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April 2012 Fortune Minerals Investor Presentation

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April 2012 Fortune Minerals Investor Presentation

  1. 1. Emerging Strategic Metal & CoalFortune Minerals Limited Producer P d Investor Presentation April 2012 TSX-FT
  2. 2. FORWARD-LOOKING INFORMATIONThis document contains certain forward-looking information. This forward-looking information includes, ormay be based upon, estimates, forecasts, and statements as to management’s expectations with respect to,among other things, the size and quality of the Company’s mineral resources, progress in development ofmineral properties, timing and cost for placing the Company’s mineral projects into production, costs ofproduction, amount and quality of metal products recoverable from the Company’s mineral resources,demand and market outlook for metals and coal and future metal and coal prices. Forward-lookinginformation is based on the opinions and estimates of management at the date the information is given and given,is subject to a variety of risks and uncertainties and other factors that could cause actual events or results todiffer materially from those projected in the forward-looking information. These factors include the inherentrisks involved in the exploration and development of mineral properties, uncertainties with respect to thereceipt or timing of required permits and regulatory approvals, the uncertainties involved in interpretingdrilling results and other geological data, fluctuating metal and coal prices, the possibility of project costoverruns or unanticipated costs and expenses, uncertainties relating to the availability and costs of financingneeded in the future, uncertainties related to metal recoveries and other factors. Mineral resources that arenot mineral reserves do not have demonstrated economic viability. Inferred mineral resources areconsidered too speculative geologically to have economic considerations applied to them that would enablethem to be categorized as mineral reserves. There is no certainty that mineral resources will be convertedinto mineral reserves. Readers are cautioned to not place undue reliance on forward-looking informationbecause it is possible that predictions, forecasts, projections and other forms of forward-looking informationwill not be achieved by the Company. The forward-looking information contained herein is made as of thedate hereof and the Company assumes no responsibility to update them or revise it to reflect new events orcircumstances, except as required by law. 2
  3. 3. Listing: TSX-FT Share Price: $ 0.87 Issued Shares: 117.1 117 1 millionCorporateC t Fully Diluted: 123.5 millionInformation Market Cap: $101.9 million Working Capital: $ 27.5 million (Q4- 2011) Total Assets: $ 156.0 million (Q4-2011) China Mining Resources Group Ltd. ~13%Ownership Manulife Global Management US ~ 9%* Officer & Director Holdings ~21% (includes China Mining) Killian Charles, Industrial Alliance Securities ($3.30 Target 01/31/12)Analyst Reports David Davidson, Paradigm Capital ($2.85 Target 07/15/11) Michael Fowler, Loewen Ondaatje McCutcheon ($2.65 Target 12/16/11)SharePerformanceP fAs of April 5, 2012All values in C$ unless otherwise noted 3*Precision IR data at April 12, 2012
  4. 4. PROPERTY INTERESTSPROPERTY INTERESTS Canada Focus - Operating inin mining friendly jurisdictions Canada Focus - Operating mining friendly jurisdictions 4
  5. 5. EMERGING PRODUCER OF GOLD, MET. COAL & SPECIALTY METALSKEY ASSETS Mount Kl M t Klappan A th it C l P j t B iti h C l bi (BC) Anthracite Coal Project, British Columbia One of the world’s premier metallurgical coal development projects JV partnership with South Korean steel producer POSCO Collaboration with CN Rail to extend railway infrastructure Accelerated development strategy with f funding to construction in place NICO Gold-Cobalt-Bismuth-Copper Project, Northwest Territories (NWT) & Saskatchewan 4 million equivalent gold ozs (1) - Significant gold & cobalt - Largest deposit of bismuth in world Mine & Concentrator planned in NWT Vertically integrated metals processing plant planned near Saskatoon, Saskatchewan Potential future mill feed from Sue-Dianne Copper-Silver-Gold satellite deposit Two development projects - Both: Positive definitive feasibility studies >$ 1.3 billion combined base case NPV Successfully test mined & pilot plant processed In permitting Deloitte & Touche engaged to secure strategic partners New reserves & economics pendingp g EXPERIENCED BOARD & MANAGEMENT TEAM Proven records in permitting construction & mine operations (1) Using Metal Price Assumptions: US$ 900/oz Au, US$ 20/lb Co, US$ 10/lb Bi, US$ 2.75/ lb Cu 5
