Corrected resource estimate boosts Copper Fox 14% (July 16, 2007)

Vancouver — After a faulty resource estimate prompted a 35% drop in share price and forced the company to halt trading for almost a month, Copper Fox Metals (CUU-V, CPFXF-O) is on the rise again with a corrected estimate for its Schaft Creek project, in northwest B.C., that shows a 41% increase in measured and indicated resources.

In early May, Copper Fox released an estimate that showed increased copper and gold resources at Schaft Creek compared to a 2004 estimate, but indicated 7% decreases in both molybdenum and silver resources. Copper Fox’s share price, which had been sitting at a record high of $1.54, plummeted to $1.00 over the following week.

On June 11, the company requested a halt on trading, announcing that the consultant company, Associated Geosciences, made a mistake in the formula used to calculate the copper-equivalent cutoff grade. As a result, Copper Fox president and CEO Guillermo Salazar said that the “classification of resources is understated.”

Copper Fox stock was halted until the copper-equivalent values were recalculated, which took most of a month. In early July, the company released a corrected estimate with trading resuming the next day.

The new estimate shows measured and indicated resources of 1.39 billion tonnes averaging 0.25% copper, 0.18 gram gold per tonne, 0.019% molybdenum, and 1.55 grams silver at Schaft Creek, using a 0.02% copper-equivalent cutoff. The new tonnage and grades represent increases of 27% copper and 33% gold compared to the 2004 estimate, as well as the notable increases of 48% molybdenum and 23% silver — in contrast with the 7% decrease in molybdenum and silver resources that the erroneous estimate had indicated.

The stock quickly bounced back, up 14% on 3.3 million shares traded, to close at $1.21.

“We didn’t exist yesterday and now we do — it seemed like an eternity,” Salazar says.

“In a nutshell, the new estimate confirms what we expected — we had been kind of shell-shocked about the previous estimate,” Salazar says. “When we realized these were the real results, we immediately changed some plans. We’re thinking about some much bigger plans for the mine now.”

Schaft Creek was first discovered in 1957. It passed through several hands including Asarco and Hecla Mining (hl-n) before being sold to Teck Cominco (TCK.B-T, TCK-N) in 1978. Teck drilled 26,000 metres on the site and conducted engineering studies, but the project fell to the wayside. Copper Fox entered into an option agreement with Teck in 2002 to earn up to a 93.4% direct and indirect interest in the property. By the time Copper Fox entered the scene, Schaft Creek had already seen 60,200 metres of diamond drilling.

Copper Fox is currently working on a scoping study to evaluate an open-pit mine at Schaft Creek. The company had envisioned a minimum capacity of 65,000 tonnes per day over a mine life of 30 years.

Copper Fox is conducting metallurgical and engineering work for the scoping study, as well as completing environmental work for the permit process and consulting with the Tahltan Nation, a local native group.

“We opened camp in early May, and we are expanding,” Salazar says. “We have two drills working away there, and a third drill coming in soon.”

The company has also added a third helicopter to help complete the environmental work it is doing.

Copper Fox can earn a 70% interest in the property by spending $15 million by 2011, $5 million of which it has already spent. The company can earn another 23.4% interest from Teck by delivering a bankable feasibility study. Teck is entitled to a 1% net smelter return or Copper Fox shares worth $1 million, or it can exercise a back-in option for up to 75% of the project.