INTERVIEW: US miner Nevada Copper gives green light to Pumpkin Hollow project

The commodities market is a fickle beast and few know that better than Nevada Copper chief executive officer and president Giulio Bonifacio.

With the market now steadily recovering from the previous price collapse and copper prices up more than 25% in the United States over the past year, capital is beginning to return to the market and Pumpkin Hollow is finally set to become a reality.

“There is a real opportunity to take advantage of a cycle,” Bonifacio told American Metal Market in an interview. “It’s been a very challenging couple of years.”

Located a couple hours’ drive southeast of Reno, Nevada, Pumpkin Hollow is unique in that it is not only the largest permitted project in the US but is also situated close to modern infrastructure that includes affordable power, workers and a state with a long tradition of mining.

As part of an agreement between Nevada Copper and its financiers - including Red Kite and Concord Resources Ltd - the company will receive a $378-million financing and recapitalization package designed to restart construction on the project, with first production anticipated in 2019.

It is a quick turnaround for a mining site but Bonifacio reiterated that the major construction was done before copper prices capsized, noting that the property has an existing concrete-lined shaft that descends nearly 2,000 feet along with underground drill stations and a core group preventing the site from flooding.
The miner estimates that production will average 60 million lb of copper at a cost of $1.86 per lb. It is a feasible proposition, with operating expenditures projected to be $1.68 per lb and Comex copper recently trading around $3.20 per lb.

But it is also a symbolic deal demonstrating that the industry is finally beginning to dip its proverbial toe into the water once again.

In 2015, the commodities industry was about to experience a major rout that would send prices to the lowest point since the Great Recession, force countless layoffs and have the world’s largest miners searching for answers while they sliced capital expenditure and watched as their previous ironclad finances disintegrated.

For Bonifacio, it was just another year confirming an axiom derived from more than three decades of experience: copper prices are cyclical, for the good and for the bad.

On August 14, 2015, the company announced that plans for a 70,000-ton-per-day operation in Nevada had finally received full permitting for construction and operation. Little did he - or the entire industry, for that matter - realize what was to become of the site and the commodities world at large.

In order to survive the fallout in copper prices, sacrifices were made both in terms of scope and in personnel, with the company making the decision to keep only a small cadre of workers.

“We had a significant layoff with people at the project level and the intent at that point was, in very simple terms, to hold on,” Bonifacio said after noting that the company had already spent $220 million on construction costs.

Following the suspension, the company opted to narrow the scope of the project and focus on high-grade underground mining to help generate returns before embarking on a large project that eventually could see annualized production reach 250-300 million lb of copper.

Long term, Bonifacio explained that the initial $1.1 billion production cost included an open-pit project with total reserves eclipsing 5 billion lb of copper and a mine life nearing a quarter of a century.

A bullish factor for Nevada Copper and the entire global industry is emanating from the sustained deficit in the global copper market, which stood at 175,000 tonnes in the first 10 months of 2017, according to the International Copper Study Group. The Lisbon, Portugal-based group previously forecast the full-year deficit at 150,000 tonnes for 2017 and 105,000 tonnes for this year.

A sustained shortfall is placing upward pressure on the concentrates market, and multiple sources have told American Metal Market that the market will only become more competitive as the year progresses.

Even after the volatility recorded over the past few years, Bonifacio always believed in the underlying fundamentals of the market and is now looking at a landscape that again is tilting in the miner’s favor. In the end, copper demand isn’t going away and “there isn’t that much copper supply in North America, let’s be frank,” he added.

What to read next
Fastmarkets has decided to proceed with the launch of a new European low carbon ferro-chrome price covering material with lower chrome content.
Fastmarkets invites feedback on a proposal to increase the publication frequency of non-exchange-deliverable equivalent-grade (EQ) copper cathode premium, cif Shanghai, from once every two weeks to once every week.
The outlook for North American steel scrap prices has headed further into bearish territory ahead of June’s trade, with prices for all grades expected to fall again after a round of across-the-board decreases in May
Fastmarkets is inviting feedback on a change of publishing time for our ferro-chrome price in the Chinese domestic market as well as ferro-chrome import prices in Japan and South Korea, to 5-6pm Shanghai time from 2-3pm London time.
Fastmarkets is inviting feedback on a proposal change the publishing time for our silico-manganese, ferro-manganese and manganese ore port prices in China, to 5-6pm Shanghai time from 2-3pm London time.
The publication of Fastmarkets copper concentrates TC index, cif Asia Pacific was delayed on Friday March 26, due to a reporter error.
We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.