Advanced copper projects in stable jurisdictions
Copper Fox Metals Inc (TSX-V:CUU, OTCQX:CPFXF). is an exploration and development company with projects in geopolitically stable, proven copper mining districts within Canada and the US.
Copper Fox’s strategy is to acquire, explore and advance projects along the value chain, creating value for its shareholders prior to divesting its interests, essentially an advanced stage project generator. Following this strategy, the Company has assembled a high-quality, balanced pipeline of exploration and advanced-stage projects.
The company’s most advanced projects are:
- A 25%-interest in Schaft Creek copper-gold-molybdenum-silver project, in British Columbia, a joint venture with Teck Resources Limited
- A 100%-interest in the Van Dyke ISR copper project, in Arizona
Schaft Creek is a large polymetallic porphyry deposit that contains over 9 billion pounds of copper, 8 million ounces of gold and additional silver and molybdenum.
A preliminary economic assessment at the Shaft Creek Project defined a post-tax NPV8 of US$842.1 million and IRR of 12.9% based on an open pit operation over 21 years and a copper price of US3.25/lb. Sensitivity analysis demonstrated that the project economics are highly levered to metal prices. This study utilised approximately 60% of the Schaft Creek resource base.
The joint venture partners are currently undertaking a 5,000-meter drill programme focused on the first five-year pit outlined in the PEA and additional studies focused on value-add opportunities ahead of making a decision on the commencement of a pre-feasibility study at the project.
Van Dyke is a moderate-sized, open-ended, supergene copper oxide deposit that contains over 1.2 billion pounds of soluble copper, with an average grade comparable to other copper oxide deposits located in Arizona.
A preliminary economic assessment at the Van Dyke Project defined a post-tax NPV7.5 of US$644.7 million and IRR of 43.4% based on an ISR operation over 17 years and a copper price of US$3.15/lb. Sensitivity analysis demonstrated that the project economics are levered to the copper price.
A proposed 2022 exploration programme for the Van Dyke Project is currently being reviewed and will be announced when finalised and on receipt of board approval.
In addition to its two more advanced development interests, Copper Fox is advancing three 100%-owned exploration projects: Eaglehead; Sombrero Butte; and Mineral Mountain. The Company is planing detailed exploration programmes at these projects during the year, including:
- Eaglehead: Drilling, preliminary metallurgical test work in mid-2022
- Sombrero Butte: Airborne geophysics and mapping planned in 2022
- Mineral Mountain: Airborne geophysics planned in 2022 and possible project-wide IP survey late 2022
All three of these projects have the potential to host significant levels of porphyry copper mineralisation and the exploration work planned for 2022, could generate some exciting targets for drill testing.
Based on Copper Fox's 25%-interest in the Schaft Creek Project it has an attributable post-tax NPV8 of US$210.5 million and its 100%-interest in the Van Dyke Project it has an attributable post-tax NPV7.5 of US$644.7 million.
Schaft Creek Copper-Gold-Molybdenum-Silver Project
The Schaft Creek copper-gold-molybdenum-silver project covers an area of 56,180 hectares in northwestern British Columbia. The project is located approximately 60 kilometres south of Telegraph Creek, near an existing seaport, transportation routes and hydro-electrical energy infrastructure (Figure 1).
Figure 1 - Location of Schaft Creek Project
Source: Copper Fox Metals
The project is being advanced as a joint venture with mining major, Teck Resources Limited. Copper Fox holds a 25%-interest, with Teck holding the balance. Teck is the operator of the project, bringing with it a knowledge and skills base and technological resources that only a major could bring to bear on the project.
Joint Venture Terms
Under the agreement, Teck paid Copper Fox US$20 million on commencement of the agreement and is due to make two further US$20 million milestone payments, one when a production decision approving mine construction is made and the other when construction of the mine facilities is completed.
Both Teck and Copper Fox are responsible for their pro-rata share of project costs, except that Teck is solely responsible for the first US$60 million in pre-production costs. If pre-production costs exceed US$60 million, Copper Fox’s pro-rata share of the costs will be offset against the two remaining cash milestone payments. If pre-production costs are greater than the two cash milestone payments, Teck will provide loans, as necessary, without dilution to the Company’s 25% joint venture interest.
