Copper Fox Metals Inc. press release

Copper Fox Announces Schaft Creek Preliminary Economic Assessment

2021-09-20

TSXV - TSX Venture Exchange · Copper · Gold · Molybdenum · Silver · Canada · Technical Studies

After-Tax NPV8 US$842.1 million (C$1.1billion); IRR 12.9% Pre-Tax NPV8US$1.4 billion (C$1.8 billion); IRR 15.2% Projected After-Tax Payback 4.8 years Metal Price Assumptions: Cu: US$3.25/lb, Au: US$1,500/oz, Mo: US$10.00/lb, Ag: US$20.00/oz

Calgary, Alberta--(Newsfile Corp. - September 20, 2021) - Copper Fox Metals Inc.(TSXV: CUU) (OTCQX: CPFXF)("Copper Fox" or the "Company")is pleased to announce the results of a Preliminary Economic Assessment (the "PEA") for the Schaft Creek copper-molybdenum-gold-silver porphyry deposit (the "Schaft Creek Project") located in Tahltan Territory in northwestern British Columbia. The Schaft Creek Project covers 55,779.56 ha of mineral concessions, located approximately 60 kilometers ("km") south of Telegraph Creek near existing transportation and energy infrastructure. The effective date of the PEA is September 10, 2021, a technical report relating to the PEA will be filed on SEDAR within 45 days of this news release. The 2021 PEA will supersede all previous studies and incorporates the Updated Mineral Resource Estimate announced on March 22, 2021.

The Schaft Creek Project is managed through the Schaft Creek Joint Venture ("Schaft Creek JV") formed in 2013 between Teck Resources Limited ("Teck") (75%) and Copper Fox (25%) with Teck being the Operator. The PEA was prepared by Tetra Tech Canada Inc. ("Tetra Tech") as the general contractor on behalf of Copper Fox in accordance with NI 43-101 standards (May 9, 2016), and CIM Definition Standards (May 19, 2014) with guidance from CIM Best Practice Guidelines (November 29, 2019). The results of the PEA are presented on a 100% project basis and in US$ unless stated otherwise.

PEA Highlights

Pre-Tax Net Present Value ("NPV8") of US$1.4 billion and Internal Rate of Return ("IRR") of 15.2%

After-Tax NPV8of US$842.1 million and IRR of 12.9%

Average annual EBITDA(6)of US$695.4 million based on first 5 years(1)(Years 2-6) at full production, and US$10.8 billion Life of Mine ("LOM")

Average annual Free Cash Flow ("FCF") before recovery of capital costs of US$633.4 million based on first 5 years(1)(Years 2-6) at full production and US$9.96 billion LOM

Net Smelter Return ("NSR") of US$20.63 per tonne ("t")

21-year Life of Mine ("LOM") producing approximately 5.0 billion pounds ("lbs") or 2.3 million tonnes ("Mt") copper, 3.7 million ounces ("oz") gold, 226.0 million lbs molybdenum and 16.4 million oz silver in concentrate

133,000 tonne per day ("tpd") LOM nominal milling rate at 92% capacity processing 1.030 billion tonnes ("Bt") of mill feed LOM, representing approximately 60% of identified mineral resources

Estimated Initial Capital Costs of US$2.653 billion, not including Sustaining Capital Costs of US$848.7 million which is inclusive of US$154.0 million Closure Costs. Operating Costs are estimated to be US$8.66/t processed

C1 Cost(7)(net of by-product credits); for first 5 years(1)(Years 2-6) at full production of US$0.46 per pound of payable copper and US$1.00 per pound payable copper LOM

All in Sustaining Costs(7)for first 5 years(1)(Years 2-6) at full production of US$0.72 per pound payable copper and US$1.18 per pound payable copper LOM

The results of the PEA are preliminary in nature. The PEA includes a combination of indicated and inferred mineral resources which are considered too speculative geologically to have the economic considerations applied that would enable them to be categorized as mineral reserves. There is no certainty that the PEA forecasts will be realized or that any of the resources will ever be upgraded to reserves. Mineral resources that are not mineral reserves do not have demonstrated economic viability.

