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Gold/Mining/Energy : Copper Fox
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Theotokos
From: explorationguy1/3/2015 12:33:07 AM
1 Recommendation  Read Replies (2) of 10654
 
I went back through the previous resource estimates to look for a smoking gun to explain the events that occurred from the PreFS to the FS. Here's a table with just the copper numbers:

Year lbs(billion) avg. grade % cuEq cut-off 2P cu billion
2008 7.7 0.25 0.2 5.4
2011 6.2 0.27 0.12
2012 7.1 0.27 0.15 5.6

The FS notes that there are differences but provides no explanation other than to classify the previous efforts as "historical". The relative amounts of measured versus indicated are much higher in 2008 and then decreased in subsequent Re's, which is opposite of what should happen. With more drilling you should be upgrading resource, not downgrading. I suspect the variogram distances were further in 2008 and cut back in later efforts. You can see that they never got back to the 7.7 billion M&I resource in 2008 despite 4 years of more drilling. It could be an interpretation issue with the geomodeling, which is covered in the forward looking statements. I couldn't find anything obvious to explain the significant difference in the economics where the 2008 12% NPV case is positive and has a good after tax IRR as well. I wasn't involved in 2011 so I don't know what the reaction was from the retail investors when they saw 1.5 billion lbs of copper evaporated. They did manage to get back to a similar 2P number in the 2012 FS but the exchange rate used in 2008 was even and the metal prices were lower in 2008 so again how did the economics look so good? The 2011 numbers were a heads up that there was a problem so that may explain the frequent delays and additional drilling required before the FS was finalized.
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