Copper Fox Metals Inc. - QwikReport

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Schaft Creek Project

Overview of Schaft Creek Project

Description: The Schaft Creek Project consists of a large undeveloped porphyry copper-gold-molybdenum-silver deposit (the Schaft Creek deposit) and is located within a contiguous group of mineral claims that cover 21,025 hectares, the ownership of which was recently transferred to Copper Fox by Teck Resources Limited ("Teck"). The mineral claims covering the Schaft Creek deposit are subject to an earn-back right held by Teck pursuant to an Option Agreement dated January 1, 2002 (the "Option Agreement") between Teck and Copper Fox. In addition, Copper Fox owns a 100% working interest in another contiguous group of mineral claims covering 3,947 hectares that is not subject to the Option Agreement.

Location: The Schaft Creek Project is situated 45 kilometers west of the Stewart-Cassiar Highway and approximately 80 kilometres south of Telegraph Creek in north western British Columbia.

History: The Schaft Creek Project was extensively explored and drilled by several mining companies since its discovery in the late 1950's culminating with the completion of a pre-feasibility study by Teck-Cominco Corp. (now Teck Resources Limited) in the early 1980s. In 2002, Copper Fox Metals Inc. secured the rights to acquire a 100% working interest in the project pursuant to an Option Agreement with Teck Resources Limited ("Teck") and related underlying agreements. Copper Fox has since earned a 100% working interest in the project (subject to the terms and conditions of the Option Agreement and an earn-back Option held by Teck) and has incurred expenditures of approximately $43 million to the end of December 2009.

Option Agreement: Pursuant to a 2002 Option Agreement with Teck, Copper Fox has acquired a 100% working interest in the Schaft Creek Project (subject to a 30% net proceeds interest held by Liard Copper Mines Limited ("Liard") a private company 78% owned by Teck and an earn-back Option held by Teck). Under the terms of the 2002 option agreement with Teck, Copper Fox can earn their 78% interest, or 23.4 % of the deposit, by completing a "positive" Feasibility Study. Pursuant to the Option Agreement, Teck may at any time elect to exercise its earn-back rights, on receipt of a Positive Bankable Feasibility Study, a defined term in the Option Agreement, Teck has 120 days in which to elect to either: i) exercise one of its earn-back options, or ii) retain a 1% net smelter return royalty, or iii) receive shares of Copper Fox to a value of $1,000,000. If Teck elects to exercise its earn-back option pursuant to the Option Agreement, then Teck has the right to elect to acquire either a 20%, a 40% or a 75% working interest in the Schaft Creek Project from Copper Fox by solely funding subsequent expenditures equal to either 100%, 300% or 400% of Copper Fox's prior expenditures pursuant to the Option Agreement. In the event Teck elects to earn-back a 75% working interest in the Schaft Creek Project, Teck will also be responsible for arranging Copper Fox's share of project financing and will recover the project financing funds from Copper Fox's share of metal sales until payout is reached.

Mineral Resources and Mineral Reserves: As set out in the Preliminary Feasibility Study dated September 15, 2008 prepared by Samuel Engineering, Inc., the current Mineral Resources and Mineral Reserves in the Schaft Creek deposit are set out below:

MINERAL RESOURCE CATEGORY	RESOURCE TONNES	COPPER %	MOLYBDENUM %	GOLD G/T	SILVER G/T
MEASURED	463,500,000	0.30	0.019	0.23	1.55
INDICATED	929,800,000	0.23	0.019	0.15	1.56
MEASURED & INDICATED	1,393,300,000	0.25	0.019	0.18	1.55
INFERRED	186,800,000	0.140	0.018	0.090	1.61

MINERAL RESERVE CATEGORY	RESERVE TONNES	COPPER %	MOLYBDENUM %	GOLD G/T	SILVER G/T
PROVEN	411,100,000	0.316	0.019	0.236	1.72
PROBABLE	409,900,000	0.283	0.020	0.186	1.79

The numbers are rounded to conform with "best practice" principals. The Proven and Probable Mineral Reserves are contained within the Measured and Indicated Mineral Resources

The Preliminary Feasibility Study shows that based on the estimated metal recoveries defined by metallurgical test work, the metal produced over the life of the mine would be approximately 4.76 billion pounds of copper, 4.5 million troy ounces of gold, 32.5 million troy ounces of silver, and 255.2 million pounds of molybdenum over a projected mine life of 22.6 years.