  6. 6. MOUNT KLAPPAN ANTHRACITE COAL PROJECTOne of world’s largest undeveloped metallurgical coal depositsAdvanced project with $ 87 million of work completedDefinitive Feasibility Study with robust economicsRailway development strategy to port of Prince Rupert - Allows for scalable expansionWorld-class JV partner secured with POSCO - One of the world’s largest steel producersSupply shortages of metallurgical coals with growing world consumption Railway sub-grade links mine site with CN mainline & Ridley Terminals 6
  7. 7. JOINT VENTURE WITH POSCOPOSCO Canada (POSCAN) has acquired 20% interest in Mount Klappan. Highlights: Anticipated total payments & cash contributions of $ 181 million based on current capital cost estimates $ 30 million paid to Fortune, $20 million contributed directly to the JV 20% of total development & capital costs - $154 million under current estimates ft t ld l t it l t illi d t ti t $ 17.2 million in additional payments at production 20% of operating costs for 20% of production in-kind for their own use Fortune is Project Manager & is compensated for providing operational, technical & administrative support over life of mineSecures world-class investor & strategic partnerValidates Mount Klappan as one of world s premier metallurgical coal development projects - world’sKey future supplier to global steel industryAccelerates project development - Upfront payment anticipated to provide 100% of funding tocomplete detailed engineering, permitting & stakeholder consultations for constructionMaintains significant upside for Fortune shareholders $601 million post-transaction levered after-tax NPV (8%) for Fortune’s 80% interest at $175 per tonne for PCI based on current reserves 7
  8. 8. ABOUT POSCOWorld’s 3rd largest steel producer by crude steel productionCrude steel production of 35.4 million tonnes in 2010 - Sales for 12 months endedSeptember 30, 2011, totalled US$ 67.0 billionGwangyang Works - Largest steel mill in world, 22 million tonnes capacityGlobal expansion p p plans towards g goal of 50 million tonnes total crude steel p productionLeading innovator in steel production – FinexHeadquartered in Seoul, South KoreaListed on Korea (KRX), New York, London & Tokyo Stock Exchanges 8
  9. 9. STRATEGIC LOCATION & INFRASTRUCTURELarge license area in northwest BC (15 866 Ha) (15,866Close proximity to deep water shipping ports Stewart Port (150km) Ridley Terminals i P i Ridl T i l in Prince R Rupert (330k ) t (330km)Mine site straddles railway right-of-way Track (CN) installed to 150km south of mine Railway road b d l R il d bed largely complete to mine l l i Road access from railway subgrade Support of CN Rail for railway expansionBC Government extending electrical grid to areaProject in Tahltan and Gitxsan Territories BC Government sharing revenues with First Nations 9
  10. 10. MOUNT KLAPPAN RESOURCES & RESERVES Significant potential to upgrade & increase resources & new reserves (expected Q2 2012) Lost Fox deposit remains open for possible expansion Additional coal seams identified below 300 meters & on adjacent lands Mount Klappan Resources (million tonnes)(1) Area Measured (M) Indicated (I) M+I Inferred Lost Fox 107.9 109.5 217.4 91.5 Hobbit-Broatch - 13.5 13.5 258.4 Summit - - - 9.6 Nass - - - - Total 107.9 123.0 230.9 359.5 Historical resources included 2.2 billion tonnes in the speculative class, however, speculative resources are no longer considered NI 43-101 compliant and such resources should not be considered current. (2) Lost F M t ll L t Fox Metallurgical Coal Reserves (million tonnes)(1) i lC lR ( illi t ) Run – Of –Mine Coal Reserves 10% Ash Product Reserves Measured Indicated Total In Situ Proven Probable Total Product 89.5 16.8 106.3 51.6 9.2 60.8(1) Richard Marston, PE is the Qualified Person as defined by NI 43-101(2) 2.8 billion tonne resource in all classes – estimates by Marston & Marston Inc. as of February 2007 10
