By Frik Els
Pumpkin Hollow goes into production next year, but the underground mine is only the first phase of a planned Nevada copper operation four times the size
Sun shines on Pumpkin Hollow underground project set for production in a year.
For Yerington it’s been 40 years in the making.
The waste dumps left behind by Anaconda after shutting copper operations in 1978 still loom large over the small town in Nevada’s Mason Valley, not far from Lake Tahoe and California state lines.
There have been a few false dawns and dashed hopes of a revival during the interceding decades in this region of the Silver State where mining dates back to the late 1800s.
But next year the town of little over 3,000 souls – who are proud of the fact that it’s the only place in the world called Yerington – will see the opening of a new mine which within short five years could eclipse the heydays in both size and scope.
If this was 2011, Pumpkin Hollow may well have been a magnetite mine
Nevada Copper’s Pumpkin Hollow project sits 13km down a road lined by farms (row upon row of irrigated onions planted with what looks like down-to-the-centimetre precision) which sustained Lyon County during the lean years.
The deposit was first discovered by US Steel in 1960 and if this was 2011, Pumpkin Hollow may well have been a magnetite mine.
Toronto-listed Nevada Copper acquired the property in 2005 and after extensive study and drilling in the ensuing years came close, but never quite made the decision to build a mine, to the chagrin of the locals.
So what’s different this time around?
The copper price is trading today where it was in 2006 after all. And even seasoned industry watchers were unnerved by the metal’s precipitous drop this summer.
But Nevada Copper is a different entity and Pumpkin Hollow is in a new jurisdiction.
Yerington is gearing up for influx of jobs and revenue
Nevada Copper has undergone a rapid transformation following a $380m recapitalization at the end of last year led by Pala Investments, the firm behind another recent high-profile reboot – Cobalt 27.
Other big mining finance names including JP Morgan, BlackRock, Capital Group, CIBC and Red Kite are also investors.
Nevada Copper has undergone a rapid transformation following a $380m recapitalization at the end of last year
In April, President and CEO Matt Gili was recruited from Barrick Gold to join Nevada Copper’s board. Gili was in charge of the gold giant’s Cortez complex in Nevada.
Gili joins other industry heavyweights including Chairman Stephen Gill from Pala, Tom Albanese, former Rio Tinto CEO, Capital Group’s Ernie Nutter and Raffaele Genovese, ex-Glencore, who all came on board in the past year.
It’s not difficult to see what attracted Gili to Nevada Copper. Opportunities to build and operate major new mines in the US are hard to come by.
The last new copper mine in the country to go into into production – Freeport’s Safford mine in Arizona – was over a decade ago. As for Nevada, you have to go back to 2004 when Poland’s KGHM restarted the historic Robinson mine.
“The number one success factor for a new mine is the involvement of executives and management on site. You don’t build a mine within budget and on time from a remote corporate head office,” Gili tells MINING.com.
Before Barrick, Gili served as COO of Rio Tinto’s Oyu Tolgoi mine in Mongolia which is set to become the world’s third largest copper mine.
You only have to listen to him recounting his years in Mongolia and the long drives across the desert and the many feasts of boiled mutton and camel’s milk he enjoyed to know that Gili is a hands-on guy.
Not that Nevada is nearly as unforgiving as the Gobi Desert. And in a labour market in the US which is the tightest in generations that’s important.
Reno is little more than an hour’s drive from Pumpkin Hollow and is fast shaking its reputation as Las Vegas’s poor cousin thanks to an influx of tech workers escaping Silicon Valley’s cost of living and a massive new industrial hub anchored by carmaker Tesla’s so-called gigafactory.
President and CEO Matt Gili joined Nevada Copper in April
Cut red tape, not corners
A recovering copper price helps, but it was a unique agreement with the local community that laid much of the groundwork for Pumpkin Hollow.
The mine is being built on private land. In 2015 after a four-year process, just over 10,000 acres of Federal Land was transferred to the City of Yerington and subsequently sold to Nevada Copper.
That enabled the company to operate under the auspices of the Nevada Division of Minerals, speeding up the permitting process and at the same time giving Yerington direct benefits under the state’s profit share scheme.
The innovative arrangement was the brainchild of Nevada Copper’s VP for environment and external relations Timothy Dyhr and Yerington’s city managers.
“With EPCs the upfront negotiations are brutal, but after you shake hands, you execute together.”
Dyhr, who’s worked all over the world including as BHP’s environment chief for copper, says approvals and permit decisions that would take six months plus making its way through the federal system now takes weeks.
“The project still adheres to all environmental regulations – we’re cutting red tape, not corners,” Dyhr tells MINING.com.
Another innovation Gili is bringing to construction of Pumpkin Hollow is the use of EPC (Engineering, Procurement and Construction) contracts.
With EPC agreements the contractor is responsible for final completion of a project at a fixed cost and is used extensively in Africa, Australia and other parts of the mining world. With investor concern over budget blowouts and delays growing, it is gaining traction in the Americas.
“With EPCs the upfront negotiations are brutal, but after you shake hands, you execute together. With EPCMs negotiation is the easy part, and the fighting is during execution,” Gili …read more