Haywood has been buying lots of CUU shares lately....don`t know if this is the same company but found this interesting......its near the bottom of the press release.

Teck avoids C$400m Schaft Creek spending commitment in new JV

Teck cut a new deal with Schaft Creek with Copper Fox Metals that sees it acquire a 75-percent interest in a copper-gold mega project in British Columbia

Author: Kip Keen
Posted: Wednesday , 17 Jul 2013

HALIFAX, NS (MINEWEB) -

More up front cash, but a shorter piggy-back ride on a copper-gold mega project in BC. That sums up a revised joint-venture agreement between Teck and Copper Fox Metals over Copper Fox's Schaft Creek project, about 80 kilometres south of Telegraph creek.

Teck is to gain a 75-percent interest in Schaft Creek, as envisioned in a 2002 option agreement, but on new terms that lessen its share of spending commitments while giving Copper Fox a cash infusion at time when dollars are scarce for juniors.

In the old agreement Teck was - for a 75 percent interest - to have to carry Copper Fox through project expenditures that equaled four times what Copper Fox had spent on Schaft Creek up until it finished a feasibility study, which it did last year. As Copper Fox has spent about C$88 million on the project so far, according to a company spokesperson who did want to be quoted, such a commitment would now run close to C$400 million for Teck.

The new agreement, however, cuts down the piggy-back ride to the C$60 million mark for the 75 percent interest. But it also adds some cash to the mix that was not in old agreement. Now Copper Fox gets C$24 million, having signed the deal, with C$40 million more to come: C$20 million if Teck reaches a production decision and another C$20 million if the project is built.

Meantime, as in the old agreement, Teck maintains a promise to fund Copper Fox's spending responsibilities if Copper Fox can't source needed cash, both for development and construction, without diluting its 25-percent interest. Teck agreed it would loan Copper Fox funds at prime plus two percent and recoup the debt from potential profits, according to terms of the agreement filed on SEDAR.

The Copper Fox spokesperson confirmed there was no clause in the agreement that forced dilution on Copper Fox if it can't meet its spending responsibilities.

What would become of the joint venture has been a matter of speculation in recent months. Teck had a back in right per a 2002 option agreement that - after Copper Fox produced a feasibility study - gave it 120 days to decide if it wanted to acquire as much as a 75 percent stake in Schaft Creek. It released the study in December and filed it in early February this year.

When the clock stopped ticking earlier this year, Copper Fox said June negotiations were still unfolding but that there was no guarantee an agreement would be made.

Clearly, though, getting an a deal with Teck - or the likes of Teck - was crucial for Copper Fox and any production future for Schaft Creek. The estimated cost to build it as a 130,000 tonne per day mine is about C$3.3 billion, according to Copper Fox's 2012 feasibility study. Developing and financing such a major project would be more or less impossible for a junior going it alone.

Now Teck is on board, but it is unclear how much of a priority Schaft Creek will be for it especially at a time most majors are paring back on spending. A Teck spokesperson could not be reached for comment at presstime, and there was little to glean from official statements about a project timeline.

Teck stated it would do a 10,000-metre drill program at the project this year and in a Copper Fox press release, Dale Andres, Teck senior vice president of copper, is quoted as saying, “We are pleased with the progress they have made and believe they will continue to be a valuable partner going forward.”

In a prepared statement, Copper Fox President and CEO Elmer Stewart said, “with Teck's expertise in the development and operation of large mining projects and strong commitment to responsible mining we are confident the Schaft Creek project will continue to benefit the Tahltan people, local communities and shareholders.”

Teck's move caught one base metals analyst by surprise. Haywood analyst Stefan Ioannou, who does not cover Copper Fox, said he had not expected Schaft Creek economics to entice Teck. Last year Copper Fox projected a 10.1 percent internal rate of return, a $513 million net present value at 8 percent discount and a 6.5 year payback on the project assuming $3.25 per pound copper and $1,445 per ounce gold.

“To the company's credit they were able to get a joint venture done,” he said, noting Copper Fox did the deal during a particularly rotten market for juniors.

Ioannou said he viewed Teck's move to maintain a hold on Schaft as part of a longterm strategy to have the option to develop Schaft Creek so long as copper prices go higher than they are currently. In the near term, he said “I would be surprised if it jumps to the front of the development line for Teck.”

He added, “but who knows, Teck could turn around next year, or sometime, and say it's a priority.

Like I said , dont know if it is the same Haywood on a buying spree for CUU shares but if it is....maybe they know something we dont?