Nevada Copper (NCU.TO) has announced the outcome of the feasibility study it initiated on the open pit zone of the Pumpkin Hollow project in Nevada. As we mentioned before, the daily throughput was increased from 60,000 tpd to 70,000 tpd which increases the annual production to 221M lbspa in the first five production years and 197M lbspa thereafter.
The cash costs are a bit higher than what we were expecting, as the cash cost per pound of copper will be $1.58 in the first five years and $1.69 thereafter, after deducting the gold and silver revenue as a by-product revenue. As it’s extremely likely Nevada Copper will fund a part of its $926M capex by selling a silver and/or gold stream, the price per pound of copper will increase further as the by-product revenue will decline if the company would enter into a streaming agreement. Because of this, we don’t think the real cash cost per pound of copper will be lower than $1.90 in the first five years of operation, but at the current copper price the operating margin would obviously still be very healthy.
Disclosure: The author holds a long position in Nevada Copper. Please see our disclaimer for current positions.