Where do you think the other 1/2 of the metals went? Webs once talked about a mine beneath a mine. I am convinced based on this BFS that they had to pretty much rework the entire pit and perhaps shift it or broaden it to accomodate the drill results since 2008 PFS. This was obvious when they started to step out with the drills in the paramount zone. Now when you broaden the project like that you push the diameters beyond the more closely spaced drilling that contributes to the M&I portions of the project moving into the inferred metals. They have to be removed and because they can't contribute to revenue generating rock and become a cost for the purpose of a feasability study, they give us the 'false impression' that the economics are not there in the project and that something has gone wrong. This is not the case. These inclusive #'s are known by TT, Elmer and Teck and the calculations have been done and I'm certain that Elmer will be able to speculate on this given the 1:1 correlation and what impact this has on NPV, payback, IRR, etc. They have likely made the pit much larger for many reasons, but bottom line is you have to move out to move down. With the P&P of the BFS representing only half of the metals in MI&I of the RE, the pit likely isn't that deep.
Another thing. Did anyone catch the CuEq ? 0.44% Give me a break. TT used their own long term metal #'s of 2.97 Cu, 16.80 Mo, 1256 Au and 20.38 Ag to come up with that. I think I heard from someone a month or 2 back that the mine feed will be realistically more in the range of 0.58% CuEq But remember, this study is about derisking through worse case scenarios and being realistic. Elmer said that Teck wanted a realistic BFS and that is what they got. Recoveries in this BFS by TT were also reduced at 60.9% Mo, 70.6% Au and 43.4% Ag yet in Feb 2012 Metallurigcal testing recoveries averaged 89% Cu, 64% Mo, 73% Au and 58% Ag.
I was going to show you some comparative materials but then I came across this and it sums it up nicely. This is one of the reasons I'm telling you it is a very base estimate. The eq of 0.44% is not our doing. But, to show that this is robust we had to go along with it.
NR snippet from the link above.
Metallurgical test work including; rougher flotation, locked cycle testing by closed circuit flotation and concentrate quality was completed on six samples of mineralization from the Paramount zone. The test work was completed by G&T Metallurgical Services Ltd. Six samples (totaling 810 kgs) were tested for metallurgical performance. These samples were prepared using 80% passing 150 micron grind size, tested individually and then composited for similar test work. Results of the test work on the two master composite samples (with average copper grades of 0.42% copper) yielded average recoveries of 89% copper, 64% molybdenum, 73% gold and 58% silver. Concentrate produced from this testwork averaged 31% copper, 1.30% molybdenum, 16 g/t gold and 131 g/t silver. The concentrate was low in other base metals and other common penalty elements. These results will be combined with the previous metallurgical test work from the Schaft Creek deposit to determine the estimated average metal recoveries to be used in the feasibility study that is expected to be completed in the first quarter of 2012."
So given what they said in the NR I wanted to hear from Elmer as to why the actual recoveries didn't get used. I suspect we will see a section in the full document showing this for the starter pits.
The Quellaveco deposit. 18% of that deposit was fought over just recently. Capex was 3 Billion in 2010... imagine today. They're in Peru and have huge water issues.
Their resource: 2010 M&I: 823.8 Mt @0.44 Cu (3.68 Bil pounds) with 183mt Inferred at 0,45 (828 Mil pounds)
They have not even completed a feasibility.
So what did they recently get:
Mitsubishi Corp said on Monday it had bought an 18 percent stake in Peruvian copper project Quellaveco, a hotly contested asset among Japanese trading and mining companies - in a deal reportedly worth $760 million to $890 million.
Just based of this I'd give us a value of about $3.15. Now add in all the stuff I've mentioned before. $340 million prepaid from our option agreement, the land package, our Liard royalty shares and a host of other items. Take note that we have superior metal credits. (Gold which is certain to run up in price)
If you are wondering why IRR came in at 10% look at the bill added for waste rock removal! Why didn't drill it right up as per the quoted NR. Well, we went about expanding the potential. When I spoke to Elmer (CEO) about this (knowing what the answer was going to be) he confirmed that the money was better spent expanding the potential. Infill drilling was going to run millions so how much should we dilute? The overburden is acceptable to Teck as a cash opportunity and so Elmer decided to show us just how big the district really is. Teck will probably spend north of $200 million drilling the area up over the next 6 years. People tend to forget that we are a Jr exploration/developer.
Returning to the IRR. The recoveries are deliberately low balled to allow for more unknown grades. But why? This is a hefty err on the side of caution. Since the money comes from concentrates this impacts the IRR in a big way. Imaging what the study would look like if we gave full credit to the recoveries. Look at the ROV method at 5%. This is what we will look like when the enviro apps are completed. It's all about de-risking. Since we have no enviro issues this should be given more consideration. In discussions with other companies I can assure you this is a top consideration amongst all developers and major investors. If anything is going to derail you it's enviro.
It's worth reviewing the FS stament against the Resource estimate. As far as potential is concerned Copper Fox has delivered.
OPEN PIT MINING, PROCESSING AT A NOMINAL RATE OF 130,000 TONNES PER DAY; A 21 YEAR MINE LIFE PRODUCING 4.88 BILLION POUNDS OF COPPER, 4.21 MILLION OUNCES OF GOLD, 25.10 MILLION OUNCES OF SILVER AND 214.92 MILLION POUNDS OF MOLYBDENUM