  11. 11. ANTHRACITE PRODUCTS Highest quality coal with very high carbon & energy content Anthracite only 1% of world coal reserves Metallurgical coal with diverse applications Filter Media US$ ~ 1000 / tonne Metallurgical Reductants / charge carbon US$ ~ 300 / tonne Ultra-Low Vol. PCI US$ ~ 175-200 / tonne Sinter US$ ~ 150-175 / tonne Other products: Blend coal with coking coal for making metallurgical coke Direct coke replacement Urea fertilizers Heating & cooking briquettes Pelletizing Premium thermal coalSource: Company Information. 11
  12. 12. GROWING PCI DEMAND FROM STEEL PRODUCERS Use of Pulverized Coal Injection (PCI) reduces th amount of coke d the t f k required in steel production Steelmakers around the world are expanding PCI use to reduce costs Low-vol PCI typically priced at 70% to 80% of high quality hard coking coal Mount Klappan PCI will achieve a higher price given its ultra-low volatile contentSource: Macarthur Coal 12
  13. 13. DECREASING QUANTITIES OF ANTHRACITE AVAILABLE FOR EXPORT World 2009 anthracite production: ~ 565 million tonnes China: 483 million tonnes Vietnam: 43 million tonnes – Reduced exports to utilize production domestically Few new high-quality deposits in mining friendly jurisdictions Import of Anthracite for Japanese Market Production & Export of Anthracite in 2009 Million mt In million mt 500 4836.5 4506.0 400 Production Export5.5 3505.0 3004.54.0 2503.5 2003.0 1502.52.0 1001.5 43 50 24 29 6 10 6 9 0 Vietnam China Russia Others Export /Source: Marubeni (1990 – 2009 data), China Coal Resource Website (2010 data), Deloitte 55.8% 1.2% 58.4% Production 32.2% Source: EIA, Marubeni 13
  14. 14. EMERGENCE OF CHINA AS NET COAL IMPORTER China became a net coal importer of anthracite in 2004, coking coal in 2007, all coals in 2009 Coal & Anthracite Net Imports by China In million mt 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011350.0350 0 $300 $291300.0 Coal Total250.0 Anthracite Met Coal Price (US$/t) $215200.0200 0 167.7 $129 145.8150.0 $125 $115 $98 103.4100.0 $58 $47 $45 50.0 50 0 31.1 31.9 31 9 17.5 23.2 22.2 7.1 13.3 1.4 - (3.9) (4.0) (2.1) (4.9) (25.4) (50.0) (46.1) (72.7) (68.3)(100.0)(100 0) (83.6) (83 6) Source: China Coal Resource Website, Bloomberg 14
  15. 15. SIGNIFICANT FUTURE MET COAL DEMAND GROWTH Global Met Coal Demand Increasing demand for good quality1,600 Million mt metallurgical coals 1,4401,400 China’s growth ~10% per yr >500 million mt demand increase over the next decade 1,185 Japan & South Korea are1,200 with limited new production potential t ti l increasing anthracite imports – g p New steel technologies - Lower1,000 920 emissions 800 Emerging economies are driving forces for future metallurgical coal demand 600 India’s growth ~8% per yr & - 400 Crude steel production expected to increase from 72.8 million tonnes to 124 million tonnes by 200 2012 & 293 million tonnes by 2020 - 2010 2015 2020 Brazilian crude steel production expected to increase from 26.5 Source: Peabody Global Energy Analytics million tonnes to 103 million tonnes by 2030 Insufficient supply of metallurgical coals to meet forecast global demand 15
  16. 16. RAILWAY UPGRADE & EXPANSIONRailway transportation of coal provides lower operational risk over trucking – Allows forscalable expansion of production to take advantage of large resource baseCN Rail operates between Prince George & port of Prince Rupert & on Dease Lake Line toMinaret, 150 km south of Mount KlappanRailway road bed largely constructed to mine site – Brownfield extension from MinaretSurvey & engineering of railway extension - $ 317 8 million capital cost i l d d i 2010 DFSS i i f il t i 317.8 illi it l t included inCN collaborating on railway upgrade & extension to Mount Klappan Existing railway right-of-way & road bed 16
  17. 17. PORT OF PRINCE RUPERTIce-free, deepwater port 36 hours closer to Asia than port of VancouverRidley coal terminal a world-class coal & bulk materials handling facility Capable of handling full Capesize vessels that reduces ocean freight Currently handling ~70% of 16 Mtpa design capacity Expansion to 24 Mtpa in progress – Potential to expand to 50 Mtpa Opportunities for shared cargos & blending of coals with other metallurgical coal producers 17
