ResourceClips interview with Robin Goad , President of Fortune Minerals Ltd. (TSX: FT)

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Fortune Seeks Partners as it Moves to Production
~ By Greg Klein - October 11 2011
With two projects slated for production within 12 months of each other, the year Fortune seeks a JV partner for NICO too. “Our plan is to fully finance both
2014 should be a big one for Fortune Minerals Ltd TSX:FT. The projects are projects right through to commercial operation with minimal equity dilution,” he
diverse—gold, cobalt, bismuth and copper at NICO in the Northwest Territories explains.
and anthracite coal at Mount Klappan in northwest BC. Both projects have been
test-mined. Much of the infrastructure is either in place, on its way or in storage. NICO has underground and open-pit proven and probable reserves of 907,000
Additionally, as President/CEO Robin Goad explains, the company intends to ounces gold, 82 million pounds cobalt, 109 million pounds bismuth and 27 mil-
recruit deep-pocketed partners to reduce equity dilution. lion pounds copper. The project’s 2008 feasibility study, however, is out of date.
“We’re now completing front-end engineering and design. We’re going to come
out with a new financial model, and we’ll have a new reserve estimate coming
out very shortly. At the same time, we’re completing the permitting process and
working very hard on community engagement.” Goad says.
A key aspect of the project is the plan to ship concentrate to the company’s re-
finery in Saskatchewan. “NICO will be using a very simple flotation concentration
process to reduce 4,650 tonnes of ore per day to only 180 tonnes of concentrate.
That means only five truckloads of material, just 3.7% of the original mass, will
leave the NICO site for Hay River each day. That’s a critical economic attribute.”
From Hay River, concentrate will travel by rail to Fortune’s Saskatchewan Metals
Processing Plant near Saskatoon. The refinery will offer much lower costs for
power, production and labour than could be found in the NWT.
At this advanced stage, NICO might be described as a mine in waiting. It’s also
Last August, Fortune teamed up with South Korea’s POSCO in a JV that gives a mine in storage. Fortune has bought and dismantled Newmont’s TSX:NMC
the world’s third-largest steel producer a 20% interest in Mount Klappan. Fortune Golden Giant Mine buildings, metallurgical labs and other infrastructure, with the
gets an estimated $181 million in return, with $30 million up front, to develop the intention of shipping and reassembling them at NICO. Goad says the Golden
mine and a rail connection. POSCO will fund 20% of operating costs and receive Giant transplant offers another de-risk benefit.
20% of production from one of the world’s largest undeveloped anthracite
deposits. “The Tlicho [aboriginal] government is generally very supportive of our project,”
Goad says. The environmental review is progressing as well. “We just completed
Mount Klappan’s four deposits total 107.9 million tonnes coal measured, 123 a conformity check on our developments assessment report [with the NWT
million tonnes indicated and 359.5 million tonnes inferred. Its Lost Fox deposit Mackenzie Valley Review Board], and I think we’re the first company in history to
has a reserve of 85.6 million tonnes proven and 16.1 million tonnes probable. have zero deficiencies.”
After wash-plant processing, that reserve translates into 51.6 million tonnes
proven and 9.2 million tonnes probable reserves of the 10% ash pulverised coal About 24 kilometres from NICO sits a possible satellite project, Fortune’s Sue
injection (PCI) product used in steelmaking. Dianne Deposit. It hosts an indicated 43-101 of 149.1 million pounds copper,
19,000 ounces gold and 855,000 ounces silver, with an inferred category of 28.3
Last November’s feasibility study projects a $768.4-million CAPEX for the first million pounds copper, 3,600 ounces gold and 122,000 ounces silver.
four years of a minimum 20-year lifespan for an open pit producing an initial
three million tonnes a year. Goad concludes, “Both projects have been test-mined; both projects have been
assessed in positive bankable feasibility studies; both have been pilot-plant
Based on a price of $175 per tonne PCI, the study projects a pre-tax IRR of processed. We’ve done things like buy the Golden Giant mine to reduce risks.
25.4% and an 8% discounted NPV of $1 billion. At $300 a tonne, the study proj- We’ve not only offer compelling value, but we’ve done a lot to reduce risk in
ects a pre-tax IRR up to 60.2% and an 8% discounted NPV up to $ 3.8 billion. terms of diversifying our assets and the work that we’ve conducted to advance
both projects.”
“
The transportation plan entails building tracks on an existing CN rail bed to the
main line 150 kilometres away, which connects with the Ridley Coal Terminal at At press time Fortune had 110.79 million shares outstanding at $0.82 a share for
Prince Rupert, gateway to Asia. a market cap of $90.85 million.
Electricity should be on its way to the region, with BC Hydro’s 344-kilometre
transmission line expected for completion in 2013. Both projects have been test-mined; both
projects have been assessed in positive
“Our POSCO agreement puts money in place to take Mount Klappan through
permitting, detailed engineering and some additional work,” says Goad. “At bankable feasibility studies; both have
the same time we’re working closely with the community, where we have very been pilot-plant processed
significant support, and on finding an additional minority partner that will fund the
project into commercial operation.” – Robin Goad
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