Kinterra-linked private equity firm to pay US$128M for failed Nevada Copper mine

An affiliate of Toronto private equity firm Kinterra Capital emerged as the successful bidder for Nevada Copper (US-OTC: NEVDQ), which earlier this year filed for bankruptcy after it failed to secure funding for its flagship Pumpkin Hollow mine as operational costs swelled.

Southwest Critical Materials, the Kinterra affiliate, made a stalking horse bid of US$128 million for substantially all of Nevada Copper’s assets in August. The bid was part of a sale process initiated by Nevada Copper when it declared bankruptcy in the U.S.

Under the bidding procedures approved by the U.S. Bankruptcy Court, other parties had until Sept. 6 to submit binding offers. However, while multiple parties were interested in the assets, no others submitted a qualified bid.

As a result, Nevada Copper’s board of directors last week designated Southwest Critical Minerals as the successful bidder in the sale process. Final approval of the transaction by the U.S. Bankruptcy Court and the Superior Court of Justice of Ontario is expected later this month, with the sale closing in October.

The Pumpkin Hollow copper mine located in Yerington, Nev., comprises a high-grade underground mine that Nevada Copper briefly returned to production and an open-pit project.

Earlier this year, the company said it would require additional funding for the copper mine after it encountered underground water build-up, as well as unexpected bottlenecks that caused repeated shutdowns of the processing plant.

The operational setbacks caused costs to spiral and its key backers, including Pala Investments and Mercuria Energy Group, hesitated to sink more money into the operation.