Copper Fox is a 25% partner in the Schaft Creek Joint Venture (the "Joint Venture") with Teck Resources Limited ('Teck'). Teck is the operator of the Joint Venture which holds two main assets;
the Schaft Creek copper/gold/molybdenum/silver project located in northwestern British Columbia and
85.45% equity interest in Liard Copper Mines Limited ('Liard'). Liard holds a 30% Net Proceeds Interest (subject to certain terms and conditions) in the Schaft Creek project.
On January 23, 2013, Copper Fox filed a National Instrument ("NI") 43-101 Technical Report comprising a feasibility study of a 130,000 tonne per day, flotation/open pit mine with a Proven and Probable Reserve of 940.8 million tonnes grading 0.27% copper, 0.19 grams per tonne ("g/t") gold, 0,018% molybdenum and 1.72 g/t silver; with contained metal of 5,611.7 million pounds of copper, 5.8 million ounces of gold, 363.5 million pounds of molybdenum and 51.7 million ounces of silver. The Technical Report was prepared by Tetra Tech and contemplated a 21 year mine life.
The Schaft Creek deposit hosts a Measured and Indicated Resource of 1,228.6 million tonnes grading 0.26% copper, 0.017% molybdenum, 0.19 g/t gold and 1.69 g/t silver and a 597.2 million tonne Inferred Resource grading 0.22% copper, 0.016% molybdenum, 0.17 g/t gold and 1.65 g/t silver. The above stated Proven and Probable Reserves for the Schaft Creek project are included within the stated Measured and Indicated Resources for this project.
After delivery of the Technical Report and pursuant to the 2002 Option Agreement between Copper Fox and Teck, on July 15, 2013 Copper Fox formed a joint venture with Teck to further explore and/or develop the Schaft Creek project located in northwestern British Columbia, Canada. Terms of the Joint Venture Agreement are:
Teck will pay a total of $60 million in three direct cash payments to Copper Fox: $20 million upon signing the Joint Venture Agreement, $20 million upon a Production Decision, and $20 million upon the completion of the mine facility.
Teck will fund 100% of costs incurred prior to a production decision up to $60 million; Copper Fox's pro rata share of any pre-production costs in excess of $60 million will be funded by Teck and the two remaining direct cash payments payable to Copper Fox will be reduced by an amount equal to 25% of the expenditure in excess of the initial $60 million.
Teck will fund any additional costs (in excess of $220 million) incurred prior to a production decision, if required, by way of loan (at an interest rate of prime +2%) to Copper Fox to the extent of its pro rata share, without dilution to Copper Fox's 25% joint venture interest.
Management of the Joint Venture will be made up of two representatives from Teck and Copper Fox with voting proportional to equity interests.
Teck has agreed to use all reasonable commercial efforts to arrange project equity and debt financing for project capital costs of constructing a mining operation upon a production decision being made; Teck has agreed to fund Copper Fox's pro rata share of project capital costs by way of loan (at prime + 2%), if requested by Copper Fox, without dilution to Copper Fox's 25% joint venture interest.
The definitive Joint Venture Agreement between Copper Fox and Teck dated July 15, 2013, is available under Copper Fox's profile on SEDAR at www.sedar.com.
Since execution of the Joint Venture Agreement, the Schaft Creek Joint Venture has conducted field programs in 2013 and 2014 and 2015. In addition to the field programs, in 2014 the Joint Venture commenced a comprehensive series of studies to optimize the Schaft Creek project.
In 2013, the Schaft Creek Joint Venture conducted a diamond drilling program to test the extension to the east of the mineralization in the Paramount Zone and to collect additional geotechnical information for pit slope stability studies. Total cost of the 2013 Joint Venture activities related to Schaft Creek was $8.2 million. The positive aspects of the 2013 drilling program are:
copper-gold-molybdenum-silver mineralization was intersected east of the resource block model indicating that the mineralization in the Schaft Creek deposit is open to the east, and
DDHSCK-13-435 intersected two broad intervals of higher grade mineralization one of which is located immediately outside the resource block model and the second interval is located within the block model.
