06:50:36 EDT Thu 28 Mar 2024
Enter Symbol
or Name
USA
CA



Copper Fox Metals Inc
Symbol CUU
Shares Issued 493,541,940
Close 2021-01-12 C$ 0.37
Market Cap C$ 182,610,518
Recent Sedar Documents

Copper Fox's Van Dyke PEA pegs NPV at $789.6M (U.S.)

2021-01-13 07:08 ET - News Release

Mr. Elmer Stewart reports

COPPER FOX ANNOUNCES SIGNIFICANT INCREASED VALUATION ON THE VAN DYKE COPPER DEPOSIT

Copper Fox Metals Inc., through its wholly owned subsidiary, Desert Fox Copper Inc., has released robust results from an external, independent preliminary economic assessment (PEA) prepared in accordance with National Instrument 43-101 for its 100-per-cent-owned Van Dyke in situ copper recovery (ISCR) project located in Miami, Ariz. The PEA was prepared under the direction of Moose Mountain Technical Services with an effective date of Dec. 30, 2020. All dollar amounts are expressed in U.S. dollars, unless otherwise noted.

PEA highlights (based on $3.15/lb copper):

  • Base case pretax net present value at a 7.5-per-cent discount (NPV7.5) of $798.6-million, internal rate of return (IRR) of 48.4 per cent, and payback period of 2.0 years;
  • Base case posttax NPV7.5 of $644.7-million, an IRR (internal rate of return) of 43.4 per cent and payback period of 2.1 years;
  • Life-of-mine (LOM) copper production of 1.1 billion pounds with peak production of 85 million pounds annually in years two to 12 inclusive, declining thereafter;
  • Initial capital expenditure of $290.5-million, including a 30-per-cent contingency;
  • LOM direct operating cost of 71 cents per pound and sustaining costs of seven cents per lb;
  • Cumulative net free cash flow of $1,757-million pretax and $1,436-million posttax;
  • Mine life of 17 years;
  • C1 cost per pound copper of 98 cents, AISC per pound copper of $1.14.

The results of the PEA are preliminary in nature. The PEA includes a combination of indicated and inferred mineral resources, which are considered too speculative geologically to have the economic considerations applied that would enable them to be categorized as mineral reserves. There is no certainty that the PEA forecasts will be realized or that any of the resources will ever be upgraded to reserves. Mineral resources that are not mineral reserves do not have demonstrated economic viability.

Elmer Stewart, president and chief executive officer, said: "The significant increase in valuation over that obtained in the 2015 PEA is a function of the 2020 resource estimate, a better understanding of metallurgical and geological characteristics of the deposit and adopting a phased approach to project development. These results combined with the exploration potential suggests that, with positive results from additional drilling and engineering studies, Van Dyke has the potential to become a significant project in the mid-size copper development space. Achieving this milestone is a significant value add to Copper Fox, and is expected to complement the results of the PEA which is currently in progress at Schaft Creek, in determining the strategy to maximize shareholder value."

Summary of base case economic results

Results of the 2020 PEA are summarized in the associated table, along with a comparison with the company's PEA conducted with respect to the Van Dyke project in 2015 (see news releases dated Nov. 25, 2015, and Dec. 24, 2015).

               LIFE-OF-MINE COMPARISON BETWEEN 2015 AND 2020 PEAS

                                                                              Base case    
Production and cost summary                          Units       2015 PEA      2020 PEA

