Copper Fox Metals Inc. Advances Multi-billion $ Deposit in B.C.
With measured and indicated resources of nearly 1.4 billion tonnes containing copper, moly, gold, silver and rhenium, mineralization, Copper Fox Metals is sitting on a world-class deposit in its Schaft Creek Project in northwestern British Columbia. It has acquired 100% interest in Schaft Creek, under an option agreement with Teck Cominco, which assures that there is already a major partner in place to help put it into production.
In reviewing the extensive database of resource companies and projects in our shareKNOW Global Resource Reference, we couldn’t help but be impressed with the potential we found there for Copper Fox.
To start with, Schaft Creek is one of the largest copper/gold deposits in Canada,with 1,393 billion tonnes of measured & indicated resources at a 0.20% copper equivalent cutoff.
According to its latest 43-101 report, this includes 7.8 billion pounds copper, 7.8 million ounces gold , 583 million pounds molybdenum, and 69.7 million troy ounces silver. Copper Fox is in the process of preparing a bankable feasibility study to evaluate the development of an open pit mine with a minimum capacity of 100,000 tonnes per day (tpd) over a mine life of 22+ years.
Property History
Prior to Copper Fox acquiring an option on the property in 2002, a total of 230 core holes with total length 60,200 metres, and percussion holes with totaling 6,500 metres had been completed.
In 2002 Copper Fox secured rights to acquire up to a 93.4% interest in the project under an Option Agreement with Teck and related underlying agreements. After making required expenditures of $15 million, Copper Fox has now earned a 70% direct interest in the project and can acquire a 23.4% indirect interest on delivery of a positive feasibility study.
At this stage, Teck may exercise back-in rights to acquire interests in the project in order to participate in mine development with Copper Fox. Teck has the right to earn a 20% interest by matching Copper Fox’s prior incurred expenditures, or a 40% interest by matching three times prior incurred expenditures, or a 75% interest by incurring four times prior expenditures and arranging all production financing.
The Development Plan
On September 15, 2008 Copper Fox Metals announced a NI 43-101 compliant Preliminary Feasibility Study on the Shaft Creek
deposit by Samuel Engineering, Inc of Denver, Colorado.
The PFS recommends that Schaft Creek be developed as a conventional open pit. The Preliminary Feasibility Study anticipates start of production to be late 2013.
The Study projects a mine life of 22.6 years with the mill expected to produce 4.76 billion pounds of copper, 255.2 million pounds of molybdenum, 4.5 million troy ounces of gold and 32.5 million troy ounces of silver.
In the event that Teck elects to exercise its back-in right to acquire 75% of the ultimate 100% Copper Fox interest in the Schaft Creek Project, it is expected to be responsible for securing financing for Copper Fox’s portion as well as its own portion.
Copper Fox would then pay back its portion of the project debt out of project revenues. Under this scenario, Copper Fox is expected to own 23.35 % of the revenues generated by the project and is expected to pay its portion of the debt financing from revenue generated by production income from its 23.35 % equity of Schaft Creek.
Copper Fox’s share of production would then be a projected 1.11 billion pounds of copper (22,400 tonnes per year), 1.05 million ounces of gold (46,500 ounces per year), 59.6 million pounds of molybdenum (2.64 million pounds per year), and 7.6 million ounces of silver (336,000 ounces per year) over the 22.6 year mine life.
Finances
Copper Fox is adequately cashed up for the near term. Mr. Ernesto Echavarria a director, insider and a control person of Copper Fox, participated in 55% (or $1,100,000) of the offering, which indicates that there is a considerable level of commitment from the team.
Our Value Calculations
We first come up with a gross recoverable value of metals in the ground at current metal prices, and it’s a tough number to get one’s head around. The metal from all categories (at today’s metal prices) prior to costs, royalties, debt, etc. is greater than $123 billion.
Of course, that number means nothing until
1)we take off the costs of building the mine and operating it to extract the metals over the mine life, so let’s do that.
2)We’ll also take off ALL the ore in the inferred category, since it’s the least certain portion of the ore body.
That leaves us with $114 billion in ore — still in the ground.
3)Before we take off costs involved in mining this ore, we also need to consider the actual recovery rate: Not all metal is recovered from the ore. They bring our value down to $79 billion.
4)Now costs. Updated capital costs for Schaft Creek deposit foresee $2.95 billion in direct and indirect capital costs. that would cost the company $20.4 billion for a Net Project Value of $59 billion.
Copper Fox presently has 242 million shares outstanding, so that leaves the company with a net per share valuation for the project of $244/share.