Welcome To the Copper Fox Metals Inc. HUB On AGORACOM
CUU own 25% Schaft Creek: proven/probable min. reserves/940.8m tonnes = 0.27% copper, 0.19 g/t gold, 0.018% moly and 1.72 g/t silver containing: 5.6b lbs copper, 5.8m ounces gold, 363.5m lbs moly and 51.7m ounces silver; (Recoverable CuEq 0.46%)
Message: My ROFO proposition
Highlights of the QB2 Sumitomo transaction.
| Sumitomo Transaction | ||
| QB2 2019 LT copper price | 3.00 | 3.25 |
| Estimated total contribution by Sumitomo for a 30% interest in QB2 @sanction decision (in 2019 $M USD) |
1500.00 | 1500.00 |
| QB2 EBITDA (100%) First 5 Full Years ($M) Ref. Reserve Case |
1000.00 | 1200.00 |
| QB2 EBITDA (30%) First 5 Full Years ($M) |
300.00 | 360.00 |
| EV/EBITDA ratio | 5.00 | 4.17 |
Here's how I would (more or less) structure a win-win transaction with Teck. All numbers are in USD.
1) Teck choses one of the options below.
| Options | 1 | 2 | 3 |
| LT copper price (lb) | 3.25 | 3.50 | 3.75 |
| SC EBITDA (100%) First 5 Full Years ($M) Ref. 2021 PEA |
695 | 755 | 815 |
| SC EBITDA (25%) First 5 Full Years ($M) |
174 | 189 | 204 |
| Estimated total contribution by Sumitomo for a 30% interest in QB2 @sanction decision (in 2019 $M USD) |
1500 | 1500 | 1500 |
| QB2 estimated EBITDA for a 30% interest* ($M) Ref. Reserve Case |
360 | 330 | 300 |
| Equivalent valuation ($M) for a 25% interest in SC @sanction decision |
724 | 858 | 1019 |
| Estimated number of years left before a sanction decision |
2 | 2 | 1 |
| Discount rate per year pre-sanction decision |
15% | 12% | 8% |
| Current valuation for 25% of SC (2022 $M US) |
548 | 684 | 943 |
| Payment terms | Shares and/or cash | ||
| * Option 1 assums a QB2 transaction based on LT copper at $3.25 * Option 2 assums a QB2 transaction based on LT copper at $3.13 * Option 3 assums a QB2 transaction based on LT copper at $3.00 |
2) Depending on the option chosen, additional payments to Copper Fox would apply per the below.
| Additional payments to Copper Fox | ||
| Payable annually during the First 5 Full Years of production | ||
| 1 | 2 | 3 |
| 25% of the incremental EBITDA vs. the SC 2021 PEA up to $3.75 US copper |
12.5% of the incremental EBITDA vs. the SC 2021 PEA up to $3.75 US copper |
N/A |
| 12.5% of the incremental EBITDA vs. the SC 2021 PEA above $3.75 US copper |
6.25% of the incremental EBITDA vs. the SC 2021 PEA above $3.75 US copper |
N/A |
3) Additionally, all milestone payment would still be paid per the current SCJV agreement.
Conclusion:
With this structure:
- Teck can elect to pay less now in exchange of Copper Fox getting more upside in the future.
- Copper Fox can get fair value regardless the option chosen and we could finally move forward with our other projects.
IMO.
MoneyK
8 Recommendations
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