After management overhaul, Nevada Copper ready for Pumpkin Hollow production
Special to the NNBV
YERINGTON, Nev. — It’s been a long journey for Nevada Copper, but after years of underground and surface work, the company finally is nearing production at its Pumpkin Hollow copper mine in Yerington.
Work on underground mining operations at Pumpkin Hollow began in 2012 with construction of a headframe and sinking of the main 24-foot diameter, concrete-lined production shaft with a targeted depth of 2,100 feet.
By 2015, Nevada Copper had reached a depth of 2,000 feet but was forced to halt mining activity due to funding and stagnant copper prices, says Tim Dyhr, vice president of environment and external relations for Nevada Copper.
Those days are in the rearview, however. Production from underground mining operations is expected to begin later this year and truly hit stride beginning in 2020.
Nevada Copper already has ore stockpiled and ready to process once it commissions its mill, which is being built by mining engineering and infrastructure construction firm Sedgman of Western Australia.
PLENTY OF CHANGE TO GET HERE
The journey to commercial production hasn’t been without its changes for the company. In 2018, Nevada Copper overhauled its senior management, bringing in former Barrick and Rio Tinto senior executive Matt Gili as president and chief executive officer.
Gili replaced former CEO Giulio Bonifacio, who founded Nevada Copper in 2005. It also hired David Swisher as senior vice president of operations. The duo bring more than four decades of hard rock mining experience to Nevada Copper’s senior management team.
“It was time to move to the phase where we had people who knew how to build mines,” Dyhr says. “The company has gone through a complete transition, which resulted in us refinancing with much better terms.”
Nevada Copper refinanced through German Bank BfW (Bank für Wohnungswirtschaft) of Mannheim, which is backed by the German government.
As it readies for commercial production, Nevada Copper is simultaneously sinking a ventilation shaft to service underground mining operations. It’s taking a two-prong approach: Surface crews have descended about 1,000 feet, while at the same time crews have dug about 100 feet from the bottom up. Once the vent shaft is complete, Nevada Copper can commence full-scale underground mining activity.
“It’s quite a Rubik’s Cube of activity,” Dyhr says.
Sedgman is building the Pumpkin Hollow infrastructure at a fixed cost, which reduces financial risk for Nevada Copper, Dyhr says. Phoenix Industrial of Vancouver is handling installation of all concrete, steel and piping, while Q&D Construction performed all the mass dirtwork.
SHIFTING FROM DEVELOPER TO PRODUCER
To date, Nevada Copper has excavated more than 6,000 feet of lateral development underground, and is hauling ore (muck) to the main shaft to be hoisted to the surface for eventual processing once mill construction and commissioning are complete.
Once Nevada Copper begins production, the company will shift from being a developer to a producer, which re-rates its valuation and allows it to better access additional capital if needed, Dyhr says.
Target production is 5,000 tons per day of ore. Annual copper production once the Pumpkin Hollow underground mine hits full capacity is 60 million pounds of copper the first two years, and about 50 million pounds per year for the subsequent 14-year mine life with current reserves. However, those reserves are likely to expand through additional exploration drilling.
The open pit copper mine at the site, meanwhile, has a projected 23-year mine life.
Nevada Copper will produce copper concentrate that will require additional processing downstream from its operations. The concentrate will be loaded on railcars and sold to various copper brokers. Part of its financing package, Dyhr says, included a deal to sell copper concentrate to German copper recycler and copper cathode fabricator Aurubis.
‘DEMAND IS GOING TO EXCEED SUPPLY’
Nevada Copper employs about 50 direct employees at the Pumpkin Hollow mine, while Sedgman employs between 100 and 200 depending on the stage of construction. Once the mine hits full production, it is expected to employ as many as 400 miners, Dyhr says.
Yerington City Manager Robert Switzer says there’s already been a push by developers eager to gain a foothold in Lyon County in advance of Nevada Copper’s projected spike in employment, and the city has taken steps to streamline the permitting process.
“I have noticed increased interest by developers addressing our critical housing needs, with many mentioning Nevada Copper’s expansion as the driving force,” Switzer says. “To help address the expected increase in building activity, the City now has a certified permit technician serving as the point-of-contact for building permits, applications for planning commission actions, and information on zoning. We also review our utility connection costs for new development with other communities to insure we have competitive rates.”
While the price for copper languished around $2.60 a pound in mid-July, executives at Nevada Copper remain bullish on the metal’s future. Increased demand for electric vehicle charging stations and declining global copper production are two factors that bode well for Pumpkin Hollow, Dyhr says.
“Even though the price is low, we aren’t selling copper right now,” he says. “Copper demand is going to exceed supply, and the fundamentals will change over the next 10 years.”
GasBuddy projects the national average gas price this Thanksgiving will be $2.56 per gallon, a penny higher than last year. The average per-gallon price in Nevada, meanwhile, is $3.30.