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.
