|September 15, 2008|
Copper Fox Metals Announces Positive Results of Preliminary Feasibility Study on Schaft Creek Copper-Gold-Molybdenum-Silver Deposit
|PRELIMINARY FEASIBILITY STUDY PROJECTS PRE-TAX 18.6% IRR, US$11.7 BILLION UNDISCOUNTED PRE-TAX CASH FLOW AND 4.7 YEAR PAYBACK.|
(CALGARY, SEPTEMBER 15, 2008) Copper Fox Metals Inc. (CUU-TSX-V, CPFXF-S/P) announced today that the National Instrument 43-101 ("NI43-101") compliant Preliminary Feasibility Study ("PFS") on its 70% owned Schaft Creek deposit in northwestern British Columbia indicates the deposit can be developed economically as an open pit mine and recommends going to a full feasibility study.
The study projects (see Appendix A for: "Key Project Parameters and Results"):
For the base case, recoverable rock value per tonne is US $31.47 and cash operating costs are US $12.49 per tonne. The PFS confirms the viability of Schaft Creek and highlights the advantages of the project including: location, comparatively low capital expenditure requirements and operating costs and high metal recoveries."
The full report is expected to be available on the www.copperfoxmetals.com and www.sedar.com websites in compliance with Regulatory deadlines.
About the Preliminary Feasibility Study (PFS)
The NI 43-101 compliant PFS was undertaken by a team led by Matt R. Bender, P.E., Director of Process, Mining & Metals of Samuel Engineering, Inc of Denver, Colorado and independent Qualified Person who is the signatory of the PFS report. The PFS was initiated in 2007 following completion of the Schaft Creek Preliminary Economic Assessment (PEA). The effective date of the PFS is August 2008. Contributors to the report include, in addition to Samuel Engineering, Inc., include Knight Piesold, Moose Mountain Technical Services, Associated Geosciences Ltd., Hyyppa Engineering, LLC, G&T Metallurgical, Rescan Environmental Services Ltd., DST Consulting Engineers Inc., BGC Engineering, McElhanney Consulting Services Ltd., HM Hamilton & Associates Inc., PR Associates, Walter Hanych (BsC, Geol), Vandan Suhbatar (Ph.D, Met) and Copper Fox Metals Inc. This Press Release has been reviewed and approved by Matt Bender, P.E.
For a mill capacity at Schaft Creek of 100,000 tonnes per day, the estimated Initial Capital Expenditure is (US)$2.95 billion. This sum includes a contingency allowance of $536.5 million (US) dollars (22%). The Exchange Rate used throughout the report and this News Release is one Canadian dollar = one US dollar.
A number of factors affected cost included in the CAPEX and OPEX estimates from the PEA to the PFS, such as increased planned mill capacity (from 65,000 to 100,000 tpd), market, metal price, volatilities of construction material costs and comparable studies about rising OPEX and CAPEX costs from other parties working in the area. These, in turn, led to a review of forecasts and estimates for labour, construction material, sustaining capital and working capital. This resulted in a delay in the release of this study and an increase in the CAPEX and OPEX from those reported in last December's PEA. The Feasibility Study, is expected to be completed in first half of 2009.
Option Agreement with Teck Cominco Limited
At present Copper Fox has earned a 70% direct participating interest in the project from Teck Cominco Ltd, through an option agreement dated January 1, 2002. The agreement stipulates that:
Total initial investment in the project is estimated to be US$2,950,406,000 which represents the total direct and indirect costs for the complete development of the project. Of this figure, US$1,315,484,000 represent direct mine development costs, US$610,108,000 indirect mine development costs, US$459,757,000 are owner's costs US$536,000,000 contingency, and US$28,566,000 are provincial taxes on identified capital expenditures.
The life-of-mine sustaining capital is as follows:
Life of Mine Total direct Taxes are estimated at US$4,041,652,000.
Cash Operating Costs
Cash Operating Costs are estimated at US$12.49 per tonne of ore for the life of the mine. Average costs are US$4.14/t for mining, US$3.94/t for milling, US$0.93/t for general and administration, and US$3.49/t concentrate handling and treatment.
The revenue generated by the production of molybdenum, gold and silver (US$14.36/t) leaves a positive balance of US1.87 $/t. This translates into an additional credit to the copper production of US$0.32 /lb of copper produced.
