Canadian cobalt-gold development project
positioned for rapidly expanding use of lithium-ion batteries in
portable electronic devices, automotive electrification &
stationary storage
Issued Capital: 302,085,257
LONDON, ON, Aug. 24, 2017 /CNW/ - Fortune Minerals Limited
(TSX: FT) (OTCQX: FTMDF) ("Fortune" or
the "Company") (www.fortuneminerals.com) is pleased to
provide an update of activities for its 100% owned NICO
Cobalt-Gold-Bismuth-Copper Project in Canada. NICO is a vertically integrated
development consisting of a planned mine and concentrator in the
Northwest Territories and refinery
near Saskatoon where concentrate
will be processed to battery grade cobalt sulphate, gold, bismuth
metal and oxide, and copper. NICO is a primary cobalt project with
approximately 60% of projected revenues from cobalt at current
commodity prices, The NICO Mineral Reserves also contain more than
1.1 million ounces of gold and 12% of world bismuth reserves. NICO
was assessed in a positive Feasibility Study in 2014. This study is
being updated by Hatch Ltd. ("Hatch") and Micon
International Limited ("Micon") in order to assess the
economics for the project at current commodity price and exchange
rate assumptions, and capital and operating costs. NICO has already
received its environmental assessment approvals in the Northwest Territories and Saskatchewan and the major mine permits.
Fortune has engaged PricewaterhouseCoopers Corporate Finance Inc.
("PwC") to arrange the project financing through a
combination of strategic partnerships, debt and equity.
Cobalt Market Update
The market for cobalt has had
significant, 20-year compounded annual growth ("CAGR") of
approximately 6% and Commodities Research Unit ("CRU")
reports current annual mine production at 117,000 metric tonnes
("mT"). Demand growth for cobalt is expected to accelerate
due to its use in lithium-ion batteries (~50% of the current
market), which are needed to power portable electronic devices,
electric vehicles ("EV's") and stationary cells to store
electricity from renewable energy (primarily wind and solar), and
off-peak charging from the electrical grid. Transformative
evolution of automobiles from internal combustion engines to
electric drivetrains is expected to dramatically impact future
cobalt demand. Whereas a typical smart phone battery contains
between 5 and 20 grams of cobalt, EV batteries usually contain
between 4,000 and 14,000 grams. Tesla's first US$5 billion, 35 gigawatt-hour ("GWh")
Gigafactory in Nevada started
commercial production earlier this year and will require
approximately 7,000 tonnes of cobalt per annum when it reaches full
production in 2018. More than 16 battery mega-factories are either
under construction or announced, including an even larger 100 GWh
plant for CATL in China. Exane BNP
Paribas is projecting 300,000 mT of cobalt will be required to
satisfy the demand by 2025. Cobalt is also used in superalloys for
aerospace applications, high strength alloys for cutting tools and
cemented carbides, permanent magnets, surgical implants, pigments,
catalysts, and additives in food and agricultural products.