  18. 18. 2010 DEFINITIVE FEASIBILITY STUDY November 2010 update to 2005 & 2008 DFS Based on railway transport of coal to Ridley Coal Terminal in Prince Rupert Initial 3 Mtpa production from Lost Fox deposit open pit mine, wash plant & site infrastructure 60.8 60 8 Mt of product coal reserves – 20+ yrs production (only 3 6% of global resource) 3.6% Premium ultra-low volatile PCI product Can diversify product mix to produce premium products (charge carbon) & sinter Life of mine average Free On Board (FOB) vessel cash cost US$104 79/tonne (C$110 30/tonne) US$104.79/tonne (C$110.30/tonne) Pre-Tax NPV (8%) In billions BASE CASE $4.5 Ultra-Low Volatile PCI $3.8 $4.0 US$175 / tonne (C$1 = US$ 0.95) $3.3 $3.5 $3.0 $2.7 PRE-TAX AFTER TAX $2.5 $2.2 $2.0 $1.6IRR 25.4% 20.7% $1.5 $1.0NPV (8%) C$ 1,027.8 Million C$ 667.4 Million $1.0 $0.5 $0.5Capital (Years 1-4) C$ 768.4 Million $- (includes railway capital) $150 / t $175 / t $200 / t $225 / t $250 / t $275 / t $300 / t 18
  19. 19. SIGNIFICANT UPSIDE POTENTIALRail transportation allows for higher annual production than 3 MtpaDFS reserves only represents 3.6% of total resource – New reserves in preparation Updated reserves in preparation for Lost Fox deposit that can support higher production rates. Production can be expanded from adjacent Hobbit – Broatch deposit Current resource only identified to 300 meters – Additional coal seams identified at depth Budget in place for additional drilling3rd Party contribution to railway capital costs increases NPVBC Government extending electrical grid & connection lowers power costs & enables use oflower cost mining equipmentLease-to-purchase of mobile equipment fleet lowers upfront capital costs & increases IRR One of world’s largest undeveloped deposits – Railway transportation solution provides scalable expansion potential 19
  20. 20. ACCELERATED DEVELOPMENT STRATEGYJV partner now secured & accelerated development program underwayNext steps include: Update reserve estimate Complete updated feasibility study on the Lost Fox Mine Complete engineering on railway transportation with CN Rail Continue community & stakeholder engagement Complete environmental permitting process C l t i t l itti Conduct additional expansion drillingDeloitte engaged to secure 2nd stage strategic partner Minority Mi i equity i i investor at the project l h j level l Provision of debt & equity tied to off-take Expertise in coal end market with strong financial position Objective of announcing fully financed, permitted project at conclusion of currently planned programs 20
  21. 21. NICO GOLD-COBALT-BISMUTH-COPPER PROJECT 100% Ownership – No 3rd party royalties Open pit & underground mine & mill i N th O it d d i ill in Northwest T it i (NT) t Territories Saskatchewan Metals Processing Plant (SMPP) Vertically integrated hydrometallurgical facility to produce gold doré, cobalt sulphate or cathode, bismuth ingot & copper metal $ 100 million work completed to date, includes: $ 20 million test mining $ 12 million metallurgy & process pilot plants 2007 positive f iti feasibility study & 2008 update ibilit t d d t 32.3% Pre-tax IRR Pre-tax $ 361 million 8% NPV Significant recent improvements not included g p 31 Million tonne reserve – 4 Million eq gold ozs* Golden Giant (Hemlo) buildings & equipment purchased & dismantled to reduce capital costs Environmental A E i t l Assessments advanced f mine & SMPP permitting t d d for i itti * Using Metal Price Assumptions: US$ 900/oz Au, US$ 20/lb Co, US$ 10/lb Bi, US$ 2.75/ lb CuTest mining 2006/2007 21
  22. 22. MINE LOCATION & INFRASTRUCTURE 5,140 Ha lease in southern NT Winter access roads All-weather road planned by governments to Hwy (135 km) $18 million in place for stage 1 – realignment, bridges & roadbed Engineering & environmental work underway 450 km from railway at Hay River for transport of concentrates to SMPP 160 km from City of Yellowknife 50 km from Town of Whati 22 km from Snare Hydro Tlicho First Nation Settled land claim Co-operative Relationship Agreement 22
