Technical improvements are continuing through
Covid-19 social distancing restrictions
Fortune Minerals Limited (TSX: FT) (OTCQB: FTMDF)
(“Fortune” or the “Company”)
(www.fortuneminerals.com) is providing an update of current work to
advance the NICO Cobalt-Gold-Bismuth-Copper Project (“NICO
Project”) in Canada during the Coronavirus pandemic. Fortune is
complying with government protocols, including temporary closure of
the Company’s head office, prohibiting non-essential travel, and
employees are social distancing and working remotely from their
homes. Technical work has advanced on the NICO Project during this
period, primarily by employees with some assistance from
engineering consultants. Fortune has also received financial
assistance through government programs available to it, and has
outstanding applications pending for additional support. The
Company is also reducing costs where it can to preserve cash until
confidence returns to the capital markets, which it normally
depends upon for its source of working capital.
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The NICO Project was assessed in a Feasibility Study prepared by
Micon International Limited (“Micon”) in 2014, based
primarily on the Company’s Front-End Engineering and Design study
led by Aker Solutions and a proposed project financing with Procon
Group which was not completed. The Mineral Reserves for the NICO
Project total 33.1 million tonnes, averaging 1.03 grams of gold per
tonne, 0.11% cobalt, 0.14% bismuth and 0.04% copper (see News
Release, dated April 2, 2014). Cobalt and bismuth are both metals
identified on the United States (“U.S.”) and European Union
Critical Minerals Lists. Minerals considered critical have
essential use in important industrial and security applications,
cannot be easily substituted by other minerals, and their supply
chain is threatened by geographic concentration of production and /
or geopolitical risks. The Canadian and U.S. governments have
signed a Joint Action Plan on Critical Mineral Collaboration to
enable more North American production of minerals identified as
critical to economic and national security, The Mineral Reserves
for the NICO Project also contain more than one million ounces of
gold, a highly liquid and countercyclical co-product that makes
this project stand out relative to other cobalt producers and
development projects.
For more detailed information about the NICO Mineral Reserves
and certain technical information in this news release, please
refer to the Technical Report on the NICO Project, 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 International
Limited which has been filed on SEDAR and is available under the
Company's profile at www.sedar.com.
After assessing a contemplated 30% expansion of the NICO Project
in 2019, Fortune has refocused the development strategy using a
plan similar to the one used in the 2014 Micon Feasibility Study.
This plan was based on combined open pit and underground mining
transitioning to only open pit mining, a mill throughput rate of
4,650 tonnes of ore per day, and processing of metal concentrates
at a hydrometallurgical refinery in southern Canada. With
development of the NICO project, Fortune would become a Canadian
producer of cobalt sulphate, gold doré, bismuth ingots and copper
precipitate with supply chain transparency and custody control of
the metals from ore through to the production of value-added
products. Before completing an updated Technical Report, Fortune is
pursuing opportunities to improve project economics and this work
is summarized below.
Updated Mineral Resource Model:
An Updated Mineral Resource block model was recently completed
by Fortune and P&E Mining Consultants Inc. (“P&E”)
with a number of improvements made to reduce modeling dilution and
capture mineralized material that was omitted in the previous
Mineral Resource model. A more constrained approach to the
mineralized domain wireframes was applied, eliminating areas with
little or no grade that caused internal and external modeling
dilution and smeared higher grades within the wireframes into areas
that had little or no grade. The wireframes were also extended to
surface where the deposit is known to outcrop and will reduce
near-surface waste rock stripping during operations. The wireframes
were also extended in deeper parts of the deposit where there is
higher grade gold, which was previously too abruptly
terminated.
