Nevada Copper Corp NEVDQ

RE:RE:stope backfill

[RockDoc1]

A very disappointed update. Some new concerns:

• Only one stope (9500 tons) mined in the quarter.  9500 tons is a small stope.  They would need to mine about 50 of these stopes per quarter to reach 5000 tpd.  There is something that they are not telling us.  Unless the average stope size is much bigger, I suspect that 5000 tpd and 6500 tpd might pipe dreams.
• More company weasel words: "the Company now expects that the Underground Mine will reach a hoisting rate of 3,000 tpd in Q4 2021...".  They are not saying that there will be 3000 tpd of stope ore in Q4, they are saying that they will hoist 3000 tpd, which includes development rock (mostly low grade waste).  Each development heading produced 200 tons.  Five or eight development rounds per day (a normal rate at this stage of the mine) means that 50% of the 3000 tpd is waste from development.  Sounds more like they will be producing 1000 - 2000 tpd of stope ore in Q4.
• More vague news about poor ground conditions and development delays due to water bearing geological structures.  Water and poor ground conditions means: slower development rates, slower ramp up to full production, and higher C1 mining cost.
• The CEO leaving after less than 10 months is concerning.  What does he know to make him leave?  Is there an issue with the owners?  Guys like Mike Ciricillo do not normally leave within 10 months.

Reading between the lines, other less-bad information from the Aug 13 update:

• The reported recovery of 81% is low, but this is expected because the material being processed is sub-ore grade development waste.  One stope of 9500 tons, with 87,211 tons processed means that 77,700 tons of development ore grading 0.4% Cu was processed.  When they are processing mostly stope ore, the recoveries will come up to the 90% spec.
• 5000 tpd is now planned for 2022H1.  They are finally being more realistic in their production ramp up.  Most mines take considerably more than one year to ramp up to full production.  Their earlier of report of ramping up to full production in a few months was utter nonsense.  Nobody can do this.  I will be very surprised if they get to 5000 tpd of stope ore before the end of 2022.
• Commissioning surface ventilation fans is still planned for 2021Q4, but production will only be 3000 tpd in Q4.  This means that the production ramp up to 5000 tpd in 2021 was never dependent on commissioning of surface ventilation fans.  The production ramp up is completely related to development rates, and development rates are being curtailed by poor ground conditions.

Patchh, some corrections:

• They are adding development rock (often very low grade) with their stope ore.  I don't understand your statement "blending and crushing for water content".  This makes no sense.  Water is added to the crushed ore in the mill as part of the mineral benefication process.
• The first stope was 1.5% Cu.  There are hundreds of drillholes that give the PH orebody a mineral reserve of 7.4 million tons grading 1.85%.  This grade will vary within the orebody.  One stope of 1.5% is not indicative of the whole orebody.
• They are not sinking a new 90 foot shaft.  Nobody sinks 90 foot shafts.  The orebody is accessed on a series of levels.  The levels are connected with a ramp/decline.  The levels have a 90 foot vertical spacing.  There will be dozens of sublevels in the mine, with a vertical spacing of 90 feet.  This is how underground mining is planned and executed.
• The underground mine is not "a busted hole".  They are encountering normal startup challenges for a mine.  You have completely unrealistic expectations for a mine in startup.  A mine startup is like elephants mating, lots of screaming going on and it takes a couple of years to get results.
• They are not starting the pit anytime soon.  They would need hundreds of millions of dollars of capital for new equipment and a new concentrator.  This will not happen for at least few years.  There is only 100 million tons in the open pit mineral reserve.  They have 20 to 50 miles of drilling to do to get enough of the pit into a mineral reserve category before they can try to finance an open pit.  Getting the drilling done will take years.

Relax, it will all come good, likely in late 2022.  For those who cannot wait until late 2022, sell early on Monday morning so that the longterm investors can get a deal.

-- A longterm investor, RockDoc1.