Introduction
The Schaft Creek project is managed through the Schaft Creek Joint Venture (SCJV) between Teck Resources Limited (Teck) (75%) and Copper Fox (25%) with Teck as Operator. The SCJV was formed on July 15, 2013 to manage the exploration and development of the Schaft Creek project which hosts the Schaft Creek polymetallic copper deposit, one of the largest undeveloped porphyry copper-gold-molybdenum-silver deposits in North America. Cumulative expenditures by Teck from July 15, 2013 to December 31, 2024 is approximately C$98 million (M) (C$24M cash payment to Copper Fox on execution of the SCJV agreement and C$74M in Pre-Production Costs).
The project covers 60,268 hectares located in Tahltan Territory in northwestern British Columbia, approximately 60 kilometers (km) south of Telegraph Creek, near existing seaport, transportation and clean hydroelectric energy infrastructure.
Pursuant to the SCJV, Copper Fox has no cash or capital obligations until production as Teck funds all development and recoups costs from 90% of future Free Cash Flow. This structure gives Copper Fox significant leverage to rising copper prices without dilution.
Based on the 2021 Preliminary Economic Assessment (PEA), Schaft Creek has a 21-year mine life (maximum NPV pit) producing 5.0Blb Cu, 3.7Moz Au, 226Mlb Mo, and 16.4Moz Ag. The base case Cash Flow Model shows an after-tax NPV 8% of US$842M, an IRR of 12.9% and C1 cash costs of US$1.00/lb Cu. The metal prices used in the 2021 PEA are; US$3.25/lb Cu, US$1,500/oz Au, US$10/lb Mo, and US$20/oz Ag. The project Cash Flow Model is most sensitive to copper prices with every US$0.25/lb increase in copper prices adding approximately US$970M to EBITDA, US$710M to Free Cash Flow and $240M to after-tax NPV. Increases in the price of gold and molybdenum above that used in the PEA also significantly impacts the projects economics. Additionally, the maximum NPV for the project (21 years) utilized approximately 60% of the mineral resource base which provides future optionality for the remaining (40%) mineral resource base.
Building on consecutive years of fieldwork and technical de-risking, the primary objective of the 2025 program (C$15.8M budget) is to determine the project readiness to transition the project to the prefeasibility study (PFS) stage. The 2025 program included geotechnical drilling, environmental baseline data collection, wildlife, aquatic, hydrogeology and archeological studies, geotechnical investigation of two critical areas of the project infrastructure, continuing the geometallurgical and mineral resource models as required and continued Tahltan Nation engagement.
2021 PEA
In November 2021, Copper Fox filed an independent PEA prepared in accordance with National Instrument 43-101 on Schaft Creek (Click here for PEA). The PEA was prepared under the direction of Tetra Tech Canada Inc. with an effective date of September 10, 2021. The effective date of the mineral resource estimate (MRE) used in the PEA is January 15, 2021. Metal Price Assumptions: US$3.25/lb Cu, US$1,500/oz Au, US$10/lb Mo, and US$20/oz Ag. The results of the PEA are presented on a 100% project basis and in US$ unless stated otherwise.
The updated PEA outlined a technically optimized development scenario compared to the 2012 Feasibility Study. The PEA envisions a 133Ktpd open-pit operation with a 21-year mine life (maximum NPV pit), leveraging a large copper-molybdenum-gold-silver resource and improved mine sequencing to enhance capital efficiency, improve project base case economics and reduced environmental impact.
Highlights
- Pre-tax Net Present Value (NPV) 8% of US$1.4 billion (B) Internal Rate of Return (IRR) of 15.2% and payback period of 4.4 years
- After-tax NPV 8% of US$842.1 million (M) and IRR of 12.9% and payback period of 4.8 years
- EBITDA of US$10.8B Life of Mine (LOM)
- Free Cash Flow of US$9.96B LOM
- Net Smelter Return (NSR) of US$20.63 per tonne (‘t’)
- 21-year mine life producing approximately 5.0B pounds (lb) or 2.3Mt copper, 3.7M ounces (oz) gold, 226.0Mlbs molybdenum and 16.4Moz silver in concentrate
- 133,000 tonne per day LOM nominal milling rate at 92% capacity processing 1.03Bt of mill feed, representing approximately 60% of identified mineral resources
- Initial Capital Cost of US$2.65B, not including Sustaining Capital Costs of US$848.7M which is inclusive of US$154.0M Closure Costs
- Operating Costs are US$8.66/t processed
- C1 Cash Costs (net of by-product credits) are US$1.00/lb payable copper
- All in Sustaining Costs are US$1.18/lb payable copper
The results of the PEA are preliminary in nature. The PEA includes a combination of indicated and inferred mineral resources which are considered too speculative geologically to have the economic considerations applied that would enable them to be categorized as mineral reserves. There is no certainty that the PEA forecasts will be realized or that any of the resources will ever be upgraded to reserves. Mineral resources that are not mineral reserves do not have demonstrated economic viability.
