Mr. Mike Ciricillo reports

NEVADA COPPER ANNOUNCES FINANCING PACKAGE

Nevada Copper Corp. has executed binding agreements with respect to a financing package that will provide liquidity for the continued ramp-up of operations at the company's underground project.

Financing package highlights:

• The company has entered into binding agreements with several of its existing financing partners to provide substantial additional liquidity to the company for completion of the ramp-up of its underground project. The financing package will consist of the following components:
  • New cash resources of $31-million with a blended headline interest rate margin of 7 per cent, of which approximately $9-million has already been advanced to the company since the beginning of November, 2020;
  • Amendments to the company's senior credit facility providing a further $26-million in increased liquidity in the form of deferral of debt service payments;
  • Up to an additional $25-million of undrawn liquidity (including the accordion feature described herein), available to the company to assist as required with completing the ramp-up of operations at the underground project.
• The financing package provides a significant increase in balance sheet flexibility through four complementary facilities. The financing package includes the following elements:
  • $15-million increase to senior credit facility: The company's senior lender, KfW IPEX-Bank, has agreed to provide an additional $15-million under the existing senior credit facility and defer $26-million of planned debt service under the KfW facility until 2023.
  • $5-million increase to working capital facility: The company's offtaker, Concord Resources Ltd., has agreed to provide access to an additional $5-million under the existing working capital facility.
  • $26-million extension of unsecured debt: The company's largest shareholder, Pala Investments Ltd., has agreed to provide a three-year, $26-million unsecured loan facility, which extends and replaces existing loans, including those under promissory notes, advanced by Pala to the company and provides a new advance of $7-million.
  • $5-million cost overrun facility (COF): In connection with the increase to the KfW facility, Pala has also agreed to provide a corporate guarantee for a committed cost overrun contingency of $5-million in connection with the completion of the ramp-up of the underground project.

Mike Ciricillo, chief executive officer of Nevada Copper, stated: "On behalf of the entire company, I want to sincerely thank KfW for its ongoing support of the company. The package not only meets the projected requirements of the ramp-up, but provides additional contingency headroom for the company."

Commenting on the ramp-up plans, he added: "With the main shaft materials handling system on track for mechanical completion in December, we expect to see hoisting rates increase significantly as planned in the coming weeks during final commissioning. Along with this significant milestone, the positive conclusion of KfW's independent engineer review further validates our ramp-up plans."

As previously announced, the company completed a geotechnical review and elected to reduce the size of certain early stopes in a localized area where initial ramp-up ore is planned. While the move to initially smaller stopes in the Upper East South zone will further derisk the underground project and does not affect the life-of-mine resource, the change has increased the company's costs in the short term. The company expects that the new financing package will address the cost increases resulting from the geotechnical changes and enable the company to complete the ramp-up of the underground project.

The company expects to close the financing package by the end of 2020 and will continue to review opportunities to supplement and optimize the financing package.

Further details of the financing package

Increase in KfW facility

The company's wholly owned subsidiary, Nevada Copper Inc. (NCI), and KfW have entered into an amendment and restatement of the KfW facility, whereby KfW has agreed to provide an additional $15-million loan with a three-year term, 12-month grace period and interest of LIBOR (London interbank offered rate) plus of 4.9 per cent and a 12-month grace period for principal payments and cash sweeps. Under the amended KfW facility, KfW has also agreed to defer $26-million of planned debt service until 2023, including deferring the financing of the debt service reserve account from January, 2022, to January, 2023, and the deferral of the first and second amortization payments to be made in July, 2022, and January, 2023, to be made in pro rata instalments over the remaining term of the facility starting at the end of July, 2023.

Increase in working capital facility

Concord has agreed to increase the availability under the working capital facility by $5-million. Following this increase, which the company expects to be effective at the end of March, 2021, the working capital facility will have a total capacity of $40-million through its maturity date in 2023.

Pala credit facility

The company has also entered into a binding commitment letter with Pala for a three-year approximately $26-million unsecured loan facility. The Pala credit facility replaces and extends two outstanding promissory notes provided by Pala to the company in October and November, 2020. The October promissory note in the amount of $8-million has been fully drawn. The promissory note provided in November was in the amount of up to $15-million, of which $9-million has been advanced to the company to date. The outstanding amounts under these existing promissory notes will be repaid with the proceeds of the Pala credit facility and the notes will be cancelled. In addition, a portion of the proceeds of the Pala credit facility will be used to pay Pala approximately $1.7-million as repayment for funds advanced by Pala to Concord on behalf of the company under the working capital facility earlier in 2020. Approximately $7-million in additional funds is expected to be advanced to the company under the Pala credit facility. The definitive agreement for the Pala credit facility is expected to be entered into prior to the closing of the amended KfW facility.

