Activist Investor Offers Support To Bankrupt Nevada Copper: '

Canadian miner Nevada Copper NEVDF filed for Chapter 11 bankruptcy on Monday despite soaring copper prices.

The company, burdened by operational setbacks and financing challenges, has secured a commitment from Elliott Investment Management, an activist investor with a strong interest in the sector.

Nevada Copper’s financial struggles stem from a series of costly operational issues at its flagship Pumpkin Hollow project. This project, situated southeast of Yerington, Nevada, includes underground and open-pit operations with proven and probable reserves (as of 2019) of 3,590Mlb of copper, 21,266koz of gold, and 617oz of silver.

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However, a buildup of underground water and other setbacks caused expenses to spiral out of control. As a result, Nevada Copper’s key backers, including Pala Investments and Mercuria Energy Group, decided against providing additional funds. The company’s attempts to attract new bidders also fell through, leaving it with no other option but to file for bankruptcy protection.

"Those discussions have failed to result in obtaining such funding or other transaction, and the company has been unable to secure additional interim funding from its key stakeholders," the company stated in a press release.

Nevada Copper's bankruptcy occurs despite an optimistic market for copper, driven by the metal’s essential role in the energy transition. Copper prices recently hit record highs, exceeding $11,000 per metric ton. Nonetheless, the elevated cost of capital has made borrowing more challenging for smaller companies.

Pala Investments holds a 57% stake in Nevada Copper, while Mercuria Energy Group owns 17%.

The company’s CEO, Randy Buffington, stepped down amid the financial turmoil. Tom Albanese took over as chairman of the board.

Elliott Investment Management’s involvement showcases its growing interest in the mining sector. The hedge fund recently disclosed a stake in Anglo American AAUKF and holds a majority stake in Triple Flag Precious Metals TFPM, a company specializing in financing solutions in the sector.

Nevada Copper has already received a commitment for $60 million in debtor-in-possession financing, with $20 million requested on an interim basis, pending court approval.

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