Life of mine (LOM)                                   years             11            17
Copper cathode sold                             million lb          456.9       1,101.0
Copper price                                          $/lb           3.00          3.15
Gross revenue                                           m$        1,370.0       3,468.3
Royalties                                               m$           31.5          82.5
Total cash costs                                        m$          550.2       1,075.8
Total cash costs ($/lb recovered copper)       $/lb copper           1.20          0.98
C1 cash costs ($/lb recovered copper)*         $/lb copper           1.08          0.86
Sustaining costs ($/lb recovered copper)       $/lb copper           0.15          0.07
All-in sustaining cost (AISC)**                $/lb copper           1.36          1.14
Initial capital costs (includes contingency)            m$          204.4         290.5
Taxes                                                   m$          110.9         321.0
Cash flow parameters and outputs
Discount rate                                            %           8.0%          7.5%
Pretax net free cash flow                               m$          453.1       1,757.3
Pretax NPV                                              m$          213.1         798.6
Pretax IRR                                               %          35.5%         48.4%
Pretax payback                                       years            2.3           2.0
Posttax net free cash flow                              m$          342.2       1,436.3
Posttax NPV                                             m$          149.5         644.7
Posttax IRR                                              %          27.9%         43.4%
Posttax payback                                      years            2.9           2.1

* This includes mining, processing, site services, G&A (general and administrative 
expenses), transportation and royalty costs.
** This includes total cash cost, sustaining capital, royalty costs and severance 
taxes.

Mineral resources

The effective date of the mineral resource used in the PEA is Jan. 9, 2020 (see news release dated May 5, 2020). The base case indicated and inferred mineral resources at a 0.025-per-cent recoverable copper (RecCu) cut-off are reported within both a 0.025-per-cent RecCu grade shell and a reasonable-prospect-for-eventual-economic-extraction shape, which includes internal dilution or all must-take material within the confining shape (see news release dated March 25, 2020). Because ISCR is a non-selective mining method, grade bins (different cut-off grades) are not considered applicable for the Van Dyke deposit and have not been applied. The base case used cut-off is considered appropriate for the extraction of copper by in situ leaching. There are no known environmental, permitting, legal, title, taxation, socio-economic, marketing, political or other factors that could materially affect the resource estimate used in the cash flow analysis.

     MINERAL RESOURCE ESTIMATE WITHIN POTENTIALLY ECONOMIC CONFINING SHAPE (SUE BIRD, PENG)

Category          Tonnes        TCu        ASCu        CNCu       Rec        RecCu          TCu          RecCu
                   (000)        (%)         (%)         (%)       (%)          (%)        (mlb)          (mlb)

Indicated         97,600       0.33        0.23        0.04        90         0.24          717            517
Inferred         168,026       0.27        0.17        0.04        90         0.17        1,007            699

TCu is total copper; ASCu is acid-soluble copper; CNCu is cyanide-soluble copper; RecCu is recoverable copper; 
and mlb is million pounds.
The reasonable prospects for eventual economic extraction shape have been created based on a copper price of 
$2.80/lb, employment of in situ leaching extraction methods, processing costs of 60 cents/lb copper, all-in 
operating and sustaining costs of $1.25/tonne, a recovery of 90 per cent for total soluble copper and average 
specific gravity of 2.6 t/cubic metre.
Approximate drill hole spacing is 80 m for indicated resources.
The average dip of the deposit within the indicated and inferred mineral resource outlines is 20 degrees.  
Vertical thickness of the mineralized envelope ranges from 40 m to over 200 m.
Numbers may not add due to rounding.

Mineral resources that are not mineral reserves do not have demonstrated economic viability.

Project description

The project consists of 531.5 hectares (1,312.8 acres) of mineral rights and 5.75 hectares (14.02 acres) of surface rights and is subject to a 2.5-per-cent gross royalty on revenue. The Miami, Ariz., area hosts several heap leach copper mines with road access, electrical power, experienced labour, supply centres and industrial service providers.

Underground development

The 2020 PEA confirmed that the most cost-effective method to develop the well field is by way of a ramp from surface to the mineralized zone. Stage 1 includes an access ramp to the top of the deposit and a decline following the Gila/Pinal schist contact to access the higher-grade portions of the deposit. Stage 2 is expected to commence toward the end of stage 1 to access the lower-grade portion of the deposit. The main components of the underground development are shown in the associated table.