2013 Drilling Program:
Information on the drill holes completed including the average grades of the mineralized intervals are set out in the tables below.
Exploration Drill Holes:
Rec. Cu Eq (%)
0.004 to 0.017
0.005 to 0.014
0.008 to 0.045
0.005 to 0.015
0.018 to 0.038
0.006 to 0.042
No significant mineralization, hole terminated at 180m depth due to bad ground conditions
No significant mineralization, hole terminated at 15m depth
Geotechnical Drill Holes:
Rec. Cu Eq (%)
No significant mineralization, hole terminated at 202m depth due to bad ground conditions
Note: The core intervals listed in the above tables do not represent true widths.
The 2014 Schaft Creek program cost approximately $2.5 million and focused on reviewing the following aspects of the Schaft Creek project:
A potential initial 12 year mine plan focused on the Liard zone,
A series of studies including metallurgical, pit slope design, geological modelling and environmental aspects of the Schaft Creek project,
Mapping and core re-logging to gain a better understanding of the geotechnical and geometallurgical aspects of the mineralization over the first 12 years of mine life,
Geometallurgical modelling of the deposit and collection of additional metallurgical samples for variability testing, and
Resource modelling and review of the precious metal content of the deposit.
The 2014 field program at Schaft Creek located a new zone of copper and gold mineralization (referred to as the LaCasse zone) north of the Discovery zone with value from outcrop samples up to 1.56% copper and 1.3 g/t gold over an area of interest that measures 1,300m long by 800m wide as well as identifying a new possible mineralized target south of the Schaft Creek deposit as well as extensions to the mineralization in three areas of the Schaft Creek deposit.
The 2015 program for the Schaft Creek project had a budget of $4.8 million and consisted of both field work and continuation of the optimization studies that commenced in 2014.
The field work portion of the 2015 program has been completed and included additional infill sampling and re-logging of diamond drill cores for geometallurgical, lithogeochemistry and acid rock drainage investigations, a study of the surficial geology of the proposed tailing impoundment area in the Skeeter Valley and a geophysical survey over the south extension of the Liard zone of the Schaft Creek deposit.
The 2015 field program also included 2,634 m of diamond drilling (5 drill holes) focusing on the copper-gold mineralization located in the LaCasse zone in 2014. The weighted average grade of the mineralized intervals from the 2015 drilling are shown below:
The core intervals in the above table do not represent true thickness. Numbers are rounded for presentation purposes. Average gold grade of 0.69g/t commencing at 121.5m core interval in DDH SCK-15-440 mostly due to two assays of 1.1g/t and 6.7 g/t gold.
Drilling in the LaCasse zone intersected numerous intervals of low grade copper mineralization characterized by chalcopyrite and bornite mineralization hosted as disseminations and veinlets in granodiorite and quartz monzonite as well as hydrothermal and intrusive breccia. The mineralized intervals where present were intruded by a considerable number of late stage barren syenite and andesite dikes.
An additional 11,800m of historical core has been logged and the data is being incorporated into the geological model. This work over the past several years has identified several new targets located north and south of the Schaft Creek deposit that require additional evaluation.
A total of 100 samples from historical drill core for geometallurgical testwork were collected in 2015. These samples were selected and represent the variation of the lithologies and alteration across the Schaft Creek deposit. A review of comminution data based on geometallurgical principals has provided an improved view of variability in the deposit. This will guide future work in optimizing the design of the project's crushing and grinding circuits.
The results of the soil sampling completed south of the Liard zone identified a copper-molybdenum geochemical anomaly that extends over an 800m horizontal distance.
The Joint Venture increased its equity ownership in Liard Copper Mines Limited ("Liard") to 85.45%. Liard holds a 30% net proceeds royalty on the Schaft Creek deposit.
The geotechnical, comminution and electrical portions of the optimization studies have been completed and the findings are similar to those presented in the feasibility study completed in 2012.
As per the Schaft Creek Joint Venture agreement, in addition to other obligations, Teck is responsible for funding the first $60 million in joint venture expenditures at Schaft Creek.