2021 Mineral Resource Estimate
In May 2021, Copper Fox filed an NI 43-101 Technical Report which included the results of an updated MRE for the Schaft Creek copper-molybdenum-gold silver porphyry project (Click here for MRE). To date the limits of the Schaft Creek deposit have not been defined based on mineralized intervals intersected during the 2023-2025 geotechnical drilling programs. The area surrounding the deposit is considered to have excellent potential to contain porphyry style copper mineralization (i.e., the Discovery zone, located approximately 2km north of the Schaft Creek deposit; DDH 2012CF427 returned 0.24% Cu, 0.14 g/t Au and 0.006% Mo over a core interval of 336.7 metres (m)).
Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability.
2025 Program
The objective of the 2025 program is to transition the project from the scoping stage to the PFS stage. The SCJV anticipates commencing the PFS in 2026 pending the recommendations of internal reviews.
The 2025 program includes geotechnical drilling, environmental baseline data collection, wildlife, aquatic, hydrogeology and archeological studies, geotechnical investigation of two critical areas of the project infrastructure, continuing the geometallurgical program and updating pit slope stability, geological, hyrdrogeological and resource models as required. Collaboration with the Tahltan Nation on culture and social traditions initiatives as well as community support programs and active engagement with the Tahltan Lands Department and Archaeology Team are a significant portion of the 2025 program.
The geometallurgical program is nearing completion with the results expected to characterize the metallurgical response of the mineralization within the Schaft Creek deposit to inform potential changes to the proposed milling circuit that could impact capital expenditures and throughput set out in the 2021 Schaft Creek PEA.
2024 Program
The 2024 program incurred expenditures of C$24.6M and focussed on geotechnical, metallurgical, environmental and archeological studies. Six geotechnical drillholes were completed at various locations across the proposed pit, filling in gaps identified in the 2023 Geotechnical Study. Three of the six drillholes intersected significant intervals of porphyry style mineralization that resulted in extending the mineralized envelope in the Paramount zone approximately 250m to the north. Analytical results are summarized below:
- DDH SCK-24-471 intersected a core interval of 134.6m (21.6 to 156.2m) that averaged 0.338% Cu, 0.037% Mo, 0.058g/t Au and 0.78g/t Ag that included a 63.8m core interval (59.2 to 123.0m) that averaged 0.437% Cu, 0.066% Mo, 0.050g/t Au and 1.11g/t Ag.
- DDH SCK-24-472 intersected a core interval of 208.6m (406.1 to 614.7m) that averaged 0.253% Cu, 0.014% Mo, 0.115g/t Au and 0.88g/t Ag.
- DDH SCK-24-476 intersected a core interval of 202.6m (189.7 to 392.3m) that averaged 0.324% Cu, 0.023% Mo, 0.044g/t Au and 1.68g/t Ag that included a 14.4m core interval (196.8 to 211.2m) that averaged 0.634% Cu, 0.104% Mo, 0.092g/t Au and 3.48g/t Ag.
Schaft Creek Joint Venture
In July 2013, Copper Fox and Teck created the SCJV to further explore and develop the Schaft Creek Project. The SCJV holds two main assets: i) the Schaft Creek copper-molybdenum-gold-silver project and ii) an 85.41% equity interest in Liard Copper Mines (Liard). Liard holds a 30% Net Proceeds Interest in the Schaft Creek Project subject to certain terms and conditions. Royal Gold holds a 3% Net Profits Interest in the project.
Under the SCJV agreement, Teck is required to make three cash milestone payments to Copper Fox: i) C$20M upon entering into the agreement (received), ii) C$20M upon a production decision approving mine construction, and iii) C$20M upon completion of construction of mine facilities.
The SCJV agreement provides that Teck and Copper Fox are each responsible for their pro-rata share of project costs except that Teck is solely responsible for the first $60M in Pre-Production Costs. In July 2024 the first $60M in Pre-Production Costs threshold was met. Going forward the Pre-Production Costs will be shared pro rata with Teck and Copper Fox with Copper Fox’s share of such costs being set off against the two remaining cash milestone payments. If Pre-Production Costs exhaust the two cash milestone payments, Teck will further assist Copper Fox by providing loans, as necessary, without dilution to Copper Fox’s 25% joint venture interest.
By way of example, Pre-Production Costs on the Schaft Creek project would have to exceed a cumulative total of $220M in order to exhaust the two cash milestone payments after which Teck would be obligated to fund Copper Fox’s pro-rata share of Pre-Productions Costs by way of a loan to Copper Fox (at Prime plus 2%).
The definitive Joint Venture Agreement between Copper Fox and Teck dated July 15, 2013, is posted on our website here.