  23. 23. SASKATCHEWAN METALS PROCESSING PLANT (SMPP) Hydrometallurgical plant to process bulk concentrate from NICO mine & mill to produce gold doré, cobalt sulphate or cathode, bismuth ingot & copper metal High concentration ratio of ore (low mass pull) using simple flotation 4,650 tonnes of ore / day reduced to only 180 tonnes of concentrate (3.8% sulphide fraction) Allows concentrate to be shipped to Saskatchewan for lower cost processing Advantages to Saskatoon site Located on CN Rail line - Close to Trans Cda Hwy Inexpensive power (5.7 cents / kWh) Close to natural gas & reagent sources Skilled worker / engineer pool – 85 employees 5 year tax holiday SMPP capital cost ~ $200 million NICO SaskatoonCN Rail Canadian Route Map 23
  24. 24. DIVERSIFIED EXPOSURE TO GOLD & SPECIALTY METALS Value by Metal at Spot PricesGold the most valuable component by value CopperFront end gold recovery - largest source of 2%revenue in first year of operation y p GoldBismuth is second largest by value – Largest Bismuth 35%bismuth deposit world-wide 33%High purity cobalt metal (99.8%) or sulphatecommands premium price. Cobalt 30% Gold – 907,000 oz @ $1651/oz Cobalt – 82 Mlbs @ $16.00/lb Bismuth – 109 Mlbs @ $13.25/lb Copper – 27 Mlbs @ $3.35/lb Prices as at Oct 24, 2011 24
  25. 25. GOLD – COUNTER CYCLICAL HEDGE Historical & Forecast Gold Price$2,000 Gold price increased consistently in past $1,900 9 years, especially after recent economic$1,800 downturn $1,591$1,600$1 600 While mine supply remains relatively flat,$1,400 $1,211 future demand continues to grow:$1,200 Growing physical demand from$1,000 $873 $873 Asia & Central banks $800 $697 $604 Growing investment demand based $600 $410 $445 on currency protection & safe $363 $400 $310 haven status $200 Provides a flexible financing opportunity $- Source: Bloomberg; Energy & Metals Consensus Forecasts, Oct 2012 25
  26. 26. COBALT – ROBUST MARKET WITH INCREASING DEMAND World cobalt production (in tonnes) Wide application of industrial usage60% 4% Batteries (27%) 51% 5%50% Superalloy (19%) 6% 27% Hard Materials (13%)40% 7% Colours (10%)30% Catalysts (9%) 9%20% Magnets (7%) 12% 7% 7% Hardfacing & Other Alloys (6%)10% 5% 5% 4% 10% 19% 3% 2% 2% 2% Tyre Adhesives, Soaps, Driers (5%)0% 13% Feedstuffs (4%)• Vast majority of cobalt sourced from regions that are politically unstable or prone to export restrictions • 80,000 t market with demand growing by ~10% / year• Congo (DRC) currently accounts for 51% of global C tl t f f l b l • Wide metallurgical & chemical market applications in: supply batteries, high strength alloys, cutting tools, catalysts, etc.• China has the largest refining capacity (43% in 2010) • Largest growth is in lithium ion & nickel metal hydride but limited mine supply batteries for electronic devices & hybrid/electric vehicles• LME initiated futures market trading for cobalt in g • High purity cobalt (99.8%) used in aerospace applications 2010, resulting in a more liquid market • Cobalt sulphate (21%) used for batteries• NICO will be a reliable North American producer Source: USGS Industry Survey Source: Cobalt Development Institute 26
  27. 27. BISMUTH – ENVIRONMENTAL FRIENDLY WITH GROWTH POTENTIAL Growing number of applications World reserves (in tonnes) Bismuth prices continue to increase Alloys, solders and 300,000 others, 8% 250,000 240,000 Metallurgical 200,000additives, 27% 150,000 100,000 48,661 50,000 39,000 11,000 10,000 10,000 5,000 5,000 Chemicals and pharmaceuticals, - 65%• Traditionally used in fusible alloys, cosmetics, chemicals etc. • World market ~ 20,000 tonnes per year • Bismuth prices have risen, supported by steady demand & constrained• New markets focus on super • China is the principal source of bismuth supply conductors, CDs & auto anti-corrosion & has total reserves of 240Kt, materials accounting for 80% of world reserves• Environmentally safe replacement for • China has closed 20% of its production lead in plumbing & electronic solders, due to environmental concerns brass, ceramic glazes, free cutting steel, • NICO contains over 48Kt of bismuth, hot dip galvanizing & paint pigments equivalent to 15% of world reserves &• Global framework to eliminate lead could the world’s largest deposit increase bismuth consumption by 25%• European legislation to eliminate lead in electronics Source: USGS Industry Survey Source: USGS Industry Survey 2010 Source: Asian Metal, Metal Bulletin 27