Open Pit Optimization:
The Updated Mineral Resource model has been subjected to open
pit shell optimization by P&E using ‘Datamine NPV SchedulerTM’
software that determines the open pit limits and tonnages of
mineralized material that would be profitable to mine using
geotechnical criteria (previously determined by Golder Associates
Ltd. (“Golder”)), factored operating costs from previous
studies, and updated metal price and currency exchange rate
estimates. The optimized open pit shell used a Net Smelter Return
(“NSR”) cut-off value of C$60.49 / tonne, derived from the
operating costs, excluding mining, to develop a Net Present Value
(“NPV”) versus pit shell size table and graph to determine
the optimal pit shell for the open pit design and production
schedule.
Underground Stope Design:
New preliminary underground stope designs have been completed
from the Updated Mineral Resource model by Fortune and P&E
using ‘DeswikTM’ software. Potential underground stopes were
identified based on geotechnical studies by Golder, information
gained from the earlier underground test mining by Procon, and the
mineralized material that would be profitable to mine by
underground methods using an NSR cut-off of $150 / tonne. The stope
designs used in the 2014 Micon Feasibility Study were used as a
guide in the new preliminary design, which was also focused on
potential stopes located close to the existing ramp system that was
constructed during earlier test mining in order to minimize
underground pre-production development costs.
New Mine Plan and Schedule:
Fortune is now developing a new mine plan and schedule based on
the Updated Mineral Resource model, open pit optimization, and
preliminary underground stope designs. This work will focus on
gaining early access to higher grade material using a combination
of open pit and underground mining methods similar to the approach
used in the 2014 Micon Feasibility Study. Open pit material will be
augmented with higher-grade, gold-rich material sourced from deeper
parts of the deposit in stopes designed close to the existing
underground access ramp system. The mine plan will also include a
grade control and stockpiling strategy to defer processing of lower
quality ores until later in the mine life and accelerate processing
of higher margin ores. This is a strategy that was being pursued in
2019 before the Company terminated the expanded project study. The
new mine plan and schedule is expected to be completed this month
and will be used to determine concentrate specifications required
to predict refinery feed criteria.
Capital Cost Optimization and Procurement Strategy
Fortune is conducting an analysis of capital costs previously
estimated by Hatch Ltd. for the recent expansion study that was
carried out in 2019, including a breakdown of their estimates and a
comparison with quotes subsequently obtained directly from
suppliers. This work is still in progress, however, the Company has
identified several opportunities to reduce capital and operating
costs, plus associated contingencies, given new supplier
information and market trends. This work will be used as a guide to
a more disciplined approach to capital cost estimation in any
updated Technical Report.
Fortune has also identified opportunities to lower capital costs
for the NICO Project using different approaches to the design
criteria. An example is replacing the primary crusher with a lower
cost mobile system, which will also reduce installation and
earthworks capital. Other opportunities are also being pursued.
Refinery Sites
Fortune is evaluating a number of sites in southern Canada to
construct the NICO Project refinery, including a site in
Saskatchewan where it already holds an option to purchase the
lands. The Company is also considering other potential sites,
including three serviced brownfield locations with permitted
process equipment that could materially reduce the capital costs
for the vertically integrated development. Fortune will provide an
update of these locations when discussions are more advanced with
the owners or as further information becomes available.
Some improvements for the NICO refinery were identified for the
2019 study that was terminated and will be considered in any
updated Technical Report at the 4,650 tonnes per day mill
throughput rate.
Tlicho Road
Construction of the C$200 million Tlicho All-Season Road to the
community of Whati is ahead of schedule. However, work on the road
has been temporarily suspended by North Star, the P3 consortium led
by Peter Kiewit Sons ULC, to mitigate the spread of the
Coronavirus. Fortune will provide an update of the Tlicho Road when
construction resumes. Notably, the NICO Project includes
construction of a 50-kilometre spur road from Whati to the mine to
enable truck haulage of metal concentrates to the railway at Hay
River and delivery to the refinery for processing during
operations. With greater certainty of the availability of this
road, the Company is now planning to align NICO Project
construction using the all-weather roads instead of winter ice
roads to reduce capital costs and supply chain risks during
construction.