Elmer B. Stewart, President and CEO of Copper Fox, stated: "We are very pleased with the results of the PEA and the recommended program work of C$23 million that could be considered by the Operator to advance the Schaft Creek Project to the Pre-Feasibility Study ("PFS") stage of study and evaluation. The significantly higher investment returns, resulting in part from project enhancements developed over the past 2 years, and remaining resources in the deposit on completion of the first 21 years of mining, provides a compelling view of the Schaft Creek Project's financial potential. The smaller project "footprint" and ability to access hydroelectric power from the existing provincial power grid is expected to reduce capital costs, as well as lower CO2emissions and the impact on the environment when compared to other large copper development opportunities. The Schaft Creek Project is a copper-molybdenum-gold-silver conventional truck-and-shovel development opportunity with scale, optionality and is in a Tier 1 mining jurisdiction. In the first 5 years of full operation, the Schaft Creek Project has the potential to produce, on average, 398 million copper equivalent pounds (181Kt) per year."

Key Changes from Previous Technical Study in 2013

Updated mine plan that reduced the strip ratio from 2.16:1 to 1:1

LOM average operating cost per tonne processed reduced from US$13.25/t to US$8.66/t

Initial capital costs reduced from US$3.26 billion to US$2.65 billion

Sustaining Capital Costs reduced from US$1.20 billion to US$848.7 million

Re-location of the milling facility closer to the pit

Re-location of the Tailing Management Facility (TMF) closer to the milling facility

Embankments in TMF reduced from three to two

Waste rock storage facilities reduced from three to two

Summary of PEA Economic Model

The PEA, Pre-Tax and After-Tax project economic analysis (reflecting constant 2021 US dollars) of the Schaft Creek Project is based on payable metal and was prepared on a 100% basis using revenues and costs projected into the future on an annual basis and then discounted using mid year discounting at a rate of 8% per annum to yield the NPV and IRR. Net Smelter Return, Capital, Operating and Sustaining Costs, Closure Costs, Net Proceeds Interests payments, BC Mineral Tax, and Federal and Provincial income taxes are included in the financial analysis. Metal prices are based on Long Term consensus metal prices (Energy and Metals Consensus Forecast, inflation adjusted pricing dated June 2021). Notes to accompany the tables are included at the end of this news release.

The Operational Summary for the PEA, is set out below:

