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COVID-19 trips up Pumpkin Hollow

Nevada Copper has stopped copper production at the fledgling Pumpkin Hollow operation near Yerrington, Nevada, amid government measures and other impacts of the COVID-19 epidemic.
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Nevada Copper has placed the Pumpkin Hollow copper mine on care and maintenance

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Nevada Copper said state rules to prevent the transmission of the virus had made business impractical, paralysing the company's supply chain and the free movement of staff, and causing "significant operational delays and work constraints".

The company shipped first concentrate in December, but last week announced a refinancing of its balance sheet to sustain the ramp-up of the mine during a time of metal price weakness.

Nevada Copper expects the suspension to last for at least six weeks, subject to revision and government restrictions. Care and maintenance activities will maintain the operation in a state of readiness for a rapid restart, according to the company.

It is reviewing cost reduction measures to preserve cash. It said it continued to closely consult with senior project lender KfW IPEX-Bank regarding the production suspension. It will work with stakeholders to mitigate the impact.

With a fresh contract crew from Redpath USA installed underground from January, the Pumpkin Hollow team was working towards achieving commercial production by June, targeting sustained production of 50 million pounds copper per annum.

Nevada Copper used a long-range "consensus price" for copper of US$3.20/lb in its 2019 technical report on Pumpkin Hollow, which reportedly has a current $2.03/lb all-in sustaining cost ($1.86/lb for the first five years) versus the copper price of US$2.21/lb.

Shares in the company (NCU:TSX) have dropped 57% in the year to date to C16c, which capitalises it at $122 million (US$87 million). Intraday trading Monday saw the stock fall to within a whisker of the 12-month low of 14c.