Vancouver-based Nevada Copper (TSX: NCU) has started a sales process as a part of a restructuring announced this week, which included filing for bankruptcy and halting its Pumpkin Hollow copper mine in Nevada.
Nevada Copper noted a Nevada court had granted it a provisional approval for its debtor-in-possession financing. This allows the company to borrow US$20 million out of the previously announced US$60-million loan facilitated by U.S. hedge fund manager Elliott Investment.
The miner said the emergency funding will be used to support care and maintenance at Pumpkin Hollow, as well as other financial needs during the Chapter 11 process. Earlier in the year it said it would need about US$10 million to keep Pumpkin Hollow idled.
Nevada Copper also said it would request final approval for the remaining US$40 million from Elliot to ensure liquidity for the remainder of the restructuring period during which it will continue paying employees’ wages and benefits.
Elliott owns two-thirds of Triple Flag Precious Metals (TSX, NYSE: TFPM), a streaming company that invested in Nevada Copper’s operations.
Before last week’s bankruptcy filing, Nevada Copper had garnered interest from two unnamed potential buyers, but was unable to finalize a deal with either, it said.
The company had said earlier this year it required additional funding to meet ongoing challenges at Pumpkin Hollow, where it restarted operations in the fourth quarter of 2023. Issues encountered included a build-up of water underground, an incomplete ore handling system and 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.
Nevada Copper reported revenue of just US$3.6 million for the year’s first quarter, while costs climbed to US$18.2 million.
The company is in the midst of a delisting review by the Toronto Stock Exchange, and its shares are currently halted from trading.
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