Care to comment on Roulston's recent critique of Copper Fox:
Copper Fox Metals
(TSXV:CUU)
"Copper Fox is about to start field work on the Schaft Creek copper-gold deposit in northern British Columbia. A feasibility study is due for completion by the end of June and is being led by Wardrop, a highly regarded international engineering firm.
The work is being done in close cooperation with Teck, a major mining company from whom Copper Fox is acquiring the project. The study considers a minimum 120,000 tonne per day open pit mine. The resource estimate supporting the feasibility study outlines 1.4 billion tonnes hosting 7.7 billion pounds of copper, 8.1 million ounces of gold, 584 million pounds of molybdenum and 69 million ounces of silver.
A prefeasibility study completed in 2008 estimated a net present value for the Schaft Creek deposit (discounted at 8%) of $2.7 billion. That value was based on the following metal prices: copper at $3.12, gold at $692, molybdenum at $33, and silver at $13. The values for copper, gold and silver are much higher now than the prices upon which the study was based.
The field work getting underway will refine some aspects in support of the feasibility study but also test other targets that could extend the resource and lead to further discoveries.
Of particular importance, Copper Fox recently acquired a 100% interest in 40 square kilometers of minerals rights adjacent to the north. Two large, relatively unexplored zones of copper mineralization are exposed in outcrop on the recently acquired mineral claims. The Schaft Creek deposit and the recently recognized zones encompass what is now considered a 15 kilometer long mineralized trend.
Planning for the 2011 diamond drilling program of 8,000 meters for the Schaft Creek deposit is underway. One of the objectives will be to expand the zones with higher grades. Copper Fox has earned a 100% interest in the project from Teck.
A 30% net profits interest is held separately and Copper Fox can also acquire 78% of that interest from Teck by delivering a positive feasibility study. The major has an option to earn back a 20%, 40% or 75% interest in the Schaft Creek project. Upon delivery of a positive feasibility study, Teck has 120 days to make its election. Should Teck elect to exercise its option for 75% they are required to fund subsequent property expenditures up to a total of 400% of the amount expended by Copper Fox ($58.1 million as of March 29, 2011) and arrange for project financing, including the Copper Fox portion. If Teck back in for the higher level, Copper Fox would hold a 25% interest in a large deposit that could become a huge mining operation, and be fully carried to production. (That is, they would not have to provide any further funding.) In addition to the Schaft Creek deposit,
Teck is also involved in the Galore Creek deposit, located to the west. The major has a 50% interest in that massive deposit (with NovaGold holding the balance). Development of Galore had begun in 2007 before being suspended by rising costs and the Global Financial Crisis. The major and its partner are now revising the feasibility study on Galore Creek. There is considerable scope for synergies between those two large deposits. Teck operated the big Highland Valley copper mine in British Columbia, as well as the world’s largest zinc-lead smelter/refinery complex which is in the province. Teck’s head office is in Vancouver.
The present market value of Copper Fox is pretty aggressive in view of the uncertainty with regard to the project, but still allows for considerable upside potential.
Putting the market value into perspective: it equates to 25% of the prefeasibility study valuation. Given the low metal prices used in that study, there could still
be upside potential.
That value might be realized in the near term if a major metals company wanted a stake in a big development project in a very favorable jurisdiction." |