The independent PFS reports that development of the Schaft Creek deposit is expected to produce a pre-tax Internal Rate of Return (IRR) of 18.6% and an 8% discounted Net Present Value of (US)$2,764,475,000 dollars. The base case financial evaluation uses historical three year trailing averages for metal prices as of August 29, 2008. This approach is consistent with the guidance of the United States Securities and Exchange Commission, is accepted by the Ontario Securities Commission and is industry standard.
The PFS recommends development of the Schaft Creek deposit as a conventional open pit, electrified, diesel truck and shovel operation. The sulphide deposit is expected to be processed using a conventional concentrator to produce separate copper-gold-silver and molybdenum concentrates.
The mill is designed to have a nominal capacity of 100,000 tonnes of sulphide ore per day. Including low grade and stockpile ore, the annual stripping ratio is estimated at 1.88 to 1.
Over a projected mine life of 22.6 years, the mill is expected to produce 4.76 billion pounds of copper, 255.2 million pounds of molybdenum, 4.5 million troy ounces of gold and 32.5 million troy ounces of silver. Rhenium is recovered in the molybdenum concentrate in significant quantities. At a present price of $350 per gram of pure rhenium this may represent a significant additional contribution to income. Copper Fox will report further results with respect to rhenium during the feasibility phase of the project.
Should Teck Cominco decide to exercise their back-in right to acquire 75% of the ultimate 93.4% Copper Fox interest in the Schaft Creek Project, it is expected to be responsible for securing financing for Copper Fox's portion as well as theirs. Copper Fox shall pay back its portion of the project debt out of project revenues. By this time Copper Fox is expected to own 23.35 % of the revenues generated by the project and is expected to pay its portion of the debt financing from revenue generated by production income from its 23.35 % equity of Schaft Creek.
Under such a scenario Copper Fox's share of production is projected to be 1.11 billion pounds of copper (22,400 tonnes per year), 1.05 million ounces of gold (46,500 ounces per year), 59.6 million pounds of molybdenum (2.64 million pounds per year), and 7.6 million ounces of silver (336,000 ounces per year) over the 22.6 year mine life. The Preliminary Feasibility Study reports start of production to be late 2013.
Environment & Permitting
Rescan-RTEC, a well regarded environmental consulting firm, has been engaged to assist Copper Fox in the permitting of Schaft Creek. Initial permits to support commencement of production are expected to be obtained in the fourth quarter of 2013 in time for sales of concentrates starting in 2014. Copper Fox is working with all levels of government and the Tahltan Nation to complete a streamlined assessment and permitting process.
FIRST FIVE YEARS PRODUCTION SCHEDULE
At a mill capacity of 100,000 tonnes per day, the mill feed for the first five years is expected to be a minimum of 180.0 million tonnes with a grade of 0.32% copper, 0.017% molybdenum, 0.237 g/t gold and 1.587 g/t silver. These higher grades are expected to be a contributing factor to the rapid repayment of CAPEX.
Mill recoveries are projected to be: copper to the copper concentrate: 88.4%, molybdenum to the molybdenum concentrate: 71.3%, gold to the copper concentrate: 81.3%, silver to the copper concentrate: 70.7%.
The resource estimates prepared in 2006-2007 by Associated Geoscientists Ltd. were reviewed and a new pit optimization plan was designed by Moose Mountain Technical Services Ltd. of Calgary. The 100,000 tonnes per day pit and mill feed optimization plan presented in the NI 43-101 compliant PFS is expected to extract 812.2 million tonnes of minable reserve with a head grade of 0.301% copper, 0.020% molybdenum, 0.212 g/t gold and 1.761 g/t silver. A total of 1.54 billion tonnes of waste rock (LOM waste to ore ratio of 1.88) is expected to be removed concurrently with mining and milling.
COPPER FOX ACHIEVEMENTS
Since the formation of Copper Fox, the company has spent in excess of 32 million CDN dollars in developing the Schaft Creek mineral deposit. Copper Fox is positioned to complete the full Feasibility Study of the deposit and readying Schaft Creek for production at a minimum of 100,000 tpd.