Excavation type                            Qty    Length          Dimensions                Shape    Total length
                                                     (m)                                                      (m)

Main access ramp to portal                   1     1,456   4.6 m W x 4.6 m H    arch (wall 3.1 m)           1,456
Vents/access from ramp to Van Dyke shaft     2        15   3.6 m W x 3.6 m H                 flat              30
Phase 1 decline                              1     1,141   4.6 m W x 4.6 m H    arch (wall 3.1 m)           1,141
Phase 1 vent/egress decline                  1       216   3.6 m W x 3.6 m H                 flat             216
Vent/egress raise                            1       401           3.0 m dia                 bore             401
Galleries                                   10        74   6.1 m W x 6.1 m H    arch (wall 4.6 m)             740
Phase 1 total excavation                                                                                    3,984
Phase 2 decline                              1     1,173   4.6 m W x 4.6 m H    arch (wall 3.1 m)           1,173
Phase 2 vent/egress way                      1        23       2.0 m x 2.0 m                 flat              23
Galleries                                   14        54   6.1 m W x 6.1 m H    arch (wall 4.6 m)             756
Phase 2 total excavation                                                                                    1,952
Combined total excavation                                                                                   5,936

Underground development will be completed using conventional drill and blast tunnelling techniques by mining contractors with appropriate ground support as required. Phase 1 of the underground development is contemplated to be completed during the preproduction phase. The mine plan is estimated to produce roughly 190,000 cubic metres of waste rock from the underground development that will be stored in a valley directly adjacent to the portal on land owned by Desert Fox.

Well field design/copper recovery plan

The copper recovery circuit has been designed to establish a closed system for fluid injection and recovery using a fan-pattern well field array to recover soluble copper. In this configuration, angled wells are advanced from underground galleries with an average well spacing of 21 metres between recovery holes within the deposit. The ratio of recovery wells to injection wells is 4:1 per array with an overall ratio of 1:1 with an estimated 1,925 injection and recovery wells required LOM.

Copper extraction and acid consumption

Chrysocolla, malachit, and azurite (all 100 per cent soluble) are the most abundant copper minerals in the Van Dyke deposit, with secondary copper minerals being chalcocite and native copper. An overall 76-per-cent Cu recovery (including plant efficiency of 95 per cent and preconditioning of the mineralized zone to ensure a high sweep efficiency) was used in the PEA. Leaching is carried out using a weak (five grams/litre) solution of sulphuric acid over a five-year period. Acid consumption is estimated to be approximately 1.5 pound acid/pound copper produced based on the current testing and historical leach test results.

Forecasted copper production

The base case contemplates 85 mlb/year (similar in scale to Taseko's Florence ISCR project) of Grade A copper cathode production that includes an initial ramp-up year (year 1) at 60 per cent of production capacity and a three-year (years 14 to 17) ramp-down period with reduced annual production at the end of mine life. Mine life is estimated to be 17 years.

The pregnant leach solution (PLS) recovered from the well field is pumped to the PLS retention pond on surface and then to the solvent extraction electrowinning (SX-EW) facilities for copper recovery. Reagents are added to the solution from the SX-EW plant to bring the solution to required operating concentrations and is then recycled back to the well field. No deleterious elements in the PLS were identified during the pressure leach tests conducted by Copper Fox.

Infrastructure

The project is located within the town limits of Miami, Ariz., with sewer, water, communications and power lines available. The administration, maintenance, warehouse facilities, the SX-EW facilities and truck scale are sited to take advantage of local topography, accommodate environmental considerations and ensure efficient operations. The processing facilities include:

  • Solvent extraction plant;
  • Electrowinning tank house and tank farm for auxiliary vessels;
  • Solution ponds to handle: PLS, raffinate, process water and emergency pond;
  • Water treatment plant;
  • Ancillary facilities including warehouse and maintenance shop;
  • Administration offices.

The ISCR operation is expected to operate with a net water surplus; however, if water is needed to support operations, it will be sourced from groundwater in the alluvium unit, which supplied water to historic leach operations.

