Friday, February 15, 2013

Copper Fox is in Discussions With Teck

As stated in the NR, the company is in discussions with Teck. I would like to see updates on the drilling plan for Schaft Creek and Arizona while they chew the fat. I'm not alone in that wish. Yet, on various discussion boards a lot of people want nothing else to happen except a closure with Teck. I find that a curious predicament for the company.

Copper Fox has an obligation to update us on those items yet they may be reluctant due to the pressure they get from share holders. I try to tell those people that those NRs are good signs. If the negotiations were getting tough it would be reasonable for the main geo/CEO to be focused on handling objections. Getting our corporate update on time shows us that things are going smooth. We should be happy to see updates on our next lines of business.

So what are they talking about... oh to be a fly on that wall. From our outside prospective we can speculate that Teck is looking at its giant land position and considering the full scope of what it intends for the next 50 years. Yes, I said 50 years. I do not expect that to be concluded over night.

I've also recently speculated that CUU may have a partner in line already. I'm basing this on the lack of an overt statement by either company saying the BFS has been accepted and the shares transferred. The simple fact that this has not been concluded suggests that a partner is involved. This is not delayed by the 30 days the contract allows. Sure there would be bankers involved as a third party to say what the bankability entailed interest wise. But, I suspect the parties involved do not require banker money.

Teck has had ample time and a hand in the crafting of the document. They cannot doubt what they have in hand. This has been reviewed by everyone and their dogs. This one smoking gun leads me to be pretty sure that one or more interested parties are involved. The hush hush even on general questions is a good sign that this speculation is correct.

All along the directors have advised that Teck could act without warning. I suspect this was a smoke screen. A project of this size is like a herd of elephants. My first inkling of this was about two years ago. This was when the company was talking about who might be interested. Then we found out that a few specific geologist visited the hill. This would be an appropriate timeline for those companies to fully investigate the offerings. The last key piece of info was the over worked BFS. In terms of BFS's this one got worked over harder than almost every one I've studied. Elephants are not fast over long distances but they can be heard miles away.

In my last discussions with the company there was a decided lack of interest in pushing the contract lines. Yes, we could have triggered the RFoR and while that would seem to be a proper step towards selling the project clearly that could be construed by Teck as a WTF. So that won't happen. Before the verbal lock down we discussed many of the contract items. Why the 30 day clause, what would happen if Teck didn't notify re the BFS etc. In all of this the tendency was to lean towards flexibility. There was no sense of us pressuring Teck at all. I think past communications with the company in this respect may have been more as a result of the share holders than as a result of what Teck was doing. Beside, the company does have to give the impression that we can stand on our own two feet.

The discussion right now would be aimed at creating a complete understanding of the underlying contracts. Both companies would be discussing a mutually beneficial stance that would make third parties happy. If this was not going on then we would have our Liard shares already. These shares make a very important negotiation point. Their value cannot be understated. They are not just a feather in our cap. They can be used to finance the project!

In addition to the above we should also be discussing our role as a partner. Now don't jump on me just yet, I know the company has said it wants to sell and nothing else but... What's more valuable, the interest we have or a partnership with one of the largest miners in the world? Suppose you had to go to Japan to make an offering. Which one would you rather present? Clearly, the best bang for the buck is the partnership. And what would you speculate they are talking about?

We want to cement our rights in the partnership and Teck wants those royalty shares off the table. They want them absorbed into a mutual frame work. We want that too but we want the best sales package possible. I see grounds for some horse trading. Teck has an interest in sending us out to the third parties with a very good deal to offer.

A while back I was pretty sure Elmer (CEO) was given the Liard appointment to facilitate a deal. My speculations appear to be accurate. Who better than the guy who's peeked under every rock on the hill. Again, the time frames of these various items reveals an undercurrent that suggests a third party. If it was just the two companies the time lines would be a little more straight forward. There would also be much less of a cone of silence. After all, the contract belongs to the two companies so nothing would require then not to talk to us unless there was indeed a third party.

Interestingly, the perceived route is not the only one! There are in fact, more options than what you read on the surface. These must also be discussed. How do you slice a pie that's this big? What about selling royalty streams to finance the project? What if the third party is a consortium? That would make the discussions complicated. What if we want to retain an interest? Let say we want to retain the Liard shares and 10% of the deposit? This would fund exploration for years to come and Teck might want us to develop the district.

These are just some of the possibilities. There are more. It's my feeling that we want to retain an interest. We are the prover upper in this equation and the other guys are the builder uppers. I might reveal what I consider the highest probability in the near future. It's also possible that before I write about it there may be an abundance of proof.

One thing I know for sure is that the next time I call we should have a lot to discuss regarding the potential deal. (Unless we get some Az guidance or the drill program for SC).

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