  28. 28. NICO MINERAL RESERVES (TO BE UPDATED SHORTLY)Underground Mineral Reserves Tonnes Au (g/t) Co (%) Bi (%) Cu (%) Proven 1,403,000 2.23 0.16 0.22 0.04 Probable 767,000 2.92 0.17 0.19 0.03 Total 2,170,000 2.47 0.16 0.21 0.03Open Pit Mineral Reserves Tonnes Au (g/t) Co (%) Bi (%) Cu (%) Proven 15,019,000 0.85 0.12 0.16 0.04 Probable P b bl 13,797,000 13 797 000 0.71 0 71 0.12 0 12 0.15 0 15 0.03 0 03 Total 28,816,000 0.79 0.12 0.15 0.04Combined Mineral Reserves Tonnes Au (g/t) Co (%) Bi (%) Cu (%) Proven 16,422,000 0.97 0.12 0.16 0.04 Probable 14,564,000 0.83 0.12 0.15 0.03 Total 30,986,000 0.91 0.12 0.16 0.04 Contained Metal 907,000 82 million 109 million 27 million ounces pounds pounds poundsReserve estimate by P&E Mining Consultants Inc., Eugene Puritch, P.Eng. & Fred Brown, CPG PrSciNat, Qualified Persons as defined by NI-43-101 28
  29. 29. 2010 DRILL PROGRAM38 holes drilled in 2010Drilling successfully expanded deposit &intersected high-grade gold intervals 51.3m averaging 2.2 g Au & 0.11% Co, g g g/t % , including 3m averaging 15.59 g/t Au, 0.46% Co, 0.05% Bi & 0.20% Cu 8.00m averaging 4.74 g/t Au & 0.16% Bi, including 1m grading 35 g/t Au 3.38m averaging 11.59 g/t Au, 0.37% Co, 0.16% Bi & 0.14% Cu, including 1.67m averaging 20.04 g/t Au, 0.36% Co, 0.24% Co 0 24% Bi & 0 13% Cu 0.13% 5.00m averaging 4.84 g/t Au, including 2.5m averaging 9.21 g/t Au 20.1m averaging 0.38% Co & 0.37% BiNew Mineral Reserve estimates pending 29
  30. 30. UNDERGROUND TEST MINING & PILOT PLANTS Mining conditions geometry & grades for conditions, deposit confirmed Environmental impacts assessed Portal, decline ramp & 2 mine levels established with ventilation raise t surface t bli h d ith til ti i to f ~$ 20 million pre-production development completed Large sample collected for $ 8 million pilot plant tests Proved process flow sheet Verified production of high value metal products Increase in metal recoveries over feasibility study Tangible demonstration of successful p j g project to governments & communities Reduced project risk 30
  31. 31. GOLDEN GIANT MINE (HEMLO) MILL, ONTARIOBuildings, equ p e & spa e pa s acqu ed from Newmont Ca ada u d gs, equipment spare parts acquired o e o CanadaRelocation to NICO for significant reduction in capital costs & project riskNo environmental liability for Hemlo siteDismantling & removal completed for net cash cost of ~$ 19 millionDDemonstration of project execution on b d t & schedule t ti f j t ti budget h d l 31
  32. 32. 2008 DEFINITIVE FEASIBILITY STUDYMicon, Met Chem, Golder, SGS Lakefield & metallurgical & engineering experts Met-Chem,Results: Pre-tax IRR 32.3% Pre-tax C$361 million 8% NPV Pre-production Pre production capital cost C$230 million Cash Cost US$1.41/lb Co (1)(2) Cash Cost US $259/oz Au equivalent (2) April 2008 metal price sensitivity increases IRR to 97.2% & NPV (8%) to $1.5 billion(3)StudySt d now outdated td t d New reserves & operational improvements not included Capital costs will be significantly higher(1) Net of credits for gold and bismuth sales(2) Base Case metal prices of US$750/oz Au, US$20/lb Co, US$10/lb Bi and US$/C$ 0.97(3) April 2008 metal prices of US$900/oz Au, US$50/lb Co, US$16/lb Bi and US$/C$ 0.97 32
  33. 33. POST-DEFINITIVE FEASIBILITY STUDY IMPROVEMENTS43% increase in reserves to 31 Mt – 18 Yr mine life - Excludes results of 2010 drilling16% production rate increase to 4,650 tpdMore efficient mine plan - Eliminated underground backfillingIdentification of low strip starter pit – Eliminates pre-strippingCo-disposalCo disposal of waste rock & tails – Reduces dam structures & reclamation costsCommodity price assumptions higher for gold & bismuthImproved recoveries from pilot plant: Gold 56-85%, Averages 76% , g Cobalt 84% Bismuth 73% Copper 58% - Not previously includedHigher value end products: Cobalt 21% cobalt sulphate option – Lower capital & operating costs - Premium Bismuth 99.9% ingot – Feasibility study assumed concentrate Copper Copper metal – Not included in feasibility studyHydrometallurgical process plant relocated to Saskatoon Lower OPEX (~$7 million per yr) – Mitigates capital cost increase (~$30 million) 33
