Copper Fox raising cash for Schaft Creek

Calgary-based Copper Fox Metals (CUU-V) will try to raise $3.5 million in flow-through and non-flow-through funds to further finance operations at its Schaft Creek project in northwestern British Columbia.

The financing has two components; the flow-through component of this offering will be in the form of common shares at a price of 30 per share (up to 60% of the total offering). The Unit component is set at a price of 23 per unit, which is comprised of one share, and one half common share purchase warrant. Each full share purchase warrant will entitle the holder to acquire one additional share of Copper Fox at an exercise price of 35 for a period of 18 months. The company expects financing to close in December 2005.

For Copper Fox’s president and chief executive, geologist Guillermo Salazar, the company’s activities on the Schaft Creek property come after decades of casting a longing eye at it.

Salazar learned of the project in the 1970s when Teck Cominco (TEK.MV-T) was doing feasibility studies there.

In 2002, with copper and gold prices low and the political situation surrounding mining in British Columbia still uncertain, Salazar was able to get an agreement with Teck Cominco whereby Copper Fox can attain roughly 93% of the property. Attached to that is a condition that allows Teck to buy back the property within 120 days after Copper Fox finishes its feasibility study.

Last year Copper Fox completed 3,000 metres of wide-diameter drilling. Salazar says test results confirm Teck Cominco’s feasibility study on copper, but returned gold grades 30% higher. Salazar says the increase is due to the wider diameter core used by Copper Fox.

Shaft Creek’s measured and indicated resource is currently at 307 million tonnes with an average grade for copper of .37%, and molybdenum .02%. The orebody also contains gold at .27 grams gold per tonne and silver at roughly 2 grams per tonne.

The plan is build an open-pit mine with a strip ration of 1.15:1. That ratio would be lower with current copper and gold prices, Salazar says. Resources and strip ratios were calculated using a copper price of 85 and a gold price of $325.

Salazar says it will cost between $400 to $500 million to bring the entire property into production. The company’s plan is to mine the higher-grade ore first to generate cashflow. Cash that will in-turn be used to mine the rest of the resource.

Salazar says the 307 million tonne resource is just 8% of the total 3.5 billion tonne resource that preliminary tests infer an average of .22% copper.

For now Copper Fox is focusing on securing financing so that a 9,000 metre drill program (3,000 of that larger diameter core) can begin in late February of 2006.

The geologist in Salazar would like to see $6 to $10 million in financingfor capital expenditures in the coming year. However, Salazar concedes the company will be shy of that. It will however have the funds in place to comply with the first term of the deal with Tech Cominco.

“But we want to be a lot further a long,” Salazar says.