Nice CUU write up:
<Thursday, August 03, 2006
Copper Fox Metals for the Long Term
Copper Fox Metals (CUU in Canada, CPFXF in the U.S.) is a Canadian mining company with an option agreement with Teck Cominco for 93.4% interest in the huge Schaft Creek copper/gold/molybdenum/silver property in Northwest British Columbia. As you can see from Table 1 on page 3 of the April letter to shareholders, the Schaft Creek deposit compares favorably to the Northgate Minerals (NXG) Kemess deposits and could be similar to the NovaGold (NG) Galore Creek deposit, despite having only a tiny fraction of the market cap of those two neighboring projects. While Schaft Creek still has a ways to go before it gets to the production stage of Northgate’s Kemess South deposit, or even the feasibility study stage of NovaGold’s Galore Creek deposit, the market caps of those stocks gives you an idea of the potential for the Schaft Creek project and Copper Fox if everything goes as planned.
Figures 5 and 6 on page 6 of the shareholder letter, showing the potential project economics, indicate how undervalued the project is even when using the extremely low prices of $1.00/lb copper (currently near $3.50/lb.), $375/oz gold (currently near $650/oz), $5.50 silver (currently over $12/oz), and $6/lb molybdenum (currently near $25/lb). These figures, while not official until completion of a feasibility study, suggest a very good likelihood that the project will prove feasible.
The biggest issue for the Schaft Creek project has been that, because of their remote location, the infrastructure isn't completely there yet (which is one reason why it has traded at such a tiny market cap vs. the huge opportunity). They’ve been planning to use a new road being put in by NovaGold, as well as the power plant NovaGold’s planning, so they’re somewhat dependent on NovaGold’s success. Barrick Gold’s unsolicited $1.5 billion takeover bid for NovaGold last week, as well as today’s announced NovaGold acquisition of Coast Mountain Power, help ensure the infrastructure Schaft Creek needs will be in place. Copper Fox and Schaft Creek seem more likely to achieve success than ever.
Despite the extremely favorable and improving risk/reward ratio for Copper Fox and the Schaft Creek project, the stock has been caught up in the junior miners selloff the past few months. Despite trading as high as .90 on May 18, CUU (in Canada) traded under .40 earlier this week, as a significant seller liquidated their position. Apparently, that seller finished pressuring the stock yesterday, as it gapped up and rallied strongly today, closing at .48. The activity this week has created a bullish island reversal pattern, a powerful bottoming indicator created when a stock gaps down, trades for a few days, and then gaps back up, leaving behind an island separated from the rest of the chart:
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