  34. 34. RESULTS OF NICO PROJECT IMPROVEMENTSHigher forecast annual metal production Gold yrs 1 & 2 of mine life ~70,000 ozs, yrs 3-18 ~35,000 ozs Cobalt ~ 3.4 million lbs (1,550 tonnes) Bismuth ~ 3.65 million lbs ( (1,650 tonnes) ) Copper ~ 770,000 lbs (350 tonnes)Cost ~$ 56 / tonne, ~$ 90 million / yrRevenue ~$ 100 / tonne, ~$ 180 million / yrCapital costs expected to be ~$400 millionUpdated economics p p pending receipt of Front End Engineering & Design ( g p g g g (FEED) Study by ) y yJacobs Engineering & other engineering Co.’s 34
  35. 35. NICO FINAL PRODUCTS Cobalt Carbonate Co 50-51 % Ni 0.005 % Ca 0.018 % Mg <0.005 %Cobalt Cathode Metal Cu 0.005 %Co >99.8% >99 8% Cobalt Sulphate (heptahydrate) Co 21 % Ni <0.003 % Fe <0.001 % Cu <0.001 <0 001 %Bismuth Ingot Zn <0.001 %Bi >99.9% 35
  36. 36. ADVANTAGES OF NICO PROJECTReliable North American source of supply of critical specialty metalsDiversified product mix reduces exposure to metal price volatility Cobalt supply coupled with world’s largest bismuth deposit Strong leverage to gold – Counter cyclical hedge – Financing options Counter-cyclical Low operating cost net of co-productsVertical Integration – Fortune controls process from mine to product reducing risk of third partymetal supplier or custom processorsSulphide cobalt source Lower capital & operating costs compared to laterites High concentration ratio allows transport to low cost processing environment Exothermic reaction in autoclave reduces energy consumption & generates its own acidSMPP flowsheet allows for flexible & diversified product mix 36
  37. 37. DEVELOPMENT STRATEGYNew reserve estimates pending – Focus on expansion of goldFEED studies nearly complete – Currently reviewing draft Revised capital & operating costs & financial modelEnvironmental Assessments advanced for mine & SMPP permitting Public Hearing Stage in NT – Targeting recommendation to Minister in 2012 Targeting receipt of permits in Saskatchewan in 2012 for SMPPExpanding management teamE diProduction targeted in 2014Deloitte engaged to secure strategic partner - Ideal partner: Minority equity investor at the project level Ability to arrange & guarantee project finance facility Expertise in cobalt or specialty metal end markets/off-take partner Committed to an accelerated development plan 37
  38. 38. 2012 TARGETED MILESTONESMount Klappan Revised Project Description submission to BC EAO (Q2) New reserves (Q2) Revised economics (Q2) MOU with CN Rail (Q2) MOU with Gitxsan BC First Nation (Q2) Second stage strategic partner(s) and project financingNICO New reserve estimates (Q2) Revised economics (Q2) Initiate Tlicho Participation Agreement (PA) Negotiations (Q4) SMPP permits (Q4) Initiate discussions with the Wekèezhìi Land and Water Board to advance EA process (Q4) Closure of Public Registry in the DAR Review process (Q4) Strategic St t i partner(s) and project financing t ( ) d j t fi iCorporate OTC QX Listing (Q2) 38
  39. 39. DirectorsMahendra Naik, B Comm, CA Chairman, Director CFO Fundeco - Founding director & former CFO, IAMGOLDGeorge Doumet, MSc, MBA Honorary Chairman, Director Chemical Engineer – President & CEO, Federal White CementRobin Goad, MSc, PGeo President & CEO, Director Geologist - 30 yrs mining & exploration experienceDavid Knight, BA, LLB Secretary, Director Partner, Norton Rose specializing in securities & mining lawJames Excell, BASc Director Metallurgical Engineer – 35 yrs mining experience BHP-BillitonWilliam Breukelman, BASc, MBA, PEng Director Chemical Engineer – Chairman, GedexJames Currie, BSc (Hons), PEng Director Mining Engineer – COO, Kimber ResourcesThe Honorable Carl L. Clouter Director Commercial pilot - former owner of charter airline in NWTShou Wu (Grant) Chen, MSc, MBA Director Geologist – Deputy Chairman & CEO, China Mining Resources GroupManagementJulian Kemp, BBA, CA VP Finance & CFO Chartered Accountant – 20+ yrs mining financial experienceThomas Rinaldi, BSc VP Operations Mining Engineer – 30 yrs engineering & operations experienceMichael De Carlo, BSc, BBA Project Manager Mining Engineer – 40+ yrs engineering & managerial experienceBill Shepard Logistics Manager 15 yrs experience in procurement and logisticsDr. Richard Schryer, PhD Director Regulatory & Aquatic Scientist –20+ yrs experience in mine permitting & environmental Environmental Affairs assessmentsAdam Jean, HBA, CA Controller Chartered Accountant previously with Ernst & YoungJames Mucklow MESc PEng Mucklow, MESc, Manager Env & Community Env.& Geological Engineer – 20+ yrs geological & environmental experienceKeith Lee, BSc Senior Process Engineer 25 yrs operations, engineering & mineral processing experienceCarl Kottmeier, MBA, Peng Project Manager Mining Engineer – 24 yrs engineering & operations experienceJoon Kim, MASc, PEng Mine Planning Engineer Mining Engineer – 10+ years operations and engineering experience 39
