical Report also provides the option to develop a 70,000 tonnes per day integrated underground and open pit mine at the property.