Fortune Minerals Ltd. (TSX: FT) is a diversified resource company with several mineral deposits and a number of exploration projects. All projects are located in Canada. ResourceClips.com highlights the company's developments regarding their gold and coal projects.

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A Complicated Company
Fortune Minerals Will Produce Gold in 2013 and Coal in 2014
~ By Kevin Michael Grace - March 16, 2011
“We are a complicated story, no question,” declares Fortune Minerals Post-mining is when Nico gets interesting. The ore will be concentrat-
Ltd President and CEO Robin Goad. He adds, “Both of our assets are ed in NWT and then shipped by rail to a refinery, the Golden Giant Mill,
a little bit complicated, too. Having them together is also somewhat which was bought in Ontario and disassembled for shipment to the
unusual in a development-stage company. But I would say that the West. “One of the very attractive attributes about Nico,” Goad explains,
largest and most successful mining companies, those that gener- “is that the ore is concentrated very well. We will process ore at 4,650
ate the strongest returns, are diversified companies, like Teck, Anglo tonnes per day, and that gets reduced to 180 tonnes of concentrate:
American, BHP Billiton and Rio Tinto. almost a 20:1 ratio, using a very inexpensive flotation process. Our
processing costs, power costs and labour costs will be much lower in
Saskatchewan.”
A 2008 feasibility study of Nico estimated a pre-tax $361 million net
present value at an 8% discount rate, with a 32.3% pre-tax internal
rate of return. “This is out of date,” Goad admits. “We have new eco-
nomics coming out that will reflect the improvements in development,
a larger reserve, higher throughput and the much-higher recover-
ies and commodity prices. But the capital costs will be substantially
higher, as the scope of the project has been significantly expanded.”
Fortune’s Mount Klappan anthracite coal project in north-central BC
hosts 2.8 billion tonnes, “one of the largest undeveloped assets in the
world,” Goad says. A November feasibility study estimates a 20-year
mine life (consuming only 3.6% of the resource), an initial capital out-
lay of $768.4 million for the mine surface facilities and railway, a pretax
internal rate of return of 25.4% and a $1-billion net present value at an
8% discount rate, at a base case of US$175 per tonne. The coal will
Of course this $170-million market cap junior is hardly in the same be shipped by rail to Prince Rupert. Goad adds, “We have recently en-
league as the giants above. However, Fortune does have two signifi- gaged Deloitte & Touche to find a financial partner for Mount Klappan,
cant projects which, after much logistical strategizing, should be in and discussions are at a very advanced stage.”
production within three years.
Goad projects that Nico will go into production at the “end of 2013,”
Nico is a gold-cobalt-bismuth-copper-deposit north of Yellowknife in and Mount Klappan will start producing “sometime in 2014.”
the Northwest Territories. According to a January 43-101 estimate, it
has 4 million gold equivalent ounces: a 16.4-million tonne proven re- Goad admits that Fortune’s complicated nature, “is one of our chal-
serve of gold at 0.97 grams per tonne and a probable reserve of 14.6 lenges” and that this has adversely affected its share price, currently at
million tonnes at 0.83 g/t, totaling 907,000 ounces. It has 82 million $1.59, down from a recent high of $2. He concludes, “Investors need-
pounds of cobalt, 27 million pounds of copper and 109 million pounds ed to see that we could actually accomplish our goals of advancing
of bismuth. “It is the largest bismuth deposit in the world,” Goad says. these two very important projects, now significantly derisked, which
collectively will have about $1 billion in capital costs. We’ve essentially
But this estimate does not include data from the most recent drilling got all the ingredients: the assets, the people, we’re relatively well
program, which generated strong results. Highlights from December financed and soon to be even better financed, if we can successfully
“
3 include 4.74 g/t gold over 8 metres, including 35.9 g/t over 1 metre, navigate the partnering process. I believe there is huge opportunity for
11.59 g/t over 3.4 metres and 4.84 g/t over 5 metres. Highlights from further share appreciation.”
September 9 include 2.22 g/t over 51.3 metres, including 4.93 g/t over
13 metres and 4.68 g/t over 4 metres. Goad comments, “The new
reserve estimates are in preparation, and they will be coming out in The largest and most success-
fairly short order.”
ful mining companies, those that
Mining will be a combination of underground and open pit. Goad generate the strongest returns,
explains, “For cash-flow scheduling purposes, we will mine the high-
margin gold first. About 68% of our mill feed will come from under- are diversified companies
ground sources in the first two years, then it goes entirely open pit for —Robin Goad
the remainder of the mine life, which is 18 years.”
www.resourceclips.com publisher: Andrea Butterworth abutterworth@resourceclips.com - 778.432.0593
editor: Kevin Michael Grace kgrace@resourceclips.com - 250.483.3753
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