  40. 40. APPENDIX A Recent Coal M&A Metrics Reserves + Resources Reserves Resources Price/ResourcesAsset Buyer Stake (mt) (mt) (mt) Price ($mln) ($/tonne) Location Status Mineral Type Mine Type DateSouthGobi CHALCO 60% 281 176 457 $926 $3.38 Mongolia Operational Met/Thermal Open Pit Apr-12Grande Cache Winsway 100% 164 137 301 $1,000 $3.32 Canada Operational Met/Thermal Open Pit/Underground Oct-11Coal & Allied Peabody/Arcelor 100% 1,982 1,102 3,084 $10,800 $3.50 Australia Operational Met/Thermal Open Pit Aug-11MacArthur Coal Peabody/Arcelor 100% 654 181 834 $4,794 $5.75 Australia Operational PCI Open Pit Jul-11Western Coal Walter Energy 100% 257 190 446 $3,235 $7.25 Canada/US/UK Operational Met/Thermal Open Pit/Underground Nov-10Prodeco Glencore 100% 250 250 $2,009 $8.04 Columbia Operational Thermal Open Pit Mar-10Cumberland Coal Massey Energy 100% 416 416 $960 $2.31 United States Operational Thermal/Met Underground Mar-10Minas Moatize Beacon Hill 49% 33 33 $35 $2.16 Mozambique Operational Thermal/Met Open Pit May-10Raven Crest Mining Xinergy 95% 17 17 $40 $2.48 United States Operational Thermal Open Pit Mar-10Centennial Coal Ltd Banpu 100% 1,930 419 2,349 $2,232 $0.95 Australia Operational Thermal/Met Open Pit/Underground Jul-10West Virginia Coal Cliff Natural Resources 100% 119 119 $757 $6.36 Australia Operational Thermal/Met Open Pit/Underground Jul-10 Average $4.14Xstrata - Peace River Coalfield JX Nippon Oil & Energy Corp 25% 422 - 422 $435 $4.12 Canada Planned/Announced Met Underground Mar-12Sukunka (Peace River Coalfield) Xstrata 100% 236 - 236 $500 $2.12 Canada Planned/Announced Met Underground Mar-12Lossan (Peace River Coalfield) Xstrata 100% 186 - 186 $40 $0.22 Canada Planned/Announced Met Underground Oct-11Maules Creek J-Power 10% 317 362 679 $359 $5.29 Mozambique/South Africa Under Construction Met Open Pit Oct-11First Coal (Peace River Coalfield) Xstrata 100% - - - $147 na Canada Planned/Announced Met Underground Jul-11Reversdale Rio Tinto 100% 8,040 326 8,366 $3,822 $0.46 Mozambique/South Africa Under Construction Met Open Pit Dec-10Vele Coal of Africa Limited 26% 720 720 $16 $0.09 South Africa Under Construction Thermal Open Pit/Underground Feb-10Maruwai Coal Complex PT Adaro Energy TBK 25% 774 774 $335 $1.73 Indonesia Under Construction Thermal/Met Open Pit/Underground Mar-10Maules Creek Aston Resources 100% 610 610 $429 $0.70 Australia Planned/Announced Thermal/Met/PCI Open Pit Feb-10Delta Mining Consolidated Limited Sable Mining Africa Limited 28% 200 200 $25 $0.45 South Africa/Botswana Planned/Announced Thermal/Met Open Pit/Underground Apr-10Zambeze Coal Deposit Wuhan Iron and Steel Corporation 40% 9,045 9,045 $800 $0.22 Mozambique Planned/Announced Thermal/Met Open Pit Jun-10Belvedere Coal Deposit Vale SA 25% 2,475 2,475 $92 $0.15 Australia Planned/Announced Met Underground Jun-10Collingswood Coal Deposit KEPCO/POSCO/Cockatoo 51% 115 115 $158 $2.69 Australia Planned/Announced Thermal/Met/PCI Open Pit Jul-10Bylong/Sutton Forest KEPCO/POSCO/Cockatoo 100% 732 732 $360 $0.49 Australia Planned/Announced Thermal Underground Jul-10Galilee mine Adani Enterprises 100% 7,800 7,800 $2,700 $0.35 Australia Planned/Announced Thermal Open Pit Aug-10Middlemount Gloucester Coal 28% 1,930 57 1,987 $406 $0.74 Australia Under Construction Met Open Pit p Aug-10 gSource: Company reports and CIBC World Markets Inc. 40
  41. 41. Notes 41
  42. 42. Notes 42
  43. 43. Notes 43
  44. 44. For further information, please contact: Emerging StrategicTroy Nazarewicz, Investor Relations Manager 148 Fullarton Street, Suite 1600 Metal & Coal London, Ontario, Canada Producer P d N6A 5P3 Tel. (519) 858-8188 Fax. (519) 858-8155 E-mail. t E il tnazarewicz @f t i @fortuneminerals.com i l Website. www.fortuneminerals.com TSX-FT

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