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Schaft Creek Project

Overview of Schaft Creek Project

Copper Fox holds title and a 100% working interest in the Schaft Creek project consisting of 55,779.55 hectares (137,834 acres). Included in this total are the "Schedule A" mineral tenures originally conveyed to Copper Fox pursuant to the option agreement dated January 1, 2002 between Teck Resources Limited ("Teck") and Copper Fox (the "Teck Option Agreement"), which consist of 8,334.34 hectares (20,594 acres). The "Schedule A" mineral tenures are subject to a 3.5% Net Profits Interest held by Royal Gold, Inc., a 30% carried Net Proceeds Interest held by Liard Copper Mines Limited ("Liard") and, together with the additional mineral tenures obtained by Copper Fox within the "Area of Interest" provided for in the Teck Option Agreement, an earn back option held by Teck. On completion of the Feasibility Study, Copper Fox will earn Teck's 78% interest in Liard. Teck's earn back option to acquire either, 20%, 40% or 75%, of Copper Fox's interest in the Schaft Creek property is triggered upon delivery of a positive Feasibility Study to Teck. Should Teck elect to exercise its option for 75%, Teck is required to fund subsequent property expenditures up to a total of 400% of those incurred by Copper Fox ($80.8 million to June 30, 2012) and arrange for project financing, including the Copper Fox portion.

The remainder of Copper Fox's registered interests in mineral tenures in British Columbia total 47,445.21 hectares (117,240 acres). These interests have been acquired by Copper Fox through mineral tenure acquisitions and mineral tenure purchase agreementssubsequent to Copper Fox entering into the Teck Option Agreement. Certain portions of these registered mineral tenures are subject to inclusion within the Schaft Creek project pursuant to the terms of the "Area of Interest" provisions of the Teck 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 $76.6 million to the end of April 2012.

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 3.5% net profits interest held by Royal Gold, Inc., a 30% carried interest held by Liard Copper and an earn back option held by Teck Resources Limited ("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.

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Resource Estimate

The effective date of the mineral resource estimate is May 23rd, 2012. Mineral resources were estimated for the Liard (also referred to as the Main) zone and the Paramount (previously referred to as the Paramount-Breccia) zone separately. The mineral resources were estimated using criteria consistent with the CIM Definition Standards (2010) and in conformity with CIM "Estimation of Mineral Resources and Mineral Reserves Best Practice" (2003) guidelines. The estimated mineral resources using a 0.15% Cu Eq. cut-off grade are categorized and tabulated in Table-1. The Base Case numbers presented in the following tables have been rounded to reflect "Best Practice Principals" as established by the CIM.

Table-1: Mineral Resource Estimate -- Schaft Creek Deposit
Robert Morrison - Ph.D., MAusIMM (CP), P.Geo., Effective Date: May 23rd, 2012

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Cautionary Note to Investors

While the terms "measured (mineral) resource", "indicated (mineral) resource" and "inferred (mineral) resource" are recognized and required by National Instrument 43-101 -- Standards of Disclosure for Mineral Projects, investors are cautioned that except for that portion of mineral resources classified as mineral reserves, mineral resources do not have demonstrated economic viability. Investors are cautioned not to assume that all or any part of measured or indicated mineral resources will ever be upgraded into mineral reserves. Additionally, investors are cautioned that inferred mineral resources have a high degree of uncertainty as to their existence, as to whether they can be economically or legally mined, or will ever be upgraded to a higher category.

Click here to view the Schaft Creek Resource Estimate, May 23, 2012

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.

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.

Geology & Technical Reports


Current

January 23, 2013 Feasibility Study

May 23, 2012 Resource Estimate



Archives

July 26, 2011 Updated Mineral Resource Estimate

May 20, 2010 Updated Amended Technical Report

September 15, 2008 Canadian NI 43-101 Technical Report - Preliminary Feasibility Study on the Development of the Schaft Creek Project Located in Northwest British Columbia, Canada

December 7, 2007 Preliminary Economic assessment study (PEA) - Executive Summary

December 7, 2007 Canadian NI43-101 Technical Report - Preliminary Economic Assessment on the Development of the Schaft Creek Project Located in Northwest British Columbia, Canada

June 22, 2007 AGL Updated Resource Estimate for Schaft Creek

March 19, 2007 Diamond Drill Report

September 20, 2004 - (AMCL) and HATCH(tm) conducted a preliminary assessment (Scoping Study) of the viability of the Schaft Creek project.

May 20, 2004 - Giroux Consultants Ltd. - Status and Resource Estimate, Schaft Creek Property, N.W. British Columbia



Tahltan Nation community relations engagement and consultation

Copper Fox is working with the Tahltan Central Council and the Tahltan people to ensure, honest and transparent communication. Over the past three years, Copper Fox has met with the Tahltan Central Council and conducted several community meetings to discuss the progress on the project and receive feedback from the political leadership and Tahltan community members.

Copper Fox has entered into several agreements with the Tahltan Central Council and the Tahltan Nation Development Corporation including:

  1. A memorandum of Understanding with the Tahltan Nation Development Corporation

    Copper Fox has signed Memorandum of Understanding with the Tahltan Nation Development Corporation which defines the scope of work, program commitments, cooperation, and communication that Copper Fox will follow at Schaft Creek and recognizes TNDC will be a "preferred contractor". This agreement includes commitments regarding contracting and sub contracting opportunities for Tahltan businesses and employment and training opportunities for all members of the Tahltan Nation. The Tahltan Nation Development Corporation (TNDC) is the economic arm of the Tahltan Nation and generates wealth, economic, employment and training opportunities for all members of the Tahltan Nation
  2. Communication Agreement with the Tahltan Central Council

    Copper Fox has signed a Communications Agreement with the Tahltan Central Council (TCC) with the objective of ensure strong communications between the company and TCC. The agreement outlines financial support the company will provide to the TCC to ensure adequate financial resources are available for funding communications between the TCC and the company.

  3. Heritage Agreement (formerly known as the Traditional Knowledge Agreement)

    Copper Fox has signed a Heritage Agreement with the Tahltan Central Council (TCC) with the objective of confirming how traditional knowledge will be collected and protected, as well as how the process will be funded. Copper Fox will fund any collection of traditional knowledge and be responsible for ensuring it keeps confidential such information. In addition, the information is always owned by the Tahltan Nation and all information is to be returned to the Nation following the environmental assessment.
  4. Tahltan Heritage Resources Environmental Assessment Team (THREAT) funding Agreement

    Copper Fox has signed a THREAT Agreement with the TCC. This agreement outlines how Copper Fox and THREAT will work through the environmental assessment process. In addition, the agreement also outlines how work will be funded. Copper Fox and the THREAT team have met several times during this pre-applications phase. There are two purposes of the meetings. The first is for Copper Fox and their consultants to provide project updates, engineering and technical reports and assessments of different project design components to THREAT. The second, is for THREAT to provide the company with provide feedback and ensure Tahltan views are incorporated early on into the project.

Public Participation


Copper Fox is committed to working with community members, stakeholders and the Tahltan Nation to develop an economically, environmentally and socially responsible project. The Project is communicated via open houses, public meetings, brochures and factsheets. For more information on the Project please select from the factsheets below.

For more information on the Project or how to become involved please contact:

Mr. Shane Uren, VP Environment and Permitting
info@copperfoxmetals.com
604 689 5080


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