Cost estimates

Initial capital, operating and sustaining costs are based on comparable projects in Arizona and quotes from suppliers where available. When information from comparable projects or from suppliers was not available, industry-standard inflation factors were applied where necessary.

Initial capital costs are defined as all costs incurred until commencement of copper production, including preproduction operating costs. The initial capital cost estimates are based on new construction costs and consists of direct and indirect cost factors. Factored estimates are used for codes A, D and E and all indirect costs. For codes B and C, detailed estimates are used.

                           CAPITAL ESTIMATE SUMMARY 
                   
WBS code                                     Description         Cost ($ 000)

A                                           general site               11,440
B                                         ISL well field                6,035
C                                     underground mining               49,676
D                                             processing               62,225
E                               buildings and facilities                9,750
PP                        preproduction operating costs*               22,287
Total direct costs                                                    161,413
X                                         indirect costs               48,827
Y                                          owner's costs               23,913
Total indirect 
costs                                                                  72,740
Z               contingency (30% of direct and indirect)               56,386
Total capital 
cost                                                                  290,539

* Indirect costs, owner's costs or contingencies are not applied 
to preproduction operating costs.

Contingency is included to cover undefined items of work within the scope of the project and is set at 30 per cent of direct and indirect costs.

Indirect costs

Indirect costs are calculated as a percentage of initial capital costs and captures charges that construction contractors might apply or include in their rates. The factors and estimated indirect costs are shown in the associated table.

                      INDIRECT CATEGORIES AND FACTORS        
  
Construction indirects -- per cent of direct costs                    15%
Spares -- per cent of processing costs                                 5%
Initial fills -- per cent of processing costs                          0%
Freight and logistic -- per cent of direct costs                       5%
Commissioning and preoperational start-up                       allowance
EPCM -- per cent of direct costs                                      10%
Vendors                                                         allowance
Taxes and duties                                                       3%

Sustaining capital costs

Sustaining capital costs are all capital expenditures incurred after commencement of copper production required to maintain annual copper production. Construction of a water treatment facility is included in the LOM sustaining costs outlined in the associated table.

                 SUSTAINING CAPITAL ESTIMATE SUMMARY        
      
WBS code                                    Description        Cost ($ 000)

A                                          general site                  $0
B                                        ISL well field              46,147
C                                    underground mining              23,903
D                                            processing               5,420
E                              buildings and facilities                   0
Total sustaining capital                                             75,470
                                                                $0.07/lb Cu

Operating costs

The LOM operating costs were developed using first principals and comparable estimates from similar-scale project in Arizona. Estimated total operating costs and LOM unit costs required to produce a pound of copper are shown in the associated table.


Operating costs                      LOM cost                      LOM  
                                        (000)                ($/lb Cu)

Drilling cost                         156,417                     0.14
Frac cost                              88,009                     0.08
Pump costs                             23,641                     0.02
Drill electricity                       5,106                     0.00
ISL well field acid costs              82,579                     0.08
Well field monitoring (KP)              7,540                     0.01
Pumping electricity costs             122,466                     0.11
Maintenance costs                     130,348                     0.12
Processing costs                      220,210                     0.20
G&A, off-site costs                   187,179                     0.17
Water treatment                        33,150                     0.03
Reclamation and closure costs          19,184                     0.02
Total opex                          1,075,830                     0.98

* All numbers are rounded following best practice principles.

All-in sustaining costs

All-in sustaining costs include total operating costs, royalties, severance taxes and sustaining capital costs as outlined in the associated table.

