Monday, December 17, 2012

Copper Fox vs Orko Silver

Orko Silver
about 145,000,000 shares
154,000,000 oz silver eq
$3.85 billion in situ
Pit prices
$1465 gold
$26 silver
Offer 10 cents on a dollar

Copper Fox
$60 billion in situ
1/10 = 6 billion
25% = 1.5 billion (if this was in Panama but it's not and it's fully funded under the 75% option)

Option Agreement $340 million
Port facility $6.8 million (Savings from transport costs)
Land $44 million (Mess Creek another $4-10 million? This is the access point and a chunk of gold was found on it.)
JV and finance carried (Interest on 1.2 billion) Value, $2.4 million based on the difference of interest terms.
(We can ignore Royal Gold's 3.5% NPI for now.)
We have the 100% working rights to the property
There is a 30% NPI held by Liard
We are about to earn 78% of the Liard NPI giving us that 23.4% of the original 30% NPI that Liard held.
Next, Teck earns back 75%.
75% of the 23.4% NPI leaves us with 5.85% NPI
5.85% NPI = $76M/yr (1.3 billion NPV) Note: We bought floating  liard shares 2 separate times so this is a ball park figure.
75% of the deposit leaves us with 25% ($300 million at a fire sale price)

The option agreement has to be spent on the project and can't really be separated out. Some people think we are attributed only 25% of that. But, dollar for dollar it is an enhancement to the total package. In other words, it is ours and forms part of the package Teck has to negotiate for. Most importantly, we decide how to spend it.

 Where it says 23.4% of the deposit is an error. It should read NPI.
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.



1 comment:

  1. The lawyers are busy working out the contract line by line. 8 Engineers are working towards signing the paper. I speculate that we are negotiating our rights to the land inclusions. This would go with the legal. They are not preparing the JV yet since terms have to be solidified. There will be some PR changes soon. The 23.4% of the deposit is erroneous. It should read NPI. NPI is not = to deposit. This will be corrected. It makes a multi million dollar difference upfront. But, NPI is relatively risk free in the long run.