Friday, December 21, 2012

Copper Fox Metals BFS is Good

If the initial reaction on some of the discussion boards was an indication of the value of the BFS you'd hear toilets flushing around the country. But, within an hour the mood has changed.

So what's my take? None of our inferred is included. It is listed as waste because there's not enough drilling to say it's economical. But, we saw the assays! Our chief wants Teck to see that the mine is profitable even if they have to pay to remove it as overburden. That's one.

Two. The report doesn't include anything beyond the main zones. Yet, we saw those assays too! So the report strictly focuses on real numbers. This is what Teck wanted. This report is for them not the retail. We are not advertising to the retail. We are completing a contract for a major that doesn't want any sunshine up the backside.

The third thing. No magic numbers were used. Everything is fully costed out. $200 million for the power tariff. Even the shared road starting from mile 0. Hint hint.

Summary of Economic Results
ItemUnitBase Case3-Y Avg* CaseSpot Price** CaseReal Options Case
Metal Price
Exchange RateUS:Cdn0.970.991.020.97
Pre-tax Economic Results
Operating Cash FlowCDN$ M10,74612,06512,16111,284
NPV (at 5%)CDN$ M1,6942,3482,4192,665
NPV (at 8%)CDN$ M5139671,0241,382
NPV (at 10%)CDN$ M25388437836
Cash Cost/lb CuCDN$/lb1.
Total Cost/lb CuCDN$/lb2.
Avg Annual operating Cash Flow***Millions371414425640

Look at the NAV at 5%. The more realistic value suggests a pretty good profit without converting the waste to cash generating rock. Even at 8% there's still a profit. So factor in the waste as a zero sum so the mine doesn't pay for the removal and the numbers get better. Take 20% as paydirt like the drills suggest and the numbers get even much better.

Give us credit for 30% at .24% for 35 meters add that to the ROV and Teck has a rosy picture to look at. I'm guessing at the average overburden paydirt because I'd have to look up the NR and do a bunch of calculations.

I'm seeing a number of things that didn't get fudged on. They all represent cost savings. So if this is the worst it can get...

A word about the copper prices. Teck wanted to know real numbers. $3.25 is a factual number. This gives us a more realistic payback of 5 years if we accept that nothing else improves like converting the waste to cash.

Development Schedule
  • Project development will take place over a 5 year period after initial permitting and engineering.
  • Permitting completed June 30, 2014
  • Engineering completed February 2016
  • Access Road construction completed March 2016
  • Construction Phase I completed July 2019 and Phase II March 2020
  • Commercial Production Phase I Start December 2019 and Phase II August 2020

Given the 5 year plan it's safe to say we are not concerned with the so called 4 year clause. I see more hints of things to come.

Overall this is a very solid document. It tells us that this is very likely to be a mine.


  1. I like your review that was done quickly upon NR. It will be interesting to get Elmers take mid Jan.

  2. The Geo tech drilling that shows the waste rock is cash