Once a production decision has been made, Teck will make an irrevocable offer to the company:
- To use all reasonable commercial efforts to arrange project equity and debt financing for at least 60% of project capital costs or such portion as Teck determines is commercially available on reasonable terms at the relevant time, and
- To fund by way of loans to Copper Fox, its pro-rata shares of project capital costs not covered by project debt financing at the Prime Rate plus 2%, if requested by the Company, without dilution to the Company’s 25% joint venture interest.
The Company must notify Teck within 60 days after Teck’s offer whether it accepts Teck’s offer or whether it will arrange for its own financing.
Figure 2 - Mineralisation Zones
Source: Copper Fox Metals
Figure 3 - Resource Base
Source: Copper Fox Metals
Figure 4 - Exploration Targets
Source: Copper Fox Metals
Figure 5 - Production Profile
Source: Copper Fox Metals
Figure 6 - Free Cash Flow
Source: Copper Fox Metals
Figure 7 - Sensitivity Analysis
Source: Copper Fox Metals
Geology
The polymetallic mineralisation at Schaft Creek Project is contained within a large porphyry deposit, located within the northwestern portion of the Stikine Terrane, within the Canadian Cordillera. The Schaft Creek Project area is dominantly underlain by the Hickman Batholith and the Stuhini Group volcanic rocks.
The mineralisation within the Schaft Creek deposit is present as both chalcopyrite and bornite (containing low, but significant concentrations of gold and silver), hosted in quartz-sulphide veins, vein stockworks and disseminations. Molybdenite is present throughout the deposit. The Schaft Creek deposit consists of three contiguous mineralised zones (Figure 2):
The Liard Zone is an area of porphyritic quartz monzonite to quartz monzodiorite dikes that intrude the andesitic volcanic and volcaniclastic host rocks of the Stuhini Group. These dikes are associated with potassic alteration, and an increased number of quartz-sulphide veins and vein stockworks and elevated copper-gold grades. The mineralisation is hosted both in the dykes and the volcanic host rocks. The boundaries of the Liard Zone are defined by faults in most directions.
The Paramount Zone is an-elongate, multi-phase igneous-hydrothermal, north-northwest trending breccia body, emplaced into quartz monzonite and andesitic volcanic host rocks. Higher-grade mineralisation occurs within the breccia body and extends up to 200 meters into the quartz monzonite hangingwall and, to a lesser extent, into the footwall andesitic volcanic rocks. The Paramount Zone is open at depth and to the south, towards the West Breccia Zone.
The West Breccia Zone is also an elongated, north-northwest trending hydrothermal breccia body but is unlike the Paramount Zone, it is contained in andesitic volcanic and volcaniclastic rocks. The boundaries of the West Breccia Zone are poorly constrained, and it remains open to the north and south.
Resource base
The Schaft Creek Project has a total NI-43 101 compliant mineral resource estimate (M, I & I) of 1.69 billion tonnes at a grade of 0.24% copper, 0.02% molybdenum, 0.15g/t gold and 1.17g/t silver, making it a very large copper deposit (Figure 3).
Management believe it is one of the largest undeveloped porphyry deposits in North America, with total contained metal contents of 9.06 billion pounds of copper, 606.09 million pounds of molybdenum, 8.15 million ounces of gold and 63.54 million ounces of silver.
To date the limits of the nonmetallic mineralisation at the Schaft Creek Project have not been defined and the area surrounding the deposit is considered highly-perspective for porphyry style copper mineralisation.
Local exploration potential
At the southern end of the Liard Zone, the following targets remain to be explored:
- several historical drill holes intersected chalcopyrite-bornite-molybdenite mineralisation in a large strong positive chargeability anomaly
- A previously unrecognised hydrothermal breccia within the footwall of the Basal Fault
The Wolverine Creek Area contains several outcrops of mineralisation possibly related to a southern extension of the Schaft Creek mineralisation.
Regional exploration potential
To the north of the Schaft Creek Deposit, mapping, geophysical surveys and limited exploratory diamond drilling located a number of open-ended areas of mineralisation.
Limited drilling on the LaCasse/Discovery zone located approximately 1.5 to 2.0kms north of the Schaft Creek Deposit intersected significant intervals of porphyry-style mineralisation in all four drill holes, including DDH CF427-2012, that returned a weighted average of 0.24% copper, 0.14g/t gold, 0.006% mo and 0.57g/t silver. (Figure 4).
