Lithium-ion battery demand for cobalt and
supply chain concerns contribute to favorable financing
environment
Issued Capital: 270,899,007
LONDON, ON, Jan. 18, 2017 /CNW/ - Fortune Minerals Limited
(TSX: FT) (OTCQX: FTMDF) ("Fortune" or
the "Company") (www.fortuneminerals.com) is pleased to
announce the engagement of PricewaterhouseCoopers Corporate Finance
Inc. ("PwCCF") as the Company's Financial Advisor to help
secure financing for construction of the NICO
Cobalt-Gold-Bismuth-Copper Project in Canada. PwCCF has a global network of more
than 2,500 professionals across 60 countries to provide in-depth
execution and expertise in cross border transactions and provide
Fortune with the right blend of transaction experience, sector
insight and local relationships to drive strategic objectives and
create company value. The recent announcement of government funding
for a public road to the community of Whati needed for mine
operations, and the positive momentum in cobalt and gold markets,
will allow the Company to proceed with financing construction of
the project. NICO is a vertically integrated development comprised
of a proposed mine and mill in the Northwest Territories and hydrometallurgical
refinery in Saskatchewan where
concentrates from the mine are planned to be processed to
value-added metals and chemicals.
Like our news? Click-to-Tweet.
Stephen Mullowney,
PricewaterhouseCoopers' Managing Director of Corporate Finance
commented, "We are pleased to be working with Fortune to arrange
the NICO project financing. NICO is uniquely positioned as a
shovel-ready asset to meet the needs of the lithium-ion battery
industry as it enters the next phase of commercialization with
transformative automobile electrification and stationary storage of
power enabling renewable energy in grid base load."
Robin Goad, Fortune's President
and Chief Executive Officer said, "Development of NICO would make
Fortune a reliable emerging producer of battery-grade cobalt
chemicals and respond to the significant growth in demand as the
market transitions into supply deficit. As a new Canadian source of
cobalt, NICO mitigates some concerns over geographic concentration
of supply in politically unstable countries and ethical procurement
of raw materials with supply chain transparency. With cobalt metal
trading above US$16 per pound and
trending higher toward longer-term averages, it is an opportune
time to secure the project financing needed for construction."
PwCCF Advisory Mandate:
PwCCF provides a full range of debt, capital and M&A
advisory services, from acquisitions and disposals, through to
equity and debt raising, debt refinancing, public-private
partnership arrangements and complex procurement, across all
industry sectors, to corporations, private equity firms, public
sector bodies, sovereign wealth and other investment funds. In the
last 10 years, PwCCF provided financial advice on over 4,000
transactions globally and in 2016, was ranked first by deal count
by Merger Market with over 350 deals completed.
Fortune has expended more than C$116
million advancing NICO from an in-house discovery to a
development project with positive Feasibility and Front-End
Engineering and Design Studies prepared by globally recognized
engineering firms. Capital costs to develop the asset are estimated
at C$ 589 million, excluding working
capital. With the assistance of PwCCF, Fortune plans to secure
these funds through a combination of strategic partnerships,
conventional and supplier debt, product off-take and/or forward
sales of a portion of the contained gold. The key to realizing full
value for any one component is closing on the entire project
financing concurrently.
Cobalt Market:
Cobalt is a critical metal used in a variety of metal and
chemical applications and annual consumption of more than 100,000
metric tonnes. Cobalt demand has grown at an approximate 6%
compounded annual rate over the past 20 years, primarily due to its
use in high performance rechargeable batteries. Cobalt delivers
superior energy density for power and performance and
cobalt-bearing lithium-ion batteries are expected to remain the
industry standard for the foreseeable future. The first phases of
battery commercialization in portable electronic devices has driven
cobalt used in batteries to account for approximately 50% of the
current market. The next phase of battery commercialization is
underway with transformative evolution of the automobile from
internal combustion engines to electric drive trains. Significant
demand is also projected to come from stationary cells used to
store electricity from intermittent wind and solar generators and
off-peak charging from the electrical grid. At least 14 battery
mega-factories have either been announced or are under construction
to meet the expected increase in demand, including the US$ 5 billion Tesla Gigafactory in Nevada that recently commenced production. By
2018, the Gigafactory is expected to produce 35 GWh per year of
lithium-ion battery cells, nearly as much as the rest of the entire
world's combined production. Notably, Exane BNP Paribas forecasts
cobalt demand to double to approximately 200,000 metric tonnes by
2022, primarily due to demand in electric vehicle batteries.
The future supply of cobalt is at risk due to various factors,
including geographic concentration of supply and the predominant
cobalt production as a by-product of copper and nickel mining. The
Democratic Republic of the Congo
is responsible for more than 60% of cobalt mine supply and is a
politically unstable country that could erupt in violence as a
result of the reluctance of the current President to cede power
pursuant to the constitutional mandate in 2016. China controls more than 52% of cobalt
refinery production and 85% of refined cobalt chemical supply after
purchasing control of the Tenke-Fungurume Cobalt-Copper Project in
the Congo. Near surface oxide
deposits in the Congo are also
becoming depleted, requiring mines to transition into deeper
sulphide ores that require more expensive downstream processing.
Nickel-cobalt laterite deposits in other counties also have very
high capital and operating costs and there have been mine closures
due to low copper and nickel prices. Ethical sourcing of raw
materials has become an issue for the electronics industry because
of the use of child labour in some Congolese artisanal mines and
concerns about metals being used to finance conflicts under U.S.
Dodd-Frank and European Ethical Sourcing legislation.
NICO is planned to become an important new Canadian vertically
integrated producer of cobalt with supply chain transparency and
uninterrupted custody of metal from ores through to the production
of battery chemicals. The more than 1.11 million ounces of gold
contained in the NICO mineral reserves is also a highly liquid
co-product whose price is commonly countercyclical to the other
contained metals to mitigate cobalt and bismuth price volatility.
NICO contains approximately 12% of global bismuth reserves, a
critical metal that also has supply chain concerns from dominant
Chinese production and growing consumption as an environmentally
friendly and non-toxic replacement for lead.
About NICO:
The NICO deposit contains Proven and Probable Mineral Reserves
totaling more than 33 million tonnes that will support a 21-year
mine life at a planned mill throughput rate of 4,650 metric tonnes
of ore per day. Approximately 180 wet tonnes per day of bulk
concentrate will be produced by flotation in the mill containing
the recoverable metals and will be trucked from the site on the new
road to the rail head at Hay River
for railway delivery to the refinery in Saskatchewan and downstream processing to
value-added metals and chemicals. Life of mine average annual
production is projected to be 41,300 ounces of gold, 1,615 tonnes
of cobalt contained in a battery grade cobalt sulphate, 1,750
tonnes of bismuth contained in metal ingots and oxide powder, and
265 tonnes of copper.
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 International Limited, 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 Fortune Minerals
Fortune is a Canadian development stage mining company focused
on advancing the vertically integrated NICO
gold-cobalt-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
recently purchased by a provincial Crown corporation.
Follow Fortune Minerals:
Click here to subscribe to Fortune's email list.
Click here to follow Fortune on LinkedIn.
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 off-take agreements and project financing to start
construction), 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 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