| Category | Unit | Total (1) | Annual Average (2) | | | | | | | | Years

2 to 6 | First 10 years | LOM | Years

2 to 6 | First 10 years | LOM | | Mining | | | | | | | | | Total Material Moved | Mt | 546.3 | 1,236.4 | 2,073.6 | 109.3 | 123.6 | 98.7 | | Processing | | | | | | | | | Total Material Processed | Mt | 243.0 | 469.0 | 1,030.2 | 48.6 | 46.9 | 49.1 | | Head grade - copper | % | 0.288 | 0.281 | 0.265 | 0.288 | 0.281 | 0.265 | | Head grade - gold | g/t | 0.203 | 0.187 | 0.157 | 0.203 | 0.187 | 0.157 | | Head grade - silver | % | 1.225 | 1.202 | 1.229 | 1.225 | 1.202 | 1.229 | | Head grade - molybdenum | g/t | 0.014 | 0.015 | 0.017 | 0.014 | 0.015 | 0.017 | | Production | | | | | | | | | Copper | Mlbs | 1,290.3 | 2,429.4 | 4,994.6 | 258.1 | 242.9 | 237.8 | | Gold | kozs | 1,162.5 | 2,045.7 | 3,695.0 | 232.5 | 204.6 | 176.0 | | Silver | kozs | 3,848.8 | 7,208.6 | 16,412.5 | 769.8 | 720.9 | 781.5 | | Molybdenum | klbs | 45,459 | 89,838 | 226,457 | 9,092 | 8,984 | 10,784 | | Copper equivalent (3) | Mlbs | 1,990.5 | 3,694.3 | 7,497.8 | 398.1 | 369.4 | 357.0 | | Financial Summary | | | | | | | | | Revenue (net of TCRC) | $USM | 5,867.4 | 10,867.4 | 21,959.1 | 1,173.5 | 1,086.7 | 1045.7 | | Site Operating costs | $USM | (2,092.5) | (4,337.8) | (8,921.5) | (418.5) | (433.8) | (424.8) | | Concentrate transportation costs | $USM | (181.4) | (342.1) | (709.4) | (36.3) | (34.2) | (33.8) | | NPI & Other Offisite Costs | $USM | (45.3) | (200.4) | (593.1) | (9.1) | (20.0) | (28.2) | | EBITDA(6) | $USM | 3,477.1 | 5,813.5 | 10,812.9 | 695.4 | 581.3 | 514.9 | | Free Cash Flow (including Initial Capex) | $USM | 747.4 | 2,578 | 7,376 | 124.6 | 257.8 | 351.2 | | Free Cash Flow (excluding Initial Capex) (1) | $USM | 3,167 | 5,231 | 9,964 | 633.4 | 523.1 | 474.5 | | Cash Costs (4) | | | | | | | | | Before by-product credits | $US/lb.Cu | (2.17) | (2.40) | (2.56) | (2.17) | (2.40) | (2.56) | | After by-product credits | $US/lb.Cu | (0.46) | (0.77) | (1.00) | (0.46) | (0.77) | (1.00) | | All-in sustaining costs | $US/lb.Cu | (0.72) | (1.00) | (1.18) | (0.72) | (1.00) | (1.18) | | Capital Costs | | | | | | | | | Initial Capital (direct, indirect, contingency) | $USM | (2,653.2) | | | | | | | Sustaining Costs | $USM | (334.4) | (541.8) | (848.7) | (66.9) | (54.2) | (40.4) | | Closure costs | $USM | included in sustaining capex | | | | | | | Economic Summary | | | | | | | | | Pre-Tax | | | | | | | | | Net Present Value (8%) | $USM | 1,383.5 | | | | | | | Internal Rate of Return | % | 15.2 | | | | | | | Payback Pre-Tax (5) | years | 4.4 | | | | | | | Post-Tax | | | | | | | | | Net Present Value (8%) | $USM | 842.1 | | | | | | | Internal Rate of Return | % | 12.9 | | | | | | | Payback Post-Tax (5) | years | 4.8 | | | | | |

Revenue split by commodity is copper (66.6%), gold (22.7%), molybdenum (9.3%) and silver (1.3%).

The PEA After-Tax Annual and Cumulative FCFs, EBITDA and Capital Cost Expenditure are shown below:

[](https://orders.newsfilecorp.com/files/2177/96955_f52e3b22a4047915_001full.jpg)

Schaft Creek Financial Summary Chart

To view an enhanced version of this graphic, please visit: https://orders.newsfilecorp.com/files/2177/96955_f52e3b22a4047915_001full.jpg

The sensitivity and incremental percentage change (8% discount rate) of the EBITDA, Free Cash Flow (FCF) and NPV based on incremental changes in metal prices, FOREX (CADUSD), Operating costs (Opex), and Initial Capital costs on after-tax basis are shown below:

[](https://orders.newsfilecorp.com/files/2177/96955_tabler.jpg)

Schaft Creek Sensitivities

To view an enhanced version of this graphic, please visit: https://orders.newsfilecorp.com/files/2177/96955_tabler.jpg

Note:_Green represents an increase in the input variable; grey represents a decrease. Base Case=The economic analysis in this news release. _Note:_Images in this news release can be seen on the PDF version of the news release located on SEDAR and our website www.copperfoxmetals.com._

After-Tax Schaft Creek Project Economics

The After-tax NPV and IRR, after applicable Federal and Provincial tax are deducted, are US$842.1 million and 12.9%. Payback of initial capital is achieved in 4.8 years from commencement of operations. The BC Mineral Tax (Provincial Resource Tax) is deductible from Federal and Provincial taxes payable. Federal, Provincial and BC Mineral Tax payable based on the PEA financial model are outlined below:

| Estimated Taxes Payable | | | Tax Component | LOM Amount (C$M) | | Corporate Tax (Federal) | 1,432 | | Corporate Tax (Provincial) | 1,145 | | BC Mineral Tax | 1,198 | | Total Taxes | 3,775 |

Capital Cost Estimates

The major items of the initial capital cost estimate (accuracy of +/- 30%), as of Q4 2020 which covers direct field costs, indirect costs associated with design, construction, and commissioning with no allowances for inflation or escalation, are outlined below. The estimates are consistent with a Class 5 estimate. Capital intensity (excluding contingency) is estimated to be approximately C$20,200 (US$15,500) per operating tonne and C$17,200 (US$13,200) per operating tonne of payable CuEq(3)production. (Note:CuEq is estimated using accepted metallurgical recovery for each metal and the metal price assumptions used in this PEA).