There is an opportunity to conduct systematic exploration along this trend and to prioritise key targets for additional work.
Preliminary economic assessment
A Preliminary Economic Assessment (PEA) was completed at the Schaft Creek Project in September 2021.
This study defined a post-tax NPV8 of US$842.1 million and IRR of 12.9% based on an open pit operation over 21 years, using a copper price of US$3.25/lb on a 100%-ownership basis. Over the life of mine the operation would process 133,000 tpd at 92% nominal capacity, producing around 5.0 billion pounds (lbs) or 2.3 million tonnes copper, 3.7 million ounces (oz) gold, 226.0 million lbs molybdenum and 16.4 million oz silver in concentrate (Figure 5).
The initial capex for the project is US$2.65 billion and all-in sustaining costs (AISC) for first 5 years at full production averages US$0.72 per pound payable copper including by-product credits and average US$1.18 per pound over the life of mine.
The PEA defined annual average free cash flow before recovery of capital costs of US$633.4 million for the first 5 years at full production and US$9.96 billion over the life of mine (Figure 6).
The capital intensity (excluding contingency) for the Schaft Creek Project was estimated to be C$20,200 (US$15,500) per operating tonne and C$17,200 (US$13,200) per operating tonne of payable CuEq production.
By-product metal credits account for approximately 33% of the CuEq production attributable to the Schaft Creek Project. In the first five years of full production, the average recoverable CuEq production is estimated to be approximately 398.1 million lbs. (180.6 Kt) (Figure 6).
Sensitivity analysis
Sensitivity analysis of the Schaft Creek Project's economics demonstrate that the project is most sensitive to changes in the copper price and the USD/CAD exchange rate (Figure 7).
A US$0.25 increase or decrease in the per pound copper price, from the base case of US$3.25/lb used in the PEA, would increase or decrease the projects post-tax NPV8 by 28% or US$240 million. The current copper price is US$4.20.
2022 exploration programme
In March of this year, the Schaft Creek joint venture approved a C$6.6 million exploration programme for the Schaft Creek Project. The programme will consist of up to 5,000 meters of drilling and associated metallurgical and geotechnical studies. This information will help the joint venture to:
- Review construction timeline and offsite infrastructure costs, with the aim of reducing the initial capital cost and further improve the project economics
- Verify potential production levels, recovery rates and ensure a ‘fit for purpose’ process design flow sheet and associated equipment selection
- Assess options to reduce the strip ratio and operational costs
- Review environmental baseline data requirements
- Update regulatory requirements and associated permitting timeline
These activities during 2022 are focused on value-add opportunities ahead of the joint venture making a decision regarding the commencement of a pre-feasibility study at the project.
Figure 8 - Van Dyke Project
Source: Copper Fox Metals
Figure 9 - In-situ Recovey
Source: Thor Mining
Figure 10 - Van Dyke Resource
Source: Copper Fox Metals
Figure 11 - Production Profile
Source: Copper Fox Metals
Figure 12 - Cash Flow
Source: Copper Fox Metals
Figure 13 - Sensitivity Analysis
Source: Copper Fox Metals
Van Dyke Oxide Copper Project
The Van Dyke Oxide Copper Project covers an area of 531.5 hectares in Arizona, approximately 110 kilometers east of Phoenix (Figure 8).
Historically there has been two periods of copper production at the project:
- Between 1929 and 1945 underground mining at the site produced 11.8 million lbs of 5.0% copper, and
- Between 1988-1989, the site produced 4 million lbs of copper using in-situ recovery.
Copper Fox owns 100% of the project and is planning to develop it as an underground in-situ recovery (ISR) operation.
What is in-situ recovery (ISR)
In-situ leaching is more commonly used for the extraction of uranium production, more than 50% of current world uranium production is from in-situ leaching, but it has also been used for copper production in the USA and Russia.
The process of in-situ leaching involves pumping lixiviants, the leaching agent, through boreholes into the mineralisation to leach the metals. The metal-enriched solution is then extracted from another proximal borehole (Figure 9).
For this process to work the copper-bearing minerals need to be amenable to chemical recovery. Another requirement is the mineralisation should be sufficiently permeable to allow the lixivants to dissolve the copper but also that the mineralisation is contained within a host rock that is sufficiently impermeable to prevent the lixivants contaminating groundwater away from the deposit.
