Nevada Copper (TSX: NCU) has released a new prefeasibility study for an open-pit mine at its Pumpkin Hollow project in Nevada, where it is building a standalone underground operation that it expects to be in production in the fourth quarter of 2019.
The updated PFS contemplates a phased approach with an initial mining rate of 37,000 short tons per day (std) with subsequent and flexible expansion to 70,000 std, which the company says will reduce initial upfront capital costs to US$672 million. Expanding to 70,000 std will cost an additional US$473 million.
The study envisions a mine life of 19 years, with peak annual copper production of 244 million lbs. copper and a post-tax payback period of 8.1 years.
Cash costs are forecast to run to US$1.73 per lb. copper net of by-product credits and all-in sustaining costs to US$2.03 per lb. The study uses a long-term copper price of US$3.20 per lb., and estimated a post-tax net present value at a 7% discount rate of US$829 million and an internal rate of return of 21%.
The mine has been phased to minimize pre-production stripping to deliver material as soon as possible and provide a life-of-mine grade profile of 0.47% copper, or 0.50% copper-equivalent. In the first five years, the grade will average 0.65% copper, or 0.69% copper-equivalent.
The company plans further drilling to test the full extent of the open pit deposit and upgrade inferred resources so that they can be included in the mine plan.
The PFS was based on measured and indicated resources of 553 million short tons grading 0.45% copper, 0.002 ounce gold per short ton and 0.054 oz. silver per short ton for 5 billion pounds of contained copper, 879,000 oz. gold and 29.78 million oz. silver.
The open-pit project's inferred resources add another 28 million short tons grading 0.36% copper, 0.001 oz. gold per short ton and 0.04 oz. silver per short ton, for 197 million lbs. copper, 37,000 oz. gold and 1.09 million oz. silver.
The project is in Nevada's Walker Lane mineral belt, and the proposed open-pit mine consists of the North and South deposits. The North deposit is a copper-rich, magnetite-poor skarn breccia body hosted by hornfels of the Gardnerville Formation and will be mined first. The South deposit is a magnetite-chalcopyrite body closely associated with an intrusive contact of granodiorite into limestones of the Mason Valley Formation.
The mine will be a conventional truck-and-shovel operation using 50 feet benches.
Nevada Copper's shares are trading at 42.5 ? in a 52-week range of 33 ? and 72 ?. The company has a $281-million market capitalization.