Copper Fox Metals

Copper Fox Metals is a small fish in a big pond. Investors have been waiting a long time, but it look like 2012 might be the year things happen.

The Schaft Creek deposit in northern B.C. was explored by various parties since the 50′s. For the last several decades, it was in the hands of Teck and its predecessors. It’s a porphyry deposit, which means gold is dispersed in a former lava flow which picked it up from somewhere. As with most porphyries, Schaft Creek was large but low grade, therefore it sat around and received limited exploration while ‘better’ mines got the go-ahead.

With grades of 0.27% copper, you can see why. But on flip side, it’s also very, very big. The limits of what is considered the deposit contain 1.3 billion tonnes of rock which is the same size as a cube of 700 m x 700 m x 700 m (the deposit isn’t a cube of course). This is not quite on the scale of the biggest mines of the world, but it might be top 10.

So to continue the story, in 2003, a Calgarian, harvard educated geologist who worked on the property in the 1970′s, Guillermo Salazar, decided to make Teck an offer. The basic gist of it is, if he could prove the economics of the deposit, and Teck would want to build the mine, he (or technically, his company) would get 25%. Teck accepted and thus Copper Fox Metals was born.

Salazar has since retired and a new CEO has taken over, but the objective still remains. The agreement says that after Copper Fox produces a feasibility study, Teck has 120 days to decide whether to “back-in” for 75%. There are several other levels of back-in, for 60% and 40%, but I’m not sure why Teck would want to do that. I believe it will be 75% and build the mine or walk away.

Unfortunately, the recession caused a slight delay in progress, but things are firing on all cylinders out at Schaft Creek now. Tetra Tech WEI, the engineering consultant for the feasibility study, says it will be ready by the end of March 2012. Last year saw a big delay from one of the other engineering consultants but they are no longer working on the project.

I, as an engineer, have scrutinized the project in depth and I believe that Schaft Creek will be a mine. I have compared it to other mines, read the scoping study and feasibility study, analyzed the metal price sensitivities, and I am confident that when a decision needs to be made, it will be a positive one.

I have already made money handsomely on this stock, having invested again at the bottom of the recession. My original target was $10.00 before the major financing at the bottom of the recession, which is equivalent to $3.00 now. So my target is $3.00.

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