Nevada Copper (TSX:NCU,OTC Pink:NEVDQ) filed for Chapter 11 bankruptcy protection on Monday (June 10) under the US Bankruptcy Code following its inability to secure funding or a change-of-control deal.
The move comes months after copper prices reached a new all-time high.
The company also announced the appointment of Tom Albanese, former CEO of Rio Tinto (ASX:RIO,NYSE:RIO,LSE:RIO), as the new chair of its board of directors following the resignation of Randy Buffington as president and CEO.
Nevada Copper has faced issues at its Pumpkin Hollow asset in Nevada since 2022. In May of that year, the company encountered "operational and geotechnical challenges," and sought liquidity from shareholder Pala Investments.
Progress was made in the two years since that update, with Buffington saying in February that the mine was ramping up to steady state operations. However, in April, Nevada Copper said it needed money to complete the commissioning and ramp-up process. By early June, it had warned investors that it would need to seek creditor protection if funds weren't secured.
Ultimately the company could not secure funding from its major stakeholders, Pala Investments and Mercuria Energy. Pala holds a 57 percent stake in the company, while Mercuria owns 17 percent.
Albanese noted that the restructuring process aims to preserve and protect the company's assets.
To maintain liquidity during the restructuring period, Nevada Copper has secured a commitment for US$60 million in debtor-in-possession (DIP) financing, with US$20 million requested for immediate use.
This financing is also intended to support employees and vendors during bankruptcy proceedings.
In conjunction with the Chapter 11 filing, Nevada Copper is requesting the Bankruptcy Court's approval to continue paying employee salaries and wages and maintaining employee benefits programs.
The company will operate as a DIP, taking steps to maximize the value of its assets under the court's guidance.
In May, the copper price hit US$11,464 per metric ton, its highest price ever.
The red metal has been attracting increasing attention as market participants become more aware of its tight supply/demand fundamentals. Attention has also been fueled by BHP's (ASX:BHP,NYSE:BHP,LSE:BHP) pursuit of Anglo American (LSE:AAL,OTC Pink:AGPPF), although the deal finally through after a series of negotiations and counter offers.
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Securities Disclosure: I, Giann Liguid, hold no direct investment interest in any company mentioned in this article.
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