  

Cash cost category             Unit cost 
                                  ($/lb)

Total operating costs              $0.98       
Royalties                           0.07       
Severance tax                       0.02       
Sustaining capital costs            0.07       
All-in sustaining cost (AISC)       1.14       

Closure and reclamation

Closure and reclamation would be in accordance with the requirements set out in the state and federal permits required to develop and operate the project includes the following major activities:

  • Rinse the underground well field to restore groundwater quality within the mined area to levels specified in the project permits;
  • Buildings and other infrastructure, including the SX-EW plant, would be decommissioned, sold and removed;
  • Reshape the earth structures and disturbed areas to achieve long-term stability and protection against erosion;
  • Reshape the waste rock dump and construct vegetative cover;
  • Excess water, including well field rinse water, would be treated and released for two years following the cessation of commercial operations;
  • Decommission the water management structure;
  • Decommission the water treatment plant.

The estimated reclamation and closure costs are summarized in the associated table.


Reclamation and closure             Cost ($ 000)

Well field decommissioning                $4,434     
Infrastructure decommissioning            $4,043     
SX-EW decommissioning                     $3,180     
Water treatment plant decommissioning     $4,054     
Total reclamation and closure costs      $15,711     

Economic analysis summary

The economic analysis of the Van Dyke project has been performed on a 100-per-cent basis and derived from input parameters set out in the associated table. The pretax and posttax NPV and IRR for the Van Dyke ISCR project at various discount rates are shown in the associated table. The 7.5-per-cent discount rate has been chosen as the base case in line with other Arizona-based ISCR projects. The economic analysis includes recovery of capital, operating and sustaining costs, county, state and federal taxes, and royalties. Input parameters include three-year preproduction period, long-term copper price of $3.15/lb, 17-year mine life and five years for reclamation/closure and monitoring. Corporate income taxes are assumed to be 21.0 per cent for federal and 4.9 per cent for state.

The payback periods are 2.0 years pretax and 2.1 years posttax. The sensitivity of the pretax and posttax NPV to the discount rate is summarized in the associated table.


Rate                Pretax NPV      Posttax NPV         Pretax IRR       Posttax IRR

(%)                       $000             $000                (%)               (%)
5.0%                $1,030,565         $835,974              48.4%             43.4%
7.5%                  $798,963         $644,667              48.4%             43.4%
8.0%                  $759,934         $612,436              48.4%             43.4%
10.0%                 $623,480         $499,781              48.4%             43.4%
12.0%                 $513,253         $408,832              48.4%             43.4%

Net cash flow

The base case net free cash flow after recovery of all operating, capital and sustaining costs pretax is estimated to be $1,757-million and $1,436-million posttax.

Project sensitivities

The NPV and IRR are most sensitive to copper prices and metallurgical recovery, as illustrated in images on the company's website.

Qualified person

Mr. Stewart is the company's designated qualified person and has approved the scientific and technical disclosure in this news release.

The PEA has been prepared by Moose Mountain Technical Services. Each of the individuals listed below is an independent qualified person for the purposes of NI 43-101. All scientific and technical information in this press release is based upon information prepared by or under the supervision of those individuals, and each has approved the scientific and technical information in this release:

  • Susan C. Bird, MSc, PEng, Moose Mountain Technical Services;
  • Bob Lane, PGeo, Moose Mountain Technical Services;
  • Tracey Meintjes, PEng, Moose Mountain Technical Services;
  • Jim Norine, PE, Ausenco.

The technical report on the preliminary economic assessment of the Van Dyke project will be filed in accordance with NI 43-101 on SEDAR within the required 45-day statutory period and will be made available on Copper Fox's website.

About Copper Fox Metals Inc.

Copper Fox is a Tier 1 Canadian resource company listed on the TSX Venture Exchange focused on copper exploration and development in Canada and the U.S. The principal assets of Copper Fox and its wholly owned Canadian and U.S. subsidiaries, being Northern Fox Copper Inc. and Desert Fox Copper Inc., are the 25-per-cent interest in the Schaft Creek joint venture with Teck Resources Ltd. on the Schaft Creek copper-gold-molybdenum-silver project located in northwestern British Columbia and a 100-per-cent ownership of the Van Dyke oxide copper project located in Miami, Ariz.

We seek Safe Harbor.

© 2024 Canjex Publishing Ltd. All rights reserved.