| Initial Capital Costs | | | | | C$M | US$M | | Direct Costs | | | | Overall site | 178.3 | 137.3 | | Mining | 245.2 | 188.8 | | Primary Crushing | 65.3 | 50.3 | | Stockpile & Reclaim | 54.3 | 41.8 | | Grinding, Flotation and Regrind | 649.4 | 500.0 | | Tailing Management Facility (TMF) | 178.2 | 137.2 | | Site Services and Site Utilities | 38.3 | 29.5 | | Ancillary Buildings | 153.0 | 117.8 | | Plant Mobile Fleet | 8.8 | 6.8 | | Temporary Services | 5.6 | 4.3 | | Off-site Infrastructure and Facilities | 106.8 | 82.2 | | Total Direct Costs | $1,683.2 | $1,296.1 | | | | | | Indirect Costs | 1,001.3 | 771.0 | | Total Indirect Costs | $1,001.3 | $771.0 | | Total Direct and Indirect Costs | $2,684.5 | $2,067.1 | | Contingency (@25.0%) + provisions | 761.2 | 586.1 | | Total Initial Capital | $3,447.3 | $2,653.2 |

Sustaining Costs

The main components of the LOM sustaining capital are set out below:

| LOM Sustaining Capital | | | Area | US$M | | Mining | 335.15 | | Tailings | 239.96 | | Process/Infrastructure | 48.46 | | Environmental Monitoring | 40.39 | | BC Hydro | 30.77 | | Closure | 154.0 | | Total Sustaining Capital | 848.73 |

Operating Costs

The LOM site unit operating cash costs per tonne processed are set out below:

| LOM Processing Costs | | | Area | US$/t processed | | Mining | 3.11 | | Processing | 4.08 | | G&A | 0.79 | | Surface Services | 0.25 | | Tailings Management | 0.11 | | Concentrate Transportation | 0.32 | | Total | 8.66 |

Note:_Mining includes the cost of mining waste and processed material. The LOM average strip ratio is estimated to be 1:1. _

PEA Project Description Update

Social and Environment

Copper Fox completed environmental baseline work on the Schaft Creek project between 2006 and 2013. Since 2013 additional environmental baseline work has been carried out by the Schaft Creek JV. Copper Fox is committed to working with its JV partner to develop and operate the Schaft Creek Project in a safe, ethically and socially responsible manner while maximizing benefits and economic opportunities for local First Nations and other communities, including employment, training, and using local service providers.

A review of the current Provincial and Federal environmental regulations indicates that the PEA project design should not present any issues pursuant to Provincial and Federal requirements in the Environmental Assessment process.

Reclamation plans for the TMF, open pit and waste rock are set out in the PEA. These plans will be considered and updated throughout design, construction, and operation of the Schaft Creek Project to help ensure that these objectives can be achieved.

Updated Mineral Resource Estimate

The Updated Mineral Resource Estimate for the Schaft Creek Project was announced on March 22, 2021. Approximately 80% of the mineral resources in the Schaft Creek deposit are classified as Measured and Indicated.

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Mining

Mining of the Schaft Creek deposit is planned as a conventional truck-shovel open-pit mining operation. Total mine production is estimated to be 1.03 Bt of mill feed and 1.03 Bt of waste rock resulting in a LOM 1:1 strip ratio. Annual mined tonnes range from 46.9 to 165.0 Mt, averaging 98.7 Mt LOM. The 21-year mine plan utilizes approximately 60% of the mineral resource base and provides options to extend mine life and/or increases in throughput.

Mining operation will commence in an area of higher-grade material for processing in years 1-5 of milling operations before transitioning to the south end of the Liard zone. The push back to the north results in increased annual tonnes of waste mined to provide access to mineralization mined in the next phase of the mine plan. The final phase extends to the ultimate pit bottom which based on the resource block model would end in mineralization. The mine plan includes a stockpiling strategy to ensure optimal LOM mill feed grade. Run-of-mine ore would be delivered to a gyratory crusher at the edge of the pit and transported via conveyor to a coarse ore stockpile near the mill site.

