Copper Fox’s primary and most advanced asset is its 25% carried interest in the Schaft Creek Joint Venture (SCJV) with Teck Resources Limited (Teck). Schaft Creek is one of the largest undeveloped porphyry copper-gold-molybdenum-silver deposits in North America, located in northwestern British Columbia.
The stated resources for the Schaft Creek project are considered to be the minimum for the project. To date the limits of the Schaft Creek project have not been defined and the area surrounding the deposit is considered to have excellent potential to contain porphyry style copper mineralization (i.e. the Discovery zone , DDH 2012CF427 returned 0.24% copper, 0.14 g/t gold and 0.006% molybdenum over a core interval of 336.7m). The Discovery zone is located approximately 2km to the north of the Schaft Creek deposit and a number of other exploration targets in the vicinity have not been drill tested. Copper Fox has recently filed a NI 43-101 Technical Report titled “Mineral Resource Estimate Update for the Schaft Creek Property, British Columbia, Canada” prepared by Tetra Tech Canada Canada Inc., with an effective date of January 15, 2021.
|Resource Category||Tonnes (Mt)||Cu (%)||Mo (%)||Au (g/t)||Ag (g/t)||Cu (Blb)||Mo (Mlb)||Au (Moz)||Ag (Moz)|
|Meas + Ind||1,345.5||0.26||0.017||0.16||1.25||7.76||510.59||6.97||54.26|
(Mt)=million tonnes, (%)=percent, (g/t)=grams per tonne, (Blb)=billions of pounds, (Mlb)=millions of pounds, (Moz)=millions of ounces. Mineral Resources are reported using the 2014 CIM Definition Standards. The QP for the estimate is Mr. Michael F O’Brien, P.Geo., Red Pennant Geosciences. Mineral Resources are reported within a conceptual constraining pit shell that includes the following input parameters: Metal prices of $3/lb Cu, $1,200/oz Au, $10/lb Mo, $20/oz Ag, and pit slope angles that vary from 40-44³, metal prices are in US$. Metallurgical recoveries reflective of prior test work that averages: 86.6% Cu, 73.0% Au, 58.8% Mo, 48.3% Ag. Mineral Resources are reported using a net smelter return (“NSF”) cut-off of US$4.31/t. Tonnes are metric tonnes, with copper and molybdenum grades as percentages, and gold and silver grades as gram per tonne units. Copper and molybdenum metal content is reported in pounds and gold and silver content is reported in troy ounces. Totals and Metal Content may not sum due to rounding and significant digits used in calculations.
Schaft Creek Feasibility Study:
On January 23, 2013, Copper Fox filed a NI 43-101 Technical Report entitled “Feasibility Study on the Schaft Creek Project, BC Canada” prepared by Tetra Tech with A. Farah, P.Eng. et al. as Qualified Persons. The Feasibility Study proposed a 130,000 tonne per day (“TPD”) truck and shovel/flotation/open pit mine. The Feasibility Study indicated that the NPV and the IRR for the Schaft Creek project were most sensitive to fluctuations in the Foreign Exchange (“FOREX”) between the Canadian and United States dollar and the price of copper. The Feasibility Study used a FOREX of $1.00 US = $0.97 CAD and a copper price of US $3.25/lb.
Readers are cautioned that the Schaft Creek Joint Venture has completed several additional studies since 2013 and is undertaking an in-depth investigation of the Schaft Creek project in 2019. The results of the in-depth study may differ materially from the 2013 Feasibility Study. The information, assumptions and projections used in the 2013 Feasibility Study have changed since the date of the Feasibility Study. There is no assurance that the economic analysis, reserves and conclusions set out in the 2013 Technical Report will be realized.
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-gold-molybdenum-silver project located in northwestern British Columbia 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. Teck is the Operator of the SCJV.
Under the SCJV agreement, Teck is required to make three cash milestone payments to the Company: (i) $20 million upon entering into the agreement (received), (ii) $20 million upon a production decision approving mine construction, and (iii) $20 million upon completion of construction mine facilities.
The SCJV agreement provides that Teck and the Company are each responsible for their pro-rata share of project costs in accordance with their interests, except that Teck is solely responsible for the first $60 million in pre-production costs. If pre-production costs exceed $60 million, the Company’s pro rata share of such costs will be set off against the two remaining cash milestone payments (totaling $40 million) payable by Teck to the Company. If pre-production costs exhaust the two cash milestone payments, Teck will further assist the Company by providing loans, as necessary, without dilution to the Company’s 25% joint venture interest.
By way of example, assuming the existing 75% interest held by Teck and the 25% interest held by the Company remain unchanged, pre-production expenditures on the Schaft Creek Project would have to exceed a cumulative total of $220 million in order to eliminate the two cash milestone payments payable to the Company through set-off, after which Teck would be obligated to fund the Company’s pro-rata share of additional pre-production costs by way of loan to the Company (at prime plus 2%).
The definitive Joint Venture Agreement between Copper Fox and Teck dated July 15, 2013, is available under Copper Fox’s profile on SEDAR at www.sedar.com.
Between 2013 and 2017, the SCJV reviewed the major components of the Feasibility Study, completed limited exploration programs and continued collecting additional geotechnical, metallurgical and baseline environmental information along with social and cultural interaction with the Tahltan Nation.
In 2017 and 2018, the SCJV updated the Mineral Resources statement for the Schaft Creek project (December 31, 2018 effective date) and confirmed there were no changes in the Measured and Indicated Resources categories used in the 2013 Feasibility Study and the 2018 Mineral Resource update.
The positive outcome of the 2017 work program was the basis for the 2018 Sizing and Infrastructure Alternatives study that investigated four sizing scenarios targeting potential capital, operating and sustaining cost reductions, a higher-grade initial starter pit and identify other infrastructure and access opportunities to improve project economics. The 2018 work indicated that the 133ktpa scenario should be selected for more in-depth study in 2019. The receipt of the Multi-Year Area Based Permit allows the SCJV to complete future exploration and includes approval for up to 50 diamond drill holes, none of which are planned at this stage.
In 2019, the Schaft Creek program focused on strengthening the 133ktpd scenario and the technical-engineering value opportunities identified by the 2018 Sizing and Infrastructure Alternatives study to reduce capital and operating costs and review potential revisions to key infrastructure elements, e.g., tailings storage, conveyance systems, ore and waste transport options, and mill location. Other activities in 2019 included collection of baseline environmental data and ongoing work with the Tahltan Nation.
Based on the work completed on the Schaft Creek project over the past several years resulted in Copper Fox commissioning independent Resource Estimate and Preliminary Economic Assessment (“PEA”) reports on the project. The Updated Resource Estimate has been completed and is filed on SEDAR with the PEA expected to be completed by Q2 2021.