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.