The cobalt market transitioned into a supply deficit in 2016
that is expected to continue for the foreseeable future. Future
supply is also at risk due to geographic concentration of mine and
refinery supply and because 98% of current non-artisanal cobalt
production is a by-product of either copper or nickel mining. Low
primary metal prices have caused some copper-cobalt and
nickel-cobalt mines to close. More than 60% of current mine
production is from the politically unstable Democratic Republic of the Congo
("Congo") and China controls 52% of cobalt refinery
production and 84% of refined cobalt chemical supply. Ethical
sourcing of raw material has become an issue for the Electronics
Industry Citizens Coalition ("EICC") because of child labour
and unsafe working conditions in some Congo mines. There are also concerns about
metals being used to finance conflicts under U.S. Dodd-Frank and
European Union Ethical Sourcing legislation. The price of cobalt
metal has escalated to approximately US$30 per pound, well in excess of the
US$16 per pound used in Fortune's
2014 Feasibility Study.
NICO Mineral Reserves & Mine
Plan
The Proven and Probable Mineral Reserves for the
NICO deposit were determined for the Company's 2013 Front-End
Engineering and Design ("FEED") study and 2014 Feasibility
Study. They total 33 million mT containing 82.3 million pounds of
cobalt (37,341 mT), 1.11 million ounces of gold, 102.1 million
pounds of bismuth (46,325 mT) and 27.2 million pounds of copper
(12,341 mT) (see Fortune's news release dated April 2, 2014 for details). The Mineral Reserves
are sufficient to support a 21-year mine life at the 4,650 mT of
ore per day production rate used in the 2014 Feasibility Study. The
study also identified several million tonnes of sub-economic
mineralized material that was planned to be separately stockpiled
for processing when metal prices permit and may be economic to
process at today's metal prices. Given the positive outlook for
cobalt, Fortune is re-evaluating the NICO Mineral Reserves and
considering a higher production rate to achieve greater economies
of scale and earlier access to the deeper higher grade parts of the
deposit.
Feasibility Study Update
The Feasibility Study update
by Hatch and Micon is proceeding well for the initially planned
scope of work for the mine and concentrator in the Northwest Territories. However, two
metallurgical testwork programs were required for Hatch to properly
size equipment and conduct the detailed design work for the copper
cementation circuit and the manganese removal step in the cobalt
sulphate circuit for the refinery in Saskatchewan. This work is currently in
progress at SGS Lakefield Research Limited, but due to laboratory
congestion will not be completed until the end of October. The
metallurgical flowsheet for NICO has previously been confirmed from
piloting, and a high quality cobalt sulphate heptahydrate product
has already been produced that meets the specifications of the
rechargeable battery industry.
Completion of the Feasibility Study update has therefore been
delayed until after this metallurgical testwork and optimization of
the Mineral Reserves, production rate and mine schedule if and as
required.
2017 Field Activities
Fortune has completed the
winter, spring and summer phases of field activities at the NICO
mine site that were required by Wek'eezhii Land and Water Board
prior to the commencement of construction of the mine. This
additional baseline monitoring was required pursuant to the
Company's water license and consisted of collecting additional
water quality, sediment, benthic invertebrate and fish population
data. The final water quality sampling for this program will be
completed in September.
While environmental work was carried out at NICO this summer,
Fortune was also able to improve and expand roads and lay-down
areas at the mine site in preparation for the arrival of supplies
and materials on the winter ice road. Fortune plans to conduct the
first year of construction of the NICO mine using winter road
access while the Government of the Northwest Territories ("GNWT")
Department of Transportation constructs a new all-weather gravel
road to Whati. Fortune will construct a 50-kilometre gravel spur
road to connect with the government road as part of its
development. Fortune and the GNWT are also negotiating a
Socio-Economic Agreement.
About NICO
NICO is a planned Canadian, vertically
integrated, primary producer of cobalt with supply chain
transparency and uninterrupted custody of metal from ore through to
the production of battery chemicals, gold, and bismuth metal and
oxide. The NICO deposit will be mined primarily by conventional
truck and shovel open pit methods. Approximately one third of the
mill feed during the first two years of operations are planned to
be mined using underground blasthole open stoping to process higher
margin, gold-rich ores from deeper in the deposit in early years of
the mine life and improve project economics. Most of the
preproduction development for the underground portion of the mine
has already been established from previous test mining
operations.
Ores will be processed in the mill using simple flotation to
produce approximately 180 tonnes per day of concentrate containing
the recoverable metals. The concentrate will be filtered, bagged
and trucked to the rail head at Hay
River for delivery by train to the Company's planned
refinery straddling the Canadian National Railway near Saskatoon. The refinery will recover metals
from the concentrate using a combination of secondary flotation,
followed by pressure and atmospheric acid leaching, electro-winning
and precipitation of value-add metals and chemicals. Life of mine
average annual production in the 2014 Feasibility Study was
projected to be 1,615 tonnes of cobalt, 41,300 ounces of gold,
1,750 tonnes of bismuth, and copper cement.
