Copper Fox Metals: Preliminary Geometallurgical Model Completed at Van Dyke

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Copper Fox Metals (CUU) announced on August 28 that a Preliminary Geometallurgical Model (PGM) was completed on its wholly-owned Van Dyke ISR copper property, located in the Globe-Miami Mining District, in Gila County, Arizona. The PGM was completed with the goal of locating the data gaps/spaces in metallurgical coverage across the deposit. Results from the PGM also provide some indication as to where metallurgical samples could/should be collected from future drill holes. Ultimately, results from the PGM provide greater certainty on the metallurgical variability across the van Dyke deposit. As progress continues to be made at Van Dyke, we note that critical to the de-risking of the asset, the PGM is an important component of the Execution Plan to map out the scope, timing and estimated cost of studies required to meet the threshold of a Pre-Feasibility (PFS) level study. These latest metallurgical results allow for an update to the current PGM. Given this data, the metallurgists will now be in a position to determine if additional sampling would be required to meet the threshold for a PFS level of investigation/study. Given the most recent close (August 28), shares of Copper Fox currently trade at a 0.12x P/NAV valuation, or at C$0.02 per booked CuEq lbs. We maintain our C$0.60 per share price objective.

FURTHER DEFINITION OF THE VAN DYKE DEPOSIT

The advancing and de-risking of the Van Dyke ISR copper project continues as the recently completed Preliminary Geometallurgical Model (PGM) was successful in achieving three objectives: 1) the identification of the mineralogical domains (zones), 2) analysis within the gaps/spaces in the metallurgical coverage across the deposits, and finally, 3) the development of recommendations for future metallurgical testing. Given this data, the metallurgists will now be in a position to determine if additional sampling would be required to meet the threshold for a PFS level of investigation/study.

MINERALOGICAL DOMAINS & GAP ANALYSIS

The mineralogical domains identified in the Van Dyke deposit have shown to be consistent with the general description of "Supergene" copper deposits. At Van Dyke, the oxide and transition zones remain as the main zones of interest. Below the transition/chalcocite zones the mineralization, where present, consists of sporadic concentrations of chalcopyrite and pyrite.

Metallurgical testwork at Van Dyke consists of 8 pressure leach tests (PRT) on whole core samples in 2014 and, 65 bottle roll leach tests (BRT) in 2023 from selected drillholes located within the Phase I leaching plan (years 1-7) set out in the 2020 PEA. Data gaps in the metallurgical database represent potential risk of variability in copper extraction and recovery. The metallurgical testwork completed on similar deposits in Arizona was used to benchmark mineral characterization, process route selection and assessing processing risks for the Van Dyke project. The data from these tests were correlated spatially to the 2020 resource block model and the mineralogical domains identified within the Van Dyke deposit. Identification of the data gaps allows for pre-selection of representative sample locations within the mineralogical domains from future drillholes to support an updated geometallurgical model.

BUILDING UPON THE 2020 PRELIMINARY ECONOMIC ASSESSMENT (PEA)

In terms of economics, recall that a 2020 Van Dyke PEA used a LT copper price of $3.15 per lb and estimated a project LOM of 17 years. The economic analysis included allowances for capital, operating, sustaining, royalties, reclamation, and closure costs. The initial capital cost was estimated at $290.5M, compared to the $204.4M as estimated in a previous 2015 PEA. Given the parameters, the after-tax NPV7.5% and IRRs went from $149.5M and 27.9% in 2015 to $644.7M and 43.4% in 2020. Though from 2020, the PEA estimates are largely in line with some of the more advanced projects in Arizona (mainly, Florence).

As per our estimates for Van Dyke, we acknowledge the inflationary environment which certainly since the 2020 PEA has increased materially. Cost inflation since the 2020 PEA will certainly impact everything from labor to procurement of materials to contracting. Its worth noting that using Taseko’s Florence ISR project as a guide (a Technical Report was published in 2023), we’ve seen that as construction has progressed, costs have been relatively accurate while timelines have not shifted - initial ISR production from Florence is still expected by Q4/2025. That said, we model a 16 year LOM operation at Van Dyke with a total of 1.05B lbs of copper being produced (average of 66M lbs Cu per year with peak production near 85M lbs per year). As per economics, we use a $4.50 per lb LT copper price and a $1.58 per lb C1 cash cost. Ultimately, estimating initial capex at $335M we calculate an after-tax NPV8% of $747.2M and an after-tax IRR of 34.6%. 

FUTURE TESTWORK RECOMMENDATIONS

As per the PGM, recommendations for additional metallurgical test work include using whole drill core samples to characterize the mineralization, identify mineralogy, BRT and corresponding PRT tests to establish correlation between the two tests, and their associated residue assays to evaluate/confirm optimum acid addition and consumption, leach cycle duration, and predicted copper extraction.

The closed-cycle PRT tests should include solvent extraction of the pregnant leach solution and detailed mineralogical studies on head samples as well as leach residues for each test. The quantification of carbonates and clays should be performed on head samples. As seen in the figure above, blue = proposed metallurgical samples; Orange = 2023 BRTs; Green = 2014 PRTs.

CONCLUSION & VALUATION

We’re glad to see that work is advancing simultaneously on all projects as management has previously emphasized a systematic approach for each, in an effort to advance and de-risk, while also in an effort to allocate capital efficiently. Ultimately, results from the PGM provide greater certainty on the metallurgical variability across the van Dyke deposit. As progress continues to be made at Van Dyke, we note that critical to the de-risking of the asset, the PGM is an important component of the Execution Plan to map out the scope, timing and estimated cost of studies required to meet the threshold of a Pre-Feasibility (PFS) level study. These latest metallurgical results allow for an update to the current PGM. Given this data, the metallurgists will now be in a position to determine if additional sampling would be required to meet the threshold for a PFS level of investigation/study. Given the most recent close (August 28), shares of Copper Fox currently trade at a 0.12x P/NAV valuation, or at C$0.02 per booked CuEq lbs. We maintain our C$0.60 per share price objective.

Given the most recent close, shares of Copper Fox trade at attractive levels versus peers: at a 0.12x P/NAV valuation and at an EV of C$0.02 per booked CuEq lbs. Our price objective equates to upside of +103% from the most recent close. For more specific information on all the company assets, refer to our June 18, 2025 initiation of coverage piece.