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Overview of Schaft Creek ProjectDescription: The Schaft Creek Project consists of a large undeveloped porphyry copper-gold-molybdenum-silver deposit (the Schaft Creek deposit) and is located within a contiguous group of mineral claims that cover 21,025 hectares, the ownership of which was recently transferred to Copper Fox by Teck Resources Limited ("Teck"). The mineral claims covering the Schaft Creek deposit are subject to an earn-back right held by Teck pursuant to an Option Agreement dated January 1, 2002 (the "Option Agreement") between Teck and Copper Fox. In addition, Copper Fox owns a 100% working interest in another contiguous group of mineral claims covering 3,947 hectares that is not subject to the 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 $43 million to the end of December 2009. 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 30% net proceeds interest held by Liard Copper Mines Limited ("Liard") a private company 78% owned by Teck and an earn-back Option held by 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. Mineral Resources and Mineral Reserves: As set out in the Preliminary Feasibility Study dated September 15, 2008 prepared by Samuel Engineering, Inc., the current Mineral Resources and Mineral Reserves in the Schaft Creek deposit are set out below:
The Preliminary Feasibility Study estimated the current Mineral Reserve at Schaft Creek to be:
The Preliminary Feasibility Study shows that based on the estimated metal recoveries defined by metallurgical test work, the metal produced over the life of the mine would be approximately 4.76 billion pounds of copper, 4.5 million troy ounces of gold, 32.5 million troy ounces of silver, and 255.2 million pounds of molybdenum over a projected mine life of 22.6 years. The main conclusion of the Preliminary Feasibility Study was that the Schaft Creek deposit should be advanced to the feasibility stage. In early 2010, Copper Fox contracted Wardrop (A TETRA TECH Company) to complete a feasibility study on the Schaft Creek project. The feasibility study is expected to be completed by the end of 2010. | |||||||||||||||||||||||||||||||||||||||||||||||||||
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