Financing:
The Canadian and U.S. Government Joint Action Plan on Critical
Mineral Collaboration advances both countries’ interest in securing
supply chains for the critical minerals needed in important
manufacturing sectors, including communication technology,
aerospace, defense, and clean technology. The plan guides
cooperation in areas including industry engagement and efforts to
secure critical mineral supply chains for strategic industries, and
promotes increased support for industry. Fortune has been in
discussions with both governments regarding financial support for
the NICO Project, including a joint proposal with an existing
refinery to the Government of Canada, and a proposal to the U.S.
for support of an updated Technical Report to enable project
financing.
Fortune is also continuing its discussions with various private
sector sources of capital including potential strategic partners in
the gold and base metals mining industry, battery materials and
electric-vehicle sectors, and private equity. While interest is
strong from some of these companies, discussions have not advanced
materially during the current Covid-19 pandemic.
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, and
Dustin Reinders, B.Sc., P.Eng., Project Engineer, who are
"Qualified Persons" under National Instrument 43-101.
About Fortune Minerals
Fortune is a Canadian mining company focused on developing the
NICO Cobalt-Gold-Bismuth-Copper Project in the Northwest
Territories. The Company has an option to purchase lands in
Saskatchewan where it may build the hydrometallurgical plant to
process NICO metal concentrates. Fortune also owns the Sue-Dianne
Copper-Silver-Gold Deposit located 25 km north of the NICO Project,
which is a potential future source of incremental mill feed to
extend the life of the NICO Project mill.
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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 construction of
the Tlicho All-Season Road, the Company’s plans to develop the NICO
Project, the preparation of an updated Technical Report for the
NICO Project, the Joint Action Plan on Critical Mineral
Collaboration (the “Joint Action Plan”) and the potential for the
Sue-Dianne property to provide incremental mill feed to 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 timing of completion of the Tlicho
All-Season Road; the timing of the updated Technical Report for the
NICO Project and the results thereof; the Company’s ability to
secure a site in southern Canada for the construction of a NICO
Project refinery; the Company’s ability to arrange the necessary
financing to continue operations and develop the NICO Project; the
receipt of all necessary regulatory approvals for the construction
and operation of the NICO Project and the related
hydrometallurgical refinery and the timing thereof; growth in the
demand for cobalt; the time required to construct the NICO Project;
and 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 Tlicho All-Season Road may
not be completed in the anticipated time frame, the updated
Technical Report for the NICO Project may take longer than
anticipated and the results thereof may not be as positive as
anticipated, the NICO Project may not receive the benefit of any
financing under the Joint Action Plan or any other benefits
therefrom, the Company may not be able to secure a site for the
construction of a refinery, the Company may not be able to finance
and develop NICO on favourable terms or at all, uncertainties with
respect to the receipt or timing of required permits, approvals and
agreements for the development of the NICO Project, including the
related hydrometallurgical refinery, the construction of the NICO
Project may take longer than anticipated, the Company may not be
able to secure offtake agreements for the metals to be produced at
the NICO Project, the Sue-Dianne Property may not be developed to
the point where it can provide mill feed to the NICO Project, the
inherent risks involved in the exploration and development of
mineral properties and in the mining industry in general, the
market for products that use cobalt or bismuth may not grow to the
extent anticipated, the future supply of cobalt and bismuth may not
be as limited as anticipated, the risk of decreases in the market
prices of cobalt, bismuth and other metals to be produced by the
NICO Project, discrepancies between actual and estimated Mineral
Resources or between actual and estimated metallurgical recoveries,
uncertainties associated with estimating Mineral Resources and
Reserves and the risk that even if such Mineral Resources prove
accurate the risk that such Mineral Resources may not be converted
into Mineral Reserves once economic conditions are applied, the
Company’s production of cobalt, bismuth 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.
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version on businesswire.com: https://www.businesswire.com/news/home/20200507005553/en/
Fortune Minerals Limited Troy Nazarewicz Investor
Relations Manager info@fortuneminerals.com Tel.: (519) 858-8188
www.fortuneminerals.com
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