Waste material will be used for road, TMF and infrastructure construction with the balance stored in two separate areas located at varying distances from the proposed open pit.

Process Plant

The processing plant is designed with a planned nominal throughput of 133,000 tpd (at 92% capacity). The annual throughput varies from 48.5 Mt to 51.5 Mt per year averaging 49.1 Mt per year, primarily due to the comminution characteristics of the mineralization.

The milling process is a conventional grinding and flotation circuit, consisting of two process trains to produce a high-quality copper concentrate with significant gold and silver by-product credits and a separate molybdenum concentrate. Each of the process trains consists of SAG mill - ball mills - pebble crushers ('SABC') primary grinding, bulk rougher/scavenger flotation, bulk concentrate regrinding and cleaner flotation circuits. The bulk concentrate produced will be separated to produce market grade copper-gold-silver concentrate and molybdenum concentrate. LOM metal recoveries to copper concentrate containing 28% copper are expected to be 83.1% for copper, 71.0% for gold and 40.3% for silver. The molybdenum recovery to the molybdenum concentrate (containing >50% Molybdenum) is estimated to be 60.1%. Tailings would be transported to the TMF through pipelines.

Forecasted Metal Production

The Schaft Creek copper deposit contains low, but significant gold, molybdenum and silver concentrations. By-product metal credits account for approximately 33% of the CuEq production attributable to the Schaft Creek Project. Metal production is highest in the first five years of full production primarily due to mining of higher-grade mineralization. In the first five years of full production, the average recoverable CuEq production is estimated to be approximately 398.1 million lbs. (180.6 Kt).

LOM, the copper concentrate is expected to contain on average 28% copper, 14.1 grams per tonne ("g/t") gold and 63.0 g/t silver with a moisture content of 9% and the molybdenum concentrate is expected to average 50% molybdenum with a moisture content of 5%. The Schaft Creek copper concentrate as modeled is considered a premium copper concentrate in terms of copper grade, gold-silver by-products and low deleterious element content. The estimated LOM metal and "dry" copper and molybdenum concentrate production is summarized below.

| Concentrate Metal Production | | | | | | | Description | Unit | Years 2-6(1)

Annual Average | Year 1-10 Annual Average | LOM Annual Average | LOM Total | | Copper Concentrate | tonnes (000's) | 418 | 393 | 385 | 8,091 | | Copper in Concentrate | Mlbs | 258 | 243 | 238 | 4,995 | | Copper in Concentrate | tonnes (000's) | 117 | 110 | 108 | 2,266 | | Gold in Concentrate | oz. (000's) | 233 | 205 | 176 | 3,695 | | Silver in Concentrate | oz. (000's) | 770 | 721 | 782 | 16,413 | | Molybdenum concentrate | tonnes | 8,248 | 8,150 | 9,783 | 205,439 | | Molybdenum in Concentrate | lbs. (000's) | 9,092 | 8,984 | 10,784 | 226,457 |

Note:_(1) Based on first five years of full production. Year 1 is partial year of production and not included. Numbers are rounded._

The most cost and time-efficient way to ship copper concentrate from Schaft Creek to the Asian markets would be trucking the concentrate via Highway 37 to the deep-water port in Stewart, BC, then transported via ocean-going vessels. Molybdenum concentrate will be bagged, sealed, placed in standard cargo containers, and trucked to the port facility in Prince Rupert, BC, for shipment.

Tailings Management Facility ("TMF")

The TMF has been designed based on the most recent guidance on construction and operation of tailing impoundment facilities. The initial design capacity of the TMF is approximately 1.0 Bt, sufficient for the 21-year mine life. The capacity of the TMF can be expanded significantly with minimal modification to the overall TMF footprint to accommodate up to approximately 2.0 Bt of tailings. The south end of the TMF is located approximately 1.8km northeast of the milling facilities.

Infrastructure

The closest provincial road to the Schaft Creek Project is Highway 37. Power would be provided from the Northwest Transmission Line, located on Highway 37, owned by BC Hydro, the provincial electrical authority. The locations of project facilities and other infrastructure items were selected to take advantage of local topography, accommodate environmental considerations, and for efficient, safe and convenient operation of the mine.