Copper is a key commodity used to power the world’s clean energy future and Copper Fox Metals Inc (TSX-V:CUU, OTCQX:CPFXF) is well-positioned to reward its shareholders with interests in two promising advanced-stage and three exploration-stage copper projects in Tier-1 North American mining jurisdictions.
Copper Fox president and CEO Elmer Stewart has over 44 years of domestic and international experience in mining and exploration for gold, uranium, base metals and copper. During his career, he has been involved in the financing, acquisition and exploration of base metal and gold projects as well as the development and construction of two underground mines and the construction and operation of three open-pit gold mines.
Stewart was instrumental in diversifying the company’s project portfolio throughout North America, led the 2013 Feasibility Study on the Schaft Creek project and was directly involved with negotiating the Schaft Creek Joint Venture Agreement with Teck Resources Limited. Stewart negotiated the acquisition of the Van Dyke and Sombrero Butte projects and supervised the work to advance the Van Dyke project from exploration to an advanced-stage project.
More recently, Stewart recognized the mineral potential of the area comprising the Mineral Mountain project and recently negotiated the acquisition of the Eaglehead porphyry copper project. In 2020 and 2021, Stewart led the Preliminary Economic Assessments (PEAs) of the Van Dyke and Schaft Creek projects that resulted in substantial increased project valuations.
With approximately 35 years of experience at the senior management level for various companies listed on the TSX and TSX Venture Exchange, he is currently the chairman, CEO and president of Copper Fox, a director of Liard Copper Mines Ltd, and represents Copper Fox on the Management Committee for the Schaft Creek Joint Venture.
In an interview, Stewart explained to Proactive why he believes the company could be on the verge of discovering a large porphyry copper resource on some its projects and outlined plans to advance other projects along the value chain.
Proactive: Of your two advanced-stage projects, Schaft Creek and Van Dyke, on which one will your company focus the majority of its efforts?
Elmer Stewart: The Schaft Creek project is a joint venture which is 75% controlled and operated by Teck Resources Limited with Copper Fox owning 25%. Teck as operator is responsible for the planning and execution of annual programs and is also required to fund these programs. The joint venture has budgeted C$6.6 million for the 2022 program, which is three times higher than its planned 2021 expenditures.
Van Dyke is Copper Fox’s other advanced-stage project. This project is 100% owned and operated by Copper Fox. Currently, we are waiting for recommendations from Ausenco Engineering, our hydrogeological consultants, for their recommended 2022 program. I want to have our resource consultants look at the locations of the proposed hydrogeological holes to determine if these locations could be used to expand the resource base of the project. Previous studies have shown that the resource envelope is open to the southwest. Copper Fox is bringing together all disciplines to prepare a multi-purpose program that achieves the hydrogeological objectives while at the same time collecting data that could be used to expand the resource base, provide samples for metallurgical testing and geotechnical information as we advance the project.
This approach is more capital efficient and provides substantially more information from a single drill hole. With the Schaft Creek project operated by Teck, Copper Fox would focus the bulk of its efforts on Van Dyke when dealing with our advanced-stage projects.
What is it about these projects and their geology that makes you think they can eventually be put into production?
First and foremost, the results of the 2021 PEAs on both projects. The enhancements identified in both studies suggest more value could be added based on positive results from detailed investigations of the enhancements. If you look at Schaft Creek, for example, the PEA only used 60% of the established resource base in the first 21-year life of the mine pit. The balance of the resources exposed in the pit walls provides optionality either to increase the throughput north of 133,000 tonnes a day or increase mine life.
Additionally, the 2021 drilling at Schaft Creek intersected several near-surface zones of higher-grade copper-gold mineralization, which is encouraging.
At Van Dyke, the 2014 and 2020 resource estimations indicate that the resource envelope is open for expansion to the southwest, which if achieved by additional drilling has implications for potentially increasing annual production or increased mine life.
Both projects have indications that their resource base could be expanded through further drilling. As well, the capital intensities, all-in-sustaining costs, and existing infrastructure are also favourable indicators.
What still needs to be done to advance these projects towards production and what is the timeline?
The PEAs for both projects recommended advancing these projects to the preliminary feasibility study (PFS) stage. This exercise would not only increase project certainty but could increase project valuation. As these projects are advanced, both Teck, as operator of the Schaft Creek joint venture, and Copper Fox, as operator of the Van Dyke project, need to ensure that the quantity and quality of the data acquired, as these projects are advanced, is sufficient to meet the requirements of a PFS.
The Schaft Creek and Van Dyke projects contemplate different production procedures and facilities. Van Dyke is classified as an in-situ copper recovery (ISCR) project and, as such, the work required to advance the project to the PFS stage is different than that required at Schaft Creek. To advance an ISCR towards production, a UIC Class III permit is required, which includes development of a hydrogeological model for the project, hence our plan to prepare a multi-purpose program for the Van Dyke project.
As for construction timelines, the PEA for the Schaft Creek project used five years, which when you think about it is a reasonable timeframe given the scale of the project. The Van Dyke PEA used a three-year build period, after obtaining a Class III permit. My preference would be to advance the projects to the PFS stage, which at Van Dyke would include collecting the hydrogeological data to develop the hydrogeological model required to enter the permitting process.
Of your exploration-stage projects, which one do you think shows the most promise and why?
To be honest, I like them all. Our approach is to acquire projects that could potentially host large copper deposits. Copper Fox has 100% of Sombrero Butte, Mineral Mountain, and Eaglehead – all of which have very large porphyry footprints, the right age rocks, exhibit the chargeability signatures, mineralization and alteration patterns you would expect to see in a porphyry copper system.
Eaglehead would be the most advanced of the three exploration stage projects. Historical exploration activities show 120 mineralized drill holes out of 126, four open-ended zones of porphyry-style mineralization and very positive metal recoveries based on preliminary metallurgical testwork.
The Sombrero Butte and Mineral Mountain projects have recently completed airborne geophysical surveys, which should be beneficial in optimizing future drill hole locations. For example, at Mineral Mountain the porphyry footprint is 4,500 meters long by 2,000 meters wide, and inside that is an open-ended chargeability anomaly that's 2,900 meters long by 1,300 meters wide. The question from an exploration point of view is where in that size of a footprint do you put your first drill hole? These projects have the characteristics of large porphyry systems, which suggest potential to make, if you're fortunate enough, a new porphyry discovery.
Finally, what do your shareholders have to look forward to in the next 12 to 24 months?
Copper Fox expects to have an exciting 12 to 24 months ahead of us because we're advancing all our projects. Clearly, positive drill results from Schaft Creek would be beneficial as the joint venture is focusing on the first five-year pit outlined in the 2021 Schaft Creek PEA. Also, positive drill results from the Eaglehead project could move the project toward a resource estimation. The proposed program for Van Dyke is not ready yet, as we're still waiting for some input from some of the project’s contractors.
Exploration results from Sombrero Butte and Mineral Mountain could inform drill target selections as we advance these projects to the drilling stage. So, overall, for the next 12 to 24 months we’re anticipating significant news flow.
Contact Sean at sean@proactiveinvestors.com