Once the copper, and potentially also the gold-bearing solution is extracted, it will be refined using either solvent extraction electrowinning (SXEW) or ion exchange electrowinning (IXEW) to produce copper/gold metal.
If the required ground conditions are present within the deposit then in-situ leaching can be a low-cost and low-environmental impact process and the San Manuel mine, now closed, is an example of this. San Manuel was operated by BHP Group Ltd (ASX: BHP) and produced 284mt of copper from in-situ leaching.
Other ISR projects
Taseko Mines Ltd (TSX:TKO) is advancing its Florence Project, located in Arizona, into production and after successfully operating a test facility at the project. Taseko expected to commence construction of the commercial SX/EW plant and wellfield during 2022.
Florence has a measured and indicated NI 43-101 compliant mineral resource estimate of 492 million tonnes at a grade of 0.33% copper. An economic study at the project completed in January 2017 defined a post-tax NPV7.5 of US$680 million IRR of 37% with a 2.5-year payback. The estimated capex is US$230 million and the C1 cash costs is US$0.90/lb.
Excelsior Mining Corp operates the Gunnison Copper Project, also located in Arizona. The project was expected to be in production during 2021 but was delayed due to carbon dioxide gas bubbles reducing injection flows and preventing timely ramp-up to nameplate production. The gas bubbles are the result of the interaction of the weak acid injection with finite amounts of secondary calcite within the permeable fracture system.
These production challenges required Excelsior to re-engineer its wellfield ramp-up, including the introduction of a long period of pre-production CO2 flushing and calcite removal. Capital costs, operating costs and the production schedule have been re-estimated to account for wellfield pre-conditioning and flushing using neutralized raffinate, which is expected to take 15 months.
A 2022 pre-feasibility study at the project defined a post-tax NPV7.5 of US$1.34 billion IRR of 44.9% with a 4.8 year payback. The estimated capex is US$45.1 million and the C1 cash costs is US$1.21/lb.Gunnison has a total NI 43-101 compliant measured and indicated mineral resource estimate of 873 million tonnes at a grade of 0.29% Cu.
Geology
The Van Dyke Copper Deposit is an enriched secondary or supergene deposit that is genetically and spatially related to the porphyry copper systems located adjacent to the Project and the hypogene mineralisation beneath it. The vertical thickness of the mineralised envelope ranges from 40 meters to over 200 meters, and it remains open to the southwest.
Malachite, azurite, chrysocolla and chalcocite comprise the majority of the copper-bearing minerals at Van Dyke. They formed from the weathering and oxidization of primary copper and iron sulphides creating copper-laden solutions that migrated laterally and downward primarily along interconnected zones of fracturing and brecciation.
The Van Dyke copper deposit is located within the Miami-Inspiration trend of deposits that includes five principal orebodies; from west to east they are Live Oak, Thornton, Miami Caved, Copper Cities and Miami East. The Van Dyke copper deposit lies to the east, and on the hangingwall side, of the Miami fault, a district-scale northerly-trending, east-dipping normal fault that developed during Tertiary extension.
Resource base
The Van Dyke Project has a total NI-43 101 compliant mineral resource estimate (I & I) of 265.7 million tonnes at a grade of 0.30% copper (0.20% soluble Cu), making it a moderate size copper deposit (Figure 10).
Preliminary economic assessment
A Preliminary Economic Assessment (PEA) was completed for the Van Dyke Project in January 2021.
This study defined a post-tax NPV7.5 of US$644.7 million and IRR of 43.4% based on an ISR operation over 17 years, using a copper price of US$3.15/lb. Over the life of mine the operation would produce around 1.1 billion pounds (lbs) or 0.5 million tonnes copper (Figure 11).
The initial capex for the project is US$290.5 million and all-in sustaining costs (AISC) at full production averages US$1.14 per pound payable copper over the life of mine.
The PEA defined life of mine post-tax free cash flow of US$1,436.3 million (Figure 12).
Sensitivity analysis
Sensitivity analysis of the Van Dyke Project's economics demonstrate that the project is most sensitive to changes in the copper price and the copper recovery rate (Figure 13).
A US$0.25 increase or decrease in the per pound copper price, from the base case of US$3.15/lb used in the PEA, would increase or decrease the projects post-tax NPV7.5 by US$90 million. The current copper price is US$4.20.
