Agoracom: Small Cap Investment - Copper Fox Metals Inc.

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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%)

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MoneyK

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SC analysis based on NPV

posted on Feb 03, 2022 02:32PM

I modeled different scenarios trying to breakdown the value of SC and the rest of our JV.

All numbers to the best of my knowledge.

Results as follow:

Table 1 - No carried-interest - Assumes FCF of $400M US per year after 21 years.

	Scenario 1	Scenario 2	Scenario 3	Scenario 4
Mine life	21	35	50	100
NPV (8%) - 100%	$846	$1,272	$1,423	$1,490
NPV (8%) - 25%	$211	$318	$356	$372

Table 2 - Carried-interest - Assumes FCF of $400M US per year after 21 years.

	Scenario 1	Scenario 2	Scenario 3	Scenario 4
Mine life	21	35	50	100
NPV (8%) - 25%	$334	$440	$478	$495

Table 1 is considering capex and the Free Cash Flow's (FCF) (to the best of my eyes) from the 2021 PEA.

Table 2 is only calculating the stream of cash flow after 100% payback, which is conservative, as I believe a certain percentage per year is still payable to the SCJV before payback.

For me, the delta between both methods is the additional NPV (8%) coming from the carried-interest.

Based on these results, most of the additional value seems to come from the reserves already proven that could last 35 years. After that point, even if SC would operate up to 100 years, it would only increase the NPV (8%) by about $65M.

Summary - Breakdown of a possible SC valuation (25%) with copper at $3.25 US - ($M)

NPV (8%) - 21 years of mine life	$211
NPV (8%) - 22-35 years of mine life (all reserves)	$107
NPV (8%) - 36-50 years of mine life (potential)	$38
NPV (8%) - 51-100 years of mine life (potential)	$17
NPV (8%) - Incremental from the carried interest	$122
Subtotal (USD)	$495
Plus:
Incremental (USD) for every LT copper increase of $0.25 US	$64
Incremental (USD) for every 10% increase in FCF	$49
Incremental (USD) for construction timeline reduction (per year)	$25
Milestone payments (CAD)	$40

Minus:
Discount for every year left before a sanction decision