Saturday, October 27, 2012

The BFS Arrival - Copper Fox End Game

Guys are saying there's one section outstanding for the BFS and that's the economics portion. If this is true then I'm calling the report completed.

Running the numbers is not that complicated. They won't be revising machine costs or the prices for building the mill. All those major costs will be written in stone by now. So what sensitivity numbers will be checked? The case numbers would be down to inputs and outputs. They would be looking at real grades, prices and concentrates. This should take no more than a day. Then comes writing the final draft for the public.

We normally get a brief that is published and then the full document comes out on Sedar within 45 days. It's possible that they dump all the data at once. Those expecting a Mira report first might be dissapointed. Mira already did it's job and provided confirmation which was backed up by drilling that shows proof of another deposit. Drilling up in the brechiated zone gave us identical result to the known trend even though they didn't make it all the way to the charged area. Those who expected the last two holes to be glory holes where not being realistic. Try 20 holes laddered across the anomaly. Even that would barely outline it. But, at the end of the day it doesn't matter what retail think. It only matters what the buyer thinks.It's pretty clear now that Teck did say stop drilling. So they did accepted what we had as proof enough.

On the share price. This is the first time Elmer has expressed concern. I got the impression he thought the sell off was due to people not understanding the drilling. I don't see that as connected. I posted thoughts about that briefly previous. We can safely conclude that someone doesn't like us and has enough shares to manipulate the price. It's pretty clear they didn't want the warrants in the money. And last, they wanted to try disgrace the stock. Call it a proxy war without the proxy. The net effect was that it impacted the PP that was open.

This did not impact the BFS schedule. I think Elmer will go discuss the final results next week in Vancouver. From their they will make the public draft and Teck will have 24 hours to approve it. Wed, Thurs. both would be good times to get it out. But in reality, Monday would give us the most time to see some reaction. Do they want to release it right on Halloween? Do they let yet another calender month appear on the wall before releasing it?

Lots of people have said another month won't damage the sp anymore than it already is from the delays. But do they want to release it during an election? I'm thinking not. For one thing that wouldn't be fair to our friends to the South. Therefore, the best bang for the buck is to do it now. Of course, you could say damn it all and just release it when you think it's as complete and well covered as it can get.

I also here people saying we can't cost less than Galore. I can't believe this is going around again. Capex is related to tonnage which relates to output and to the NPV. What's 1.2 billion worth over 40 years? The method of calculating anything this way makes a 40 year horizon meaningless. So just look at the IRR to pay back the capex and what the high grade will deliver for 20 years. I think people will have a hard time accepting what a Canadian porphry is worth. This deposit is no longer a low grade money pit. It's as good as Galore and a few billion cheaper. Even my own rough calculations based off the Preliminary give an indication as to a very good IRR. We've gone those extra steps to guarantee prices like on the Port facility. The discussions with Ledcore also give us a certainty for the cost of construction. So when the conservative numbers look good, the best case numbers will be hard to believe.

I think this has had some impact of the delivery schedule for the BFS. There's also the input from Chinese manufacturers etc who can have a better price since labour for machines manufacturing is cheap and they already have a stake in this. But at the end of the day I think it is done. I'm expecting robust numbers rivaling any Canadian deposit.

I think Elmer will dish up his idea of conservative numbers and Teck will have a set of real world (adaptable) scenarios. This should make a very convincing case to go ahead and build it. I'm also betting they made a case for a state of the art mine. They will incorporate the most modern equipment and technology. This will allow teck to opt for a less expensive model should they choose. I know Elmer has spent a lot of time on this because it reflects in the concentrates.

So all the right things seem to be lined up. We have a good window to deliver it. The taxation timing is favorable for an all shares deal. The best case BFS is iron clad and ready for delivery. What more is there to say. Wait a week and see what happens.


  1. Great Blog Webgogs!! Very clear and concise. Thank-you!!


  2. I very much appreciate that someone with your obvious knowledge base, powers of deduction and ability to disseminate information in a conversational style, takes the time to share that with all of 'us'. Thank you; great blog!

  3. Web, Quick question.....Elmer slightly concerned about the SP....did you ask him if he thought the significant delays had something to do with it? Or did you not go there??

    1. I chose not to go there. That would have been stating the obvious. Interesting to see the sp bounce off 99 cents today.