2022 exploration programme
Copper Fox has been working with Ausenco Engineering Canada Inc. to review of all the hydrogeological data and Copper Fox plans to include Ausenco’s proposed work program into its 2022 exploration programme for the project. The programme and budget will be announced when finalised and on receipt of board approval.
Figure 14 - Eaglehead Targets
Source: Copper Fox
Figure 15 - Sombrero Butte Location
Source: Copper Fox Resources (ASX:FXR)
Figure 16 - Sombrero Butte
Source: Copper Fox
Figure 17 - Mineral Mountain Targets
Source: Copper Fox
Exploration Stage Project
In addition to its two more advanced projects, Copper Fox has three earlier stage exploration projects: Eaglehead; Sombrero Butte; and Mineral Mountain. The mineralisation, alteration and geophysical signatures on these projects are typical of porphyry copper systems.
Eaglehead
The Eaglehead Copper-Molybdenum-Gold Project covers an area of 15,713 hectares in the Liard Mining District of British Columbia (Figure 1). The project covers a large portion of the Eaglehead stock (intrusive), within the Quesnel Terrane. The Quesnel Terrane hosts several porphyry copper deposits including Highland Valley, Mt. Milligan and Mount Polly.
The target at Eaglehead is 8,000 meters long by 3,000 meters wide, and contains five zones of porphyry style mineralisation (Figure 14). Of the drilling completed to date 120 out of 126 drill holes intersected significant intervals of copper-molybdenum-gold mineralisation.
During 2022, Copper Fox plans to commence a drilling programme and preliminary metallurgical test work planned around mid-2022.
Sombrero Butte
Sombrero Butte Copper-Molybdenium Project covers an area of 1,389 hectares in the Bunker Hill Mining District, 44 miles northeast of Tucson, Arizona (Figure 15).
Between 1903 and 1920 copper is reported to have been produced from the project by mining operations on breccia pipes on the Audacious claim at the north end of the property with reports of ‘low-grade ore assaying 3-5% copper and higher-grade ore from along open cuts and tunnels assaying 20-33% copper.’
Copper Fox has defined two large porphyry copper targets (Figure 16):
Target #1 is measures 2,000 meters by 1,200 meters and is located at the northern end of the project. Within the target is a 600 meters by 600 meters zone that hosts 28 mineralised breccia pipes, which were the focus of the historic mining. A chargeability/resistivity body occurs at a depth of approximately 400 meters below the mineralised breccia pipes at surface.
Target #2 is in the centre of the property approximately 2,800 meters long by a minimum of 400 meters wide (open to the east). Sixty leached, intensely altered mineralised and non-mineralised breccia pipes have been located within this target. This target consists of copper-molybdenum mineralisation in outcrop and a positive chargeability/resistivity signature that extends from surface to a depth of greater than 800 meters.
Copper Fox is planning an airborne magnetic and radiometric survey in 2022, to locate late stage felsic intrusives exhibiting potassic alteration (magnetite) and Th/K radiometric anomalies associated with a buried porphyry system, prior to commencing drill testing of Target #2.
Mineral Mountain
Mineral Mountain Project covers an area of 1,751 hectares in the Mineral Mountain Mining District, 20 miles east of Florence, Arizona (Figure 15).
The Mineral Mountain Project is located on the 100-kilometre long Casa Grande to Globe-Miami mineralised trend between the Florence Copper Deposit to the west and the Resolution Copper Deposit to the east.
At Mineral Mountain, Copper Fox has defined two large areas of copper porphyry-style mineralisation (Figure 17):
Target #1 is 4,500 meters long by up to 2,000 meters wide. The mineralisation defined at surface consists of malachite, chrysocolla and chalcocite, as well as rare covellite and chalcopyrite as disseminations, in quartz veinlets and in fractures. Three zones of coincident copper-molybdenum mineralisation occur within this target.
Target #2 is 2,800 meters long by 400 meters wide. The mineralisation defined at surface consists of malachite and chrysocolla occur in quartz veins and fractures.
A high-sensitivity airborne magnetic and radiometric survey is planned over these targets in early-2022. It is expected that this survey would better locate late stage buried intrusives exhibiting potassic halos and Th/K signatures associated with a buried porphyry system, prior to drill testing.