The Pala credit facility will be available for an initial draw in the full amount of $26-million, as described herein, subject to the satisfaction of certain conditions. It will be a direct obligation of the company and will not be guaranteed or secured by any of the company's subsidiaries. The Pala credit facility will bear interest at LIBOR plus 9 per cent per annum and will include a 3-per-cent arrangement fee and a 4-per-cent disbursement fee. There will be no common shares, warrants or other convertible securities of the company issuable in connection with the Pala credit facility, other than the potential for interest and certain fees to be paid in shares rather than paid in cash or capitalized. Pala will be entitled to syndicate all or a portion of the Pala credit facility, which may result in higher interest and fees.

If the company raises additional funds after the date hereof prior to June 30, 2021, in certain instances, up to $15-million will be required to be repaid to Pala from the proceeds of the new financings. Upon a repayment from a future financing, such amount may be reborrowed by the company, subject to certain conditions, including that the company's financial resources plus any amounts drawable under the Pala credit facility will be sufficient to complete the ramp-up and achieve positive cash flows before the end of 2021. During the availability period, Pala will be paid a 4-per-cent-per-annum commitment fee on amounts available to be reborrowed. The Pala credit facility will also include an accordion feature, whereby, subject to the agreement of the parties and the satisfaction of other applicable conditions, additional drawings of up to $15-million would be permitted at any time prior to the maturity date. Voluntary prepayments under the Pala credit facility will be subject to a prepayment premium, which will also apply in the case of a change of control.

Funds advanced under the Pala credit facility will be primarily used to finance the construction and ramp-up of the underground project as well as for the general working capital needs of the company.

The negotiation and approval of the commitment letter for the Pala credit facility and the fee for the guarantee arrangements and the mechanics for the financing of the COF under the guarantees (each as described as follows) in connection with the amended KfW facility were supervised on behalf of the company by a committee of independent members of the company's board of directors. The committee will also supervise the negotiation and approval of the definitive agreement providing for the Pala credit facility.

Cost overrun facility

In connection with the amended KfW facility, the company will provide the COF to NCI for up to $5-million on substantially the same terms as the cost overrun facility that was provided by the company to NCI in May, 2019, when the KfW facility was entered into. The COF may be drawn only once all other existing sources of financing have been utilized and if construction costs at the underground project exceed the current estimate.

Pala will provide a corporate guarantee to KfW in respect of both the $15-million additional loan amount under the amended KfW facility and the $5-million COF amount and a pledge of certain of Pala's assets. The company will compensate Pala for its commitments under the corporate guarantee and related pledge arrangements at a rate of 8 per cent per annum of any outstanding guaranteed amount, which may be payable in cash, shares or deferred to the next payment date and will be subject to a prepayment premium in certain circumstances, including on a change of control. If Pala is required to finance the COF under its guarantee, it may elect to inject funds into the company by way of a loan on similar terms as the Pala credit facility or by way of a subscription for shares at the maximum discount permitted by the policies of the Toronto Stock Exchange.

Conditions to the financing package

Completion of the closing of the amended KfW facility and the drawdown of funds thereunder is subject to a number of conditions, including NCI's receipt of $6-million pursuant to the Pala credit facility, the consent of the Federal Republic of Germany through Euler Hermes for the amended KfW facility, and the provision of the guarantee and collateral package by Pala referred to herein. The effectiveness of the increase to the working capital facility is conditional upon the $15-million drawdown under the amended KfW facility being completed. In addition, the Pala credit facility is subject to the approval of the TSX. Approval by the company's shareholders of the Pala credit facility and the related guarantee arrangements, as well as a share consolidation, is a requirement of the Pala credit facility. Shareholder approval is not a condition for the closing of draws under the Pala credit facility, but will result in an event of default if not obtained at the company's next annual general meeting. The company expects that all conditions to financing under the amended KfW facility and the Pala credit facility will be satisfied by the end of 2020. However, there can be no assurance that all such conditions to financing will be satisfied in this time frame, or at all.

Advisers

Torys LLP and Shearman & Sterling LLP acted as legal counsel to the company and Milbank LLP acted as legal counsel to KfW.

About Nevada Copper Corp.

Nevada Copper is a copper producer and owner of the Pumpkin Hollow copper project. Located in Nevada, United States, Pumpkin Hollow has substantial reserves and resources, including copper, gold and silver. Its two fully permitted projects include the high-grade underground mine and processing facility, which is now in the production stage, and a large-scale open-pit project, which is advancing toward feasibility status.

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