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% of the shares in Liard Copper Mines Limited ('Liard'). Liard holds a 30% Net Proceeds Interest (subject to certain terms and conditions) in the Schaft Creek project.
The 2013 Technical Report ("Feasibility Study on the Schaft Creek Project BC., Canada", dated January 23, 2013, prepared by Tetra Tech, A. Farah, P.Eng, et al as Qualified Persons) considered the feasibility 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 g/t gold, 0.018% molybdenum and 1.72 g/t silver; containing 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 Feasibility Study suggested annual production of 105,000 tonnes of copper, 201,000 ounces gold, 1.2 million ounces silver and 10.2 million pounds of molybdenum.
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. Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability.
Readers are cautioned that the Schaft Creek Joint Venture is undertaking a remodel of the resources on the Schaft Creek deposit. The results of the remodeling may differ materially from the 2013 Technical Report. The information, assumptions and projections used in the 2013 Technical Report have changed since the date of the Technical Report. There is no assurance that the economic analysis, reserves and resources and conclusions set our in the 2013 Technical Report will be realized.
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.
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 were:
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
DDH SCK-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 2013 drill holes including the average grades of the mineralized intervals are:
Exploration Drill Holes:
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:
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 that measures 1,300m long by 800m wide. The 2014 work identified a new exploration target south 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 included diamond drilling (2,634 m in five holes) in the LaCasse zone, 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 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 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 results of the 2015 drilling program indicated that the intervals of higher grade copper mineralization intersected in 2015 and the 74m at 0.5% Cu in DDH 2012CF427 in the Discovery Zone (2012) are analogous to the styles of mineralization in the Paramount Zone.
A total of 100 representative samples of the lithologies and alteration across the Schaft Creek deposit were collected in 2015 for geometallurgical testwork. This work indicates for the various GeoMet Units (based on 50th percentile of hardness) throughput could range from 118 to 153 kt/d, while maintaining a 150 micron flotation feed size. This information will guide future work in optimizing the design of the project's crushing and grinding circuits.
The geotechnical, comminution and electrical portions of the optimization studies found similar results to those presented in the 2013 Feasibility Study. Surficial geological mapping of the proposed tailings impoundment area did not find any evidence to support the existence of a large slope sagging feature previously reported by Copper Fox in 2011.
At the end of 2015, over 40% of the drill core from the deposit has been re-logged. Further work includes upgrading the 3D structural model as well as the alteration, mineralization and geo-metallurgical 3D models.
In 2016, the program for the Schaft Creek project is estimated to cost $0.7 million and includes incorporating the results of the 2013 drilling and the re-logging completed in 2013, 2014 and 2015 to update the resource model for the Schaft Creek deposit with emphasis on getting a better understanding of the precious metals content of the deposit.
Other aspects of the 2016 program include environmental monitoring and collection of field data including humidity cell tests and other environmental baseline data and ongoing consultation with the Tahltan First Nations on social and cultural matters.
Other activities in 2016 included voluntarily withdrawal from the Environmental Assessment ("EA") process and the queue for the Northern Transmission Line ("NTL") for the Schaft Creek project. The Schaft Creek Joint Venture is of the opinion that keeping the EA active and remaining on the NTL queue would not be significantly beneficial to the project as there are no technical or procedural disadvantages to leaving these processes and then re-entering the processes at a later date. It is expected that getting back in the NTL queue would not be a problem.
In 2017, the Schaft Creek Joint Venture approved a $0.9 million program and budget for the Schaft Creek project. The 2017 program contemplates completion of the resource remodeling of the Schaft Creek deposit, desktop engineering and trade-off studies, collection of environmental baseline data and permitting and social activities aspects of the project.
The QA/QC reviews, definition of the mineral domains, contact analysis and establishment of the grade estimation profiles have been completed. The long term metal prices (in line with industry consensus) to be used in the remodeling work are: copper $US3.00/lb, molybdenum $US10.00/lb, gold $US1,200/oz and silver $US20.00/oz. The long term FOREX for the remodeling work has been set at $1.00 US = $0.83 CDN. The results of the remodeling work will be compared to the resource estimation completed in 2012 to determine if either positive or negative changes to resource categories, tonnes and metal grades have occurred. The decision on if an updated resource estimate for the Schaft Creek deposit is required will be made on completion of the remodeling work.
External consultants will be used to collect environmental baseline data (including humidity cell tests and field sampling) for the Schaft Creek deposit. Other aspects of the 2017 program include the application for a MYAB, pursuant to which; approval for up to 50 diamond drill holes, 5 kms of new drill road and 20 kms of line cutting could be requested; none of which are planned at this stage. The 2017 program also includes ongoing consultation with the Tahltan First Nations on social and cultural matters.