Buyout thoughts

The main reasons in my mind we are experiencing a buyout delay are:

1) A buyout negotiation game of Mexican stand-off is going on: Elmer and EE know the "real" value of Schaft Creek and the potential of the NPV is undeniably greater than what the current BFS expresses.

2) There is no rush on Teck's part to negotiate a buyout or make a production decision because they know something about the permit and build timelines that doesn't require them to make a production decision just yet, or a buyout offer yet

3) There is still legitimate exploration to do before making the critical decision of how large the mine should be - a 'NPV impact' is potentially greater than that of the deferral of revenues caused by waiting for more exploration and studies.

Potential of Assays

http://agoracom.com/ir/CopperFoxMetals/forums/discussion/topics/592593-assay-potential-from-2013-drill-season/messages/1859621#message

Just re-read this as it explains the potential of the drill results that will be released in due time as Greg Waller announced, I do not feel like revisiting this concept again, but the results will positively surprise you!

Results will be coming in the next couple of weeks-end of the year IMO

I believe the 2013 results are ready and in the hands of Teck Resources as Teck specifically negotiated a "quality assurance review period" clause before they will release the numbers to Copper Fox Metals.

Resource Estimate upgrade

In 2011, Copper Fox completed a 8,000 metre Drill program in which our management team decided to revise the already "upgraded" resource at Schaft Creek. Let's remember the 2011 drill program has greatly increased the Paramount Zone in all directions and at depth: North, South, East, West. Now, before I look at what that 8,000 metre drill program discovered let us look at what the resource was before:

1.01 Billion tonnes in the M&I Category containing 6.1 Billion pounds of Copper, 383 Million pounds of Molybdenum, 5.8 Million ounces of Gold

283 Million tonnes of Inferred Resources containing 1.5 Billion pounds of Copper, 69 Million pounds of Molybdenum, 1.3 Million ounces of Gold, NO Silver content.

2011 Drill program commences and concludes:

1.23 Billion tonnes in the M&I Category containing 7.11 Billion pounds of Copper, 455 Million pounds of Molybdenum, 7.3 Million ounces of Gold, 66.7 Million ounces of Silver

597 Million tonnes of Inferred Resource containing 2.8 Billion pounds of Copper, 206 Million pounds of Molybdenum, 3.3 Million ounces of Gold, 31.6 Million ounces of Silver

So as you can witness, this was a huge increase in metal tonnage and resources. This represents an:

262% increase in the Measured Category,9% increase in the Indicated Category, 19% increase in the Combined M&I Category, and 100% increase in the Inferred Category.

To conclude this segment, I am basically explaining this 2013 drill program of 10,000 metres will significantly grow the already "gigantic" resource! OH WAIT, if we do a revised resource estimate/BFS we would also include the 2012 drill program that drilled the discovery and Mike Zones. If the rumours are correct regarding Teck thinking about a "Meta Pit" then the Schaft Creek resource would be astronomical. If a 8,000 metre drill program in 2011 grow our resource by that great of a percentage gain then I believe the 2013 10,000 metre program will continue this trend of a growing deposit at Schaft Creek.

Schaft Creek will be a Mine

The logic to me is undeniable. It did not take Teck Resources and Copper Fox 6 months to discuss the ownership and earn-back agreement, but rather a sale of purchase to obtain 100% ownership of the SC asset. It is obivous a "fair-value" price could not YET be established therefore the commencement of a 2013 drill program which is what I wanted anyways to be honest. The "business drivers" to make Teck move forward in a timely fashion are important factors in advancing Schaft Creek. Apparently, the major issue with current shareholders is time to when a buyout will occur rather the amount of the buyout. I understand time is a problem as some here have been invested with this company now for 6-8 years but if the time is not right to sell then so be it. I personally want maximum value from this investment. In relation to that, the time to sell should be nearing for us, and hopefully the wait is not much longer. I am willing to wait 2 years for maturity such as a new Resource and revised BFS that will reflect the real value of the Schaft Creek economics IMO. The debate surrounding the NPV is a joke! First off, Schaft Creek is one of the most cleanest deposits in North America, and I have no doubts in my mind that this is going to be a future mine. The fact that Teck decided to take controlling interest of 75% in the deposit and is now the operator of the project spending over 20 Million this year alone just solidifies my beliefs. Now, understadning this will be a future mine as Elmer too believes we should be using 5% discount rate in determining value as Schaft Creek as this is one of the most cleanest deposits around IMO. Put it this way, if Schaft Creek does not become a mine with STRONG FIRST NATIONS support, no deposit in Canada has a standing chance of mineral extraction and mine development. IF one was to believe that statement get your money out of the resource industry asap and I am not even joking around.

The case surrounding the NPV/Economics

The NPV is going to be HUGE once all the dust has settled and the below revisions come into affect, and the current numbers are restricted and should not even be contemplated as fact/truth, let the evidence speak to the truth in realizing the "real" value of Schaft Creek:
1) The 171MT waste rock as a cost rather generating ore (Huge difference in revenue streams once that is corrected/confirmed)
2) The M&I Category outside the Pit Shell
3) Currency rates (Elmer himself told me this makes a huge difference in economics of SC. The Canadian dollar is down a good amount since BFS was created).
4) Improvements in metal recovery rates (Huge possibility this could be true)
5) Increased rate of mill production (added metal production per day adds value)
6) Longer-term life cycle: life of the mine will be dramatically increased in a new BFS (added years of revenue to the deposit)
7) 2012 and 2013 drill programs: The "district" theory: Teck's potential idea of a Meta Pit including the Mike zone and Discovery Zone which have very high-grade silver: Game-changing. Drill cores have not yet been incorporated into a revised Resource/BFS! (This is another huge difference as those assays would bring the overall grade of SC higher and added metal tonnage...Greatly changing the size and scope of SC).

8) Higher Metal prices (The SC economics would be astronomical once the metal values uptrend...very important to understand this)

So, if you observe the above 8 factors, this would positively impact the NPV of Schaft Creek, we are looking at potentially over 8 Billion NPV at 5% discount rate using the ROV Method IMO. These numbers are my assumptions and opinions for the record. Teck should be secretly salivating and simply cannot further defer the mine-build decision and hence further defer the enormous revenues Schaft Creek would bring them, even if with just 75%.

The current handicapped BFS states 2665M NPV at 5% discount of the R.O.V (Real Options Value) method which Elmer believes a deposit such as Schaft Creek should be considered for as a method to calculate the real worth/value.

I will conclude this message with this thought in your mind, when I asked Elmer about Schaft Creek's "MONETARY VALUE" he stated:

"Unfortunately I am not allowed to comment on these matters. If you look at comparable transactions for large copper projects (in the past) Schaft Creek is worth more. The current market is very slow which strongly suggests that now is not the time to think of selling our interest in Schaft Creek, after the 2013 results are known and if the valuations pick up, then would most likely be a better time to)" (Elmer quote)

Thanks,

YM