The Pumpkin Hollow copper project owner has agreed non-binding terms for the loan with its senior lender KfW IPEX-Bank and its largest shareholder Pala Investments by way of a new tranche extension of the existing senior credit facility with KfW.

The update follows Nevada Copper last week announcing that liquidity issues had resulted in the company suspending most mining activities and falling into default of its financial obligations.

The company's share price on July 4 was down 12% day on day and at the lowest closing value in at least 10 years, of C$0.23 (US$0.18). It has fallen from C$0.71 since the beginning of April.

Nevada said that, if implemented, the financing package will allow it to maintain the assets at the Pumpkin Hollow underground mine and pursue projects such as completing the dike crossing and advancing open pit feasibility study work, as well as exploring further financing and strategic options.

Of the total amount, US$50 million is to be committed to be advanced by the lenders and US$20 million may be available for future draw by the company on an uncommitted basis, Nevada said.

"If further draws are not available, the financing package is not completed, or satisfactory arrangements are not implemented with vendors, then absent obtaining other financing and/or making such other arrangements, the company will not be able to continue carrying on business in the ordinary course and may need to pursue proceedings for creditor protection," Nevada warned.

Nevada Copper ended the first quarter of this year with US$12 million in cash and an elevated net debt position of US$180 million.

The company has a market capitalization of C$103.14 million.