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
a 78% 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 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 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. The feasibility study contemplated a 21 year mine life.
The Schaft Creek deposit hosts a Measured and Indicated Resource of 1,228.6 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 is currently conducting the 2015 field program. 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.
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
0.001 to 0.003
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 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 1.3g/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 is estimated to cost $4.8 million. The objectives of the field program are to continue the optimization studies that were commenced in 2014 and to diamond drill test the copper-gold mineralization located in the LaCasse zone.
The 2015 field work includes additional infill sampling and re-logging of diamond drill cores for geometallurgical purposes as well as lithogeochemistry and acid rock drainage investigations. The 2015 field program also includes an estimated 2,500m of diamond drilling (5 drill holes) focusing on the copper-gold mineralization located in the LaCasse zone in 2014. The completion of the last two drill holes is contingent on the results of the first three holes.
Studies on comminution (grinding), daily milling rates, electrical demand, mine planning, land use concepts, updating the resource model, review of infrastructure planning, water management and various possibilities related to tails and tails storage are also part of the 2015 program for the Schaft Creek project.
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.