You’ve probably heard or peak oil but have you heard of peak copper? The difference between peak oil and peak copper is that copper is recycled and reused. It has been estimated that at least 80% of all copper ever mined is still available above ground. Peak copper, in theory, is the point in time when the maximum global copper production rate is reached. Since copper is a finite resource, at some point in the future new production from the earth will diminish. When this will occur is very much a matter under dispute but, lately, the debate over peak copper has been adding fuel to the copper frenzy. One Canadian listed company that plans on adding to the global supply of copper is Copper Fox Metals.
Copper Fox listed on the TSX Venture Exchange in June 2004 to explore the potential of the Schaft Creek deposit in Northern British Columbia, Canada. Schaft Creek deposit is an undeveloped copper-gold-molybdenum-silver that was owned by Teck-Cominico (now Teck Resources) that was optioned by Guillermo Salazar, the company’s founding president and CEO, in 2002. Pursuant to the option agreement, Copper Fox can earn a 78% interest (23.4 % of the deposit) in Liard Copper Mines Limited by completing a “positive” feasibility study. Teck maintains certain earn-back rights on receipt of a “positive” bankable feasibility study.
The recent approval of the Northwest Power Line by B.C.’s Provincial government was always considered a key component of the projects viability. BC Hydro performed technical studies on the project for years and advocated the new line would provide a reliable supply of clean power to potential industrial developments in the area. But, as is often the case with such mega-projects, environmental opponents were vocal.
Finally, on February 23rd, 2011 the BC Environmental Assessment Office announced that the Northwest Transmission Line was finally granted an Environmental Assessment Certificate. Copper Fox put out a press release applauding the decision and the company’s shares made a dramatic move from $.96 cents on February 11th to $2.70 a few months later. Shares of Copper Fox have subsequently pulled back from their April highs to the $2.00 range. MiningFeeds.com connected with Copper Fox boss Elmer Stewart recently to discuss the significance of the Northwest Power Line and the company’s future.
You joined Copper Fox as Chief Executive in 2009, when you were doing your own due dilligence what was it about the Schaft Creek project that caught your attention?
I joined Copper Fox as President and CEO in July 2009. Prior to that I was a director of the Company and non-executive Chairman of the Board. I have always been excited about the size of the resource, its polymetallic nature, metallurgical recoveries and the general setting of the deposit. The reported low grade nature of the Schaft Creek deposit was clearly a function of the low cut-off used to report the resource which I saw as a positive. Using a higher cut-off grade clearly reduced the resource, but provides higher average metal grades. The ability to balance average grades and resources is fundamental in mine development. Another aspect was that developing mines and specifically open pit mines in mountainous terrain depends on the ability to have space for the infrastructure and waste piles associated with mine development. Schaft Creek possessed all these features.
In February the British Columbia government approved the “Northwest Transmission Line” which, when completed, will provide you with the power reguired for the project – tell us a bit about what this means to Copper Fox?
The NTL is fundamental to the development of the large copper deposits located in northern British Columbia including Schaft Creek. Without this supply of electricity, the capital and operating costs would increase which directly impacts the economics of these deposits. The NTL is also good for the residents of northern British Columbia in that it brings environmentally friendly energy to the region and opens the area up to development for other business enterprises as well.
The company has a relationship with Teck, Canada’s largest diversified mining company, can you explain the significance of this relationship to our readers?
Teck has an earn-back right pursuant to the Option agreement entered into in 2002. We have been working with the senior technical people from Teck since early 2010 when we announced that we were proceeding to complete a feasibility study on Schaft Creek. The purpose of engaging Teck early on in the process of completing the feasibility study was to have their input into the feasibility study that is required to allow Teck to make their decision as to their participation in the Schaft Creek project. Teck’s experience in operating open pit mines of the size of that contemplated at Schaft Creek is valuable information that helps makes the feasibility study a realistic and practical study in the contexts of developing the deposit.
In terms of comparables, are there other projects in Canada that compare to the Schaft Creek project in terms of size, grade and composition?
Schaft Creek is a very large project and possibly the largest one in Canada that is undergoing a feasibility study. The work completed in 2010 suggests that a substantial portion of the Schaft Creek deposit has not been tested by drilling. In addition the nature of porphyry deposits suggests that there should be other similar deposits within the same general area. The two large zones of copper mineralization exposed on surface and the large untested chargeability anomaly may represent one or more deposits. Of course exploration will need to be completed to confirm this interpretation. At this time, we do not know what the ultimate resource could be at the Schaft Creek property so it is difficult to make a comparisson with other deposits. But given the geophysical and geological information, I suspect that Schaft Creek may be much larger than the our resource estimation completed in late 2006 suggests.
With a deposit containing copper, gold, molybdenum and silver, please comment of the econimic associated with the project?
The preliminary feasibility study completed in September 2008 showed a -$0.32 to produce a pound of copper net of the sale of the gold-molybdenum-silver credits. This was based on metal prices of $3.12/pound copper, $692/oz gold, $33.00/pound molybdenum and $13.09/ozs silver. The current metal prices for three of the four metals are substantially higher than those used in the 2008 calculations and this increase/decrease will be included in the feasibility study currently underway. The sale of four metals from each tonne of rock processed show the economic impact on the cost to produce a pound of copper which substantially impacts the overall economic performance of Schaft Creek.
What major milestones is Copper Fox working towards completing in 2011?
Our near term major milestones are; to complete the updated resource estimation which is expected to be completed shortly, commence the 2011 program at Schaft Creek before the end of May and complete the balance of the work required to complete the feasibility study as soon as possible. A substantial amount of work has already been completed on the feasibility study to date. Due to the large amount of technical data and studies that need to be performed it’s not easy for the independent contractors working on the feasibility study to give Copper Fox a specific date on which the study would be completed. One of our main objectives at Schaft Creek in 2011 is to test the three targets identified above – any one of which we believe could be another previously undiscovered deposit.
This interview appeared in 10 Base Metal Stocks to Watch – Part 4 – CLICK HERE – for the article.