The disclosure of scientific and technical information
contained in this news release has been approved by Robin Goad, M.Sc., P.Geo., President and Chief
Executive Officer of Fortune, who is a "Qualified Person" under
National Instrument 43-101. The technical report on the feasibility
study referred to above, entitled "Technical Report on the
Feasibility Study for the NICO-Gold-Cobalt-Bismuth-Copper Project,
Northwest Territories, Canada",
dated April 2, 2014 and prepared by
Micon, from which certain information in this press release has
been extracted, has been filed on SEDAR and is available under the
Company's profile at www.sedar.com.
About Hatch
Hatch has over six decades of business and
technical experience in the mining, energy, and infrastructure
sectors. The firm has 9,000 staff with experience in over 150
countries and is well known for the design and construction of
mineral beneficiation process plants and supporting infrastructure,
including projects in remote and cold climate regions and Arctic
regions of Canada.
About Micon
Micon is a mining consultancy providing
independent professional advice to mining companies and their
providers of capital, law firms and government agencies. Staffed by
senior mineral industry consultants with extensive international
experience in the fields of geology, mining engineering,
metallurgy, processing, environmental management, market analysis
and mineral economics.
About Fortune Minerals
Fortune is a Canadian mining
company focused on developing the vertically integrated NICO
cobalt-gold-bismuth-copper project in the Northwest Territories and a related refinery
the Company plans to construct in Saskatchewan. Fortune also owns the Sue-Dianne
copper-silver-gold deposit located 25 km north of NICO and a
potential future source of incremental mill feed to extend the life
of the NICO mill. The Company also maintains the right to
repurchase the Arctos anthracite coal deposits in northwest
British Columbia that were
purchased by a provincial Crown corporation.
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This press release contains forward-looking information and
forward-looking statements within the meaning of applicable
securities legislation. This forward-looking information includes
statements with respect to, among other things, the Company's plans
to develop the NICO Project (including the Company's plans to
secure project financing to start construction), the anticipated
timing for the updated feasibility study for the NICO Project, the
estimated capital costs for the construction of the NICO Project
estimated future production, anticipated growth in the
demand for cobalt, anticipated constraints on the supply of cobalt
and plans for the construction of an all-season road needed for
operations at the NICO Project. Forward-looking information is
based on the opinions and estimates of management as well as
certain assumptions at the date the information is given
(including, in respect of the forward-looking information contained
in this press release, assumptions regarding the Company's ability
to arrange the necessary financing to continue operations and
develop the NICO Project, growth in the demand for cobalt,
restrictions on the supply of cobalt and the proposed construction
of the all-season road, the economic environment in which the
Company will operate in the future, including the price of gold,
cobalt and other by-product metals, anticipated costs and the
volumes of metals to be produced at the NICO Project). However,
such forward-looking information is subject to a variety of risks
and uncertainties and other factors that could cause actual events
or results to differ materially from those projected in the
forward-looking information. These factors include the risks that
the Company may not be able to finance and develop NICO on
favourable terms or at all, the updated feasibility study may take
longer than anticipated, the capital costs for the construction of
the NICO Project may be greater than anticipated, the all-season
road may not be built within the anticipated time frame, the market
for rechargeable batteries and the use of stationary storage cells
may not grow to the extent anticipated, the future supply of cobalt
may not be as limited as anticipated, the Company's production of
cobalt and other metals may be less than anticipated and other
operational and development risks, market risks and regulatory
risks. Readers are cautioned to not place undue reliance on
forward-looking information because it is possible that
predictions, forecasts, projections and other forms of
forward-looking information will not be achieved by the Company.
The forward-looking information contained herein is made as of the
date hereof and the Company assumes no responsibility to update or
revise it to reflect new events or circumstances, except as
required by law.
SOURCE Fortune Minerals Limited