The main conclusion of the Preliminary Feasibility Study was that the Schaft Creek deposit should be advanced to the feasibility stage. In early 2010, Copper Fox contracted Wardrop (A TETRA TECH Company) to complete a feasibility study on the Schaft Creek project. The feasibility study is expected to be completed by the end of 2010.

Resource Estimate

Copper Fox Metals reported an independent National Instrument 43-101 compliant resource calculation prepared by Associated Geosciences Ltd. (AGL) dated June 22, 2007 on the resources for the Schaft Creek deposit.

The measured and indicated resources at Schaft Creek include 1,393 billion tonnes including 7.7 billion pounds Copper, 8.1 million ounces Gold, 584 million pounds Molybdenum and 69.4 million ounces Silver at 0.2% Copper Equivalent cutoff. The 0.55% Copper Equivalent Cutoff indicates that a significant volume of higher-grade mineralization occurs in the deposit. A 0.35% Copper Equivalent has also been included to compare to the historical resource reported by AMCL and by Giroux and Ostensoe.

Click here to view the Schaft Creek Resources Technical Report, June 22, 2007

Schaft Creek Option

Copper Fox has an option agreement dated January 1, 2002 to:

Acquire 100% of Teck Cominco's 'Direct Holding', defined as a 70% direct participating interest in the Schaft Creek Property, by:
- Incurring $5,000,000 in expenditures on or before December 31, 2006 and aggregate expenditures of $15,000.000 on or before December 31, 2011.
Further acquire Teck Cominco's 'Indirect Holding' (defined as an indirect 23.4% carried interest through its 78% shareholding in Liard Copper Mines Ltd. who hold a 30% carried interest in the property) by incurring the above described $5,000,000 in expenditures and completing and delivering to Teck Cominco a positive bankable feasibility study.

If Copper Fox delivers a feasibility notice to Teck Cominco prior to completing the $15,000,000 in expenditures, Copper Fox will be deemed to have exercised the option as to Teck Cominco's Direct Holding in addition to having acquired the Indirect Holding.

The option agreement has a time-limited back-in right exercisable by Teck Cominco within up to 120 days of the delivery of the positive feasibility study. If the back-in right is not exercised, and at Teck Cominco's option, CFM shall grant Teck Cominco a 1% net smelter royalty or, if CFM has assigned the option agreement to a public company whose shares are listed on a recognized stock exchange, shares of that company having a value of $1,000,000.

If Teck Cominco wishes to exercise its back-in right, it may earn;

a 20% interest by matching prior incurred expenditures, or it may earn;
a 40% interest by matching three times prior incurred expenditures, or it may earn
a 75% interest by incurring four times prior expenditures and arranging all production financing.

The option agreement includes provisions for joint management and for dilution of interests in proportion to expenditures, including reversion of either party to a defined net profits royalty if that party's interest is diluted below a 20% working interest in the joint venture.

History

The Schaft Creek copper-gold-molybdenum-silver prospect was located in 1957 by prospector Nick Bird while employed by the BIK Syndicate. Three diamond drill holes were drilled to moderate depths. Cores from two holes, when sampled, returned sufficient copper values to encourage further work. The prospecting syndicate was re-organized in 1966 into Liard Copper Mines Ltd. (" Liard") with Silver Standard Mines Limited, holding a 66% interest, acting as the manager. In 1966, ASARCO obtained an option to explore the Liard Copper Mines Ltd. ground, carried out geological and induced polarization surveys and drilled 10,939 feet (3,335 metres) in 24 holes. The option was not maintained despite encouraging drill results and in 1968 Hecla, a subsidiary of Hecla Mining Company of Wallace, Idaho, entered an option agreement to earn a 75% property interest and commenced drilling and other exploration work with Hecla operating company as its agent.

Hecla, in the period 1968 through 1977, completed 34,500 metres of diamond drilling, 6,500 metres of percussion drilling, induced polarization and resistivity surveys, geological mapping, air photography, and engineering studies related to the development of a large open pit copper-gold-molybdenum mine. Property work ceased in 1977 and in 1978 Hecla sold its interest to Teck Corporation ("Teck") (now Teck Cominco Limited).

In 1980 Teck commenced a program of exploration and drilling designed to confirm and expand Hecla's work. A total of 26,000 metres of diamond drilling was completed by 1981. Teck then undertook an engineering study to determine the feasibility of mine development. Further data reviews were completed by Western Copper Holdings in 1988 and Teck in 1993. A total of 230 core holes with total length 60,200 metres and percussion holes with total length 6,500 metres were completed prior to Copper Fox acquiring an option on the property in 2002.

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This page was created on Tue Sep 7, 2010 at 9:03:52 PM Pacific Time.