Key development achievements include:
Since 2005, Copper Fox has worked with the Tahltan Nation to develop a relationship based on open, honest and transparent communication. The company has done this by entering into agreements with the Tahltan Central Council (TCC) and the Tahltan Nation's government, with the aim of building a solid working relationship. These agreements include: the Communications Agreement, which provides funding to build communications capacity within the TCC; the Tahltan Heritage Resources Environmental Assessment Team (THREAT) agreement, which outlines how the company works with THREAT through the environmental assessment process; the Heritage Agreement, which outlines how the company is expected to protect the heritage and cultural resources of the Tahltan Nation within the Schaft Creek Project area; and a Memorandum of Understanding (MOU) between the company and the Tahltan Nation Development Corporation (TNDC) which ensures that Copper Fox will hire Tahltan workers and use Tahltan suppliers when price and quality are comparable.
In addition to these agreements, Copper Fox has provided support to initiatives and projects that support the advancement of Tahltan youth and culture. These include: support for the Tahltan Language Camp, Youth Science Camp, bursaries to support continuing education and support for the Resource Forum.
As part of its commitment to open communication, Copper Fox has hosted open houses in the Tahltan communities of Dease Lake, Iskut and Telegraph Creek as well as the northern communities of Smithers, Terrace, Stewart and Kitimat. As the Schaft Creek Project advances towards feasibility these community meetings will continue and the company will seek further feedback on the project.
Samuel Engineering notes that the economics in the PFS do not take into account opportunities for improvement of the project economics based on:
Guillermo Salazar, President and CEO
For additional information contact: Investor inquiries: Jason Shepherd, Phoenix
Communications Group Tel: 1-866-913-1910, E-mail: .
The TSX Venture Exchange has not reviewed the contents of this news release and accepts no responsibility for the adequacy or the accuracy thereof.
Cautionary Note Regarding Forward-Looking Information
This news release includes "forward-looking information" within the meaning of the Canadian securities laws. All statements, other than statements of historical fact, included herein and including, without limitation; anticipated dates for receipt, commencement or completion of permits, approvals, construction, production and other milestones; anticipated results of drilling programs, scoping, prefeasibility and feasibility studies and other analyses; anticipated availability and terms of future financings; estimated timing and amounts of future expenditures; Copper Fox's future production, operating and capital costs; operating or financial performance; geological interpretations and potential mineral recovery processes, are forward-looking statements. Information concerning mineral reserve and resource estimates also may be deemed to be forward-looking information in that it reflects a prediction of the mineralization that would be encountered if a mineral deposit were developed and mined. Forward-looking information is necessarily based upon a number of estimates and assumptions that, while considered reasonable by management, are inherently subject to significant business, economic and competitive uncertainties, risks and contingencies. For any forward looking information given, management has assumed that the geological, metallurgical, engineering, financial and economic advice it has received is reliable, and is based upon practices and methodologies which are consistent with industry standards. There can be no assurance that such information will prove to be accurate, and actual results and future events could differ materially from those anticipated in such information. Important factors that could cause actual results to differ materially from Copper Fox's expectations include: fluctuations in copper and other commodity prices and currency exchange rates; uncertainties relating to interpretation of drill results and the geology, continuity and grade of mineral deposits; uncertainty of estimates of capital and operating costs, recovery rates, production estimates and estimated economic return; the need for cooperation of government agencies and native groups in the exploration and development of properties and the issuance of required permits; the need to obtain additional financing to develop properties and uncertainty as to the availability and terms of future financing; the possibility of delay in exploration or development programs or in construction projects and uncertainty of meeting anticipated program milestones; uncertainty as to timely availability of permits and other governmental approvals; and other risks and uncertainties disclosed in Copper Fox's continuous disclosure filings with Canadian securities regulatory authorities at www.sedar.com. The forward-looking information in this news release is based on Copper Fox's current expectations and Copper Fox assumes no obligations to update such information to reflect later events or developments, except as required by law. This news release by Copper Fox uses the terms "resources", "measured resources" and "indicated resources" as well as the terms "Reserves" and "Mill Feed". United States investors are advised that, such terms are recognized and required by Canadian securities laws, the United States Securities and Exchange Commission (the "SEC") does not recognize them. Under United States standards, mineralization may not be classified as a "reserve" unless the determination has been made that the mineralization could be economically and legally produced or extracted at the time a reserve determination is made. Mineral resources that are not mineral reserves do not have demonstrated economic viability. The terms "Reserve" and "Mill Feed" have been used to define resources which extraction has been optimized and metallurgical recoveries defined to the satisfaction of independent professional engineers. NI 43-101 is a rule developed by the Canadian Securities Administrators, which established standards for all public disclosure an issuer makes of scientific and technical information concerning mineral projects. The requirements of NI 43-101 are not the same as those of the SEC.
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