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An example of how the Teck earn-back option works based on the assumption that Teck elects to exercise either 20%, 40% or 75% earn-back is set out below. This example assumes that Copper Fox has incurred a total of $75.0 million of qualifying expenditures pursuant to the Option Agreement at the time Teck makes its election.
Copper Fox Expenditure
As per Option Agreement__________Earn-Back Percentage
________________________________Elected by Teck___Multiple of Copper Fox
_______________________________________________Expenditures Required_____Capital Expenditure required by
___________________________________________________From Teck____________Teck to Complete Earn-Back
| 75,000,000 |
20 |
100% |
75,000,000 |
| 75,000,000 |
40 |
300% |
225,000,000 |
| 75,000,000 |
75 |
400% |
300,000,000 |
Copper Fox holds title and a 100% working interest in a contiguous 21,024.96 hectare (51,954 acre) property which includes the Schaft Creek deposit subject to a 3.5% Net Profits Interest held by Royal Gold, Inc., a 30% carried Net Proceed Interest held by Liard and an earn back option held by Teck Resources Limited ("Teck"). Copper Fox is currently earning a 78% interest in Liard from Teck. Teck's earn back option to acquire 20%, 40% or 75% of the Copper Fox interest in the Schaft Creek project is triggered upon completion of a positive feasibility study. Should Teck elect to exercise its option for 75% they are required to fund subsequent property expenditures up to a total of 400% of those incurred by Copper Fox ($74.2 million as of December 1, 2011) and arrange for project financing, including the Copper Fox portion. For full details of the option please refer to the Company's website www.copperfoxmetals.com.
