Nevada Copper Corp

Mr. Evan Spencer reports

NEVADA COPPER ANNOUNCES $97 MILLION BOUGHT DEAL PUBLIC OFFERING; AND PROPOSED RETIREMENT OF CONVERTIBLE DEBT

Nevada Copper Corp. has entered into an agreement with Scotiabank, on behalf of a syndicate of underwriters, including RBC Capital Markets and National Bank Financial Inc., acting together with Scotiabank as joint bookrunners, and including Haywood Securities, pursuant to which the underwriters have agreed to buy, on a bought deal basis, 643,713,553 units of the company at a price of 15 cents per unit for aggregate gross proceeds of approximately $97-million.

Each unit consists of one common share of Nevada Copper and one-half of one common share purchase warrant of Nevada Copper. Each full warrant will entitle the holder thereof to purchase one common share at a price of 20 cents per common share for a period of 18 months following the closing of the offering.

The company has granted the underwriters an option, exercisable at the offering price for a period of 30 days following the closing of the offering, to purchase up to an additional 23.79 million units to cover overallotments, if any, and for market stabilization purposes, which, if exercised in full, would result in additional gross proceeds to the company of approximately $3.6-million. The overallotment option is exercisable to acquire units, common shares and/or warrants (or any combination thereof), at the discretion of the underwriters.

The units will be offered by way of a short form prospectus to be filed in all provinces of Canada, except Quebec. The offering is expected to close on or about July 27, 2020, subject to the receipt of all necessary regulatory and stock exchange approvals, including the approval of the Toronto Stock Exchange and applicable securities regulatory authorities.

The net proceeds from the offering will be used to finance the company's operations, including: to continue its previously announced accelerated mine development plan and to restart and ramp up production at its Pumpkin Hollow underground mine; to repay the convertible loan (as defined herein); to repay other outstanding indebtedness (including short-term financing provided by Pala Investments Ltd., currently in the amount of $9.6-million (U.S.)); and for general corporate purposes. As previously announced, concentrate production is temporarily suspended at the underground project due to COVID-19 impacts, and the company expects a mill restart at the underground project in August, subject to revision based on the impacts of the COVID-19 pandemic and other factors.

As part of the offering, the company intends to prepay, in full (including all accrued interest and fees thereon of approximately $4-million (U.S.)), the existing $30-million (U.S.) convertible loan facility that the company entered into with Pala, the company's largest shareholder, on March 27, 2020, on the closing date of the offering. The convertible loan was entered into as part of the company's balance-sheet-strengthening package, which was completed in March, 2020. Subsequently, Pala syndicated a portion of the convertible loan, including an aggregate principal amount of $13.4-million (U.S.) to an affiliate of Castlelake LP, the company's second-largest shareholder. In connection with the prepayment of the convertible loan, Pala and Castlelake have agreed to waive the applicable prepayment premiums and have agreed to subscribe for an aggregate of 302,977,529 units for aggregate gross proceeds of approximately $45.4-million pursuant to the offering. In addition, Pala and Castlelake have committed to subscribe for up to an additional 163,128,000 units pursuant to the offering for approximately $24.5-million in aggregate gross proceeds.

H.C. Wainwright & Co. and Jett Capital Advisors are acting as financial advisers on the offering.

Corporate governance

The board of directors of Nevada Copper has formed a special committee, consisting of members of the board who are independent of Pala and Castlelake, to consider the proposed terms of the offering involving Pala and Castlelake, including: the prepayment of the convertible loan; the repayment of the short-term financing provided by Pala; and the additional subscriptions under the offering by Pala and Castlelake. The special committee has met separately from the full board. After careful consideration, the special committee unanimously recommended that the company approve the terms of the offering relating to these matters.

The involvement of Pala and Castlelake in the transactions referred to above in connection with the offering are related party transactions within the meaning of Multilateral Instrument 61-101 -- Protection of Minority Security Holders in special Transactions, and the company is relying on the exemptions in sections 5.5(g) and 5.7(e) of MI 61-101 in connection with such transactions.

Nevada Copper intends to apply to the TSX, pursuant to the provisions of Section 604(e) of the TSX company manual, for a financial hardship exemption from the requirements to obtain shareholder approval of the offering on the basis that, absent the offering, the company is in serious financial difficulty due to the lack of available cash and financing resources. The offering is designed to improve the company's financial situation. The application will be made upon the recommendation of the special committee and will be based on the determination that the transactions are reasonable for Nevada Copper in the circumstances.

Nevada Copper expects that, as a consequence of its financial hardship application, the TSX will extend the remedial delisting review, which Nevada Copper is currently under for a period of 120 days, which is normal practice when a listed issuer seeks to rely on this exemption. Although Nevada Copper believes that it will be in compliance with all continued listing requirements of the TSX upon the closing of the offering, no assurance can be provided as to the outcome of such review or continued qualification for listing on the TSX. There can be no assurance that the TSX will accept the application for the use of the financial hardship exemption from the requirement to obtain shareholder approval described above.

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