Study assessing expanded production
scenario is nearing completion for one of the few global
development stage cobalt assets
Issued Capital: 338,403,220
LONDON, ON, March 27, 2018 /CNW/ - Fortune Minerals
Limited (TSX: FT) (OTCQX: FTMDF) ("Fortune" or
the "Company") (www.fortuneminerals.com) is pleased to
provide an update on the progress of its 100% owned NICO
Cobalt-Gold-Bismuth-Copper Project in Canada ("NICO Project"). The NICO
Project is a development stage primary cobalt asset consisting of a
planned mine, mill and concentrator in the Northwest Territories and hydrometallurgical
refinery in Saskatchewan to
process concentrates from the mine to cobalt sulphate, gold,
bismuth ingot and oxide, and a copper precipitate. As a vertically
integrated Canadian emerging producer of environmentally
responsible, ethical cobalt and bismuth, NICO will be able to
demonstrate supply chain transparency and custody control of metals
from ores through to the production of value-added products for the
growing green economy. Development of the NICO Project will help
alleviate supply chain concerns from increasing cobalt demand in
the rapidly expanding lithium-ion battery industry and geographic
concentration of supply from the politically unstable Congo (~67% of mine supply), China (~80% of refined cobalt chemical
supply), and its production primarily as a by-product of copper and
nickel mining (~98% of non-artisanal cobalt mine production) where
the primary metals determine production criteria.
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Cobalt Market:
The replacement of the internal combustion engine by electric
vehicles is an integral part of the fourth industrial revolution,
and for at least the next decade, cobalt will continue to be an
irreplaceable ingredient in the lithium-ion batteries that are
driving this transformation.
Responding to tight market conditions and the growing demand
from automotive electrification and stationary grid storage of
electricity, the price of cobalt has continued its ascent from
US$10/lb in early 2016 to more than
US$40/lb today. With the aim of
supporting its transition to electric vehicles, China has been aggressively securing the
critical raw materials used in batteries. Notably, China Molybdenum
acquired Tenke Fungurume in 2016, which last year accounted for
approximately 14% of global cobalt mine supply. Earlier this month,
Glencore Plc., the world's top cobalt producer, agreed to sell
about a third of its output to a single Chinese supplier of battery
chemicals - GEM Co. Beyond China,
several multinational corporations including Volkswagen, BMW,
Apple, LG Chem, and Samsung C&T have been working to secure
cobalt supplies for their battery requirements.
Fortune's NICO Project is one of few new cobalt assets globally
with the potential to be in production by the early 2020's and help
meet the demand growth from transformation of the automotive
industry.
NICO Project Financing:
Fortune has engaged PricewaterhouseCoopers Corporate Finance
Inc. ("PwCCF") as its financial advisor to arrange the
financing for the NICO Project from various financial instruments.
Fortune's preferred strategy is to attract one or more asset level
strategic partners to contribute equity toward a conventional debt
and equity project financing. Toward this goal, the Company has
entered into approximately 25 Confidentiality Agreements with
various parties around the world. As the need for a reliable,
ethically sourced cobalt supply becomes increasingly critical,
interest in the NICO Project has grown. The Company plans to focus
negotiations with a short-list of preferred partners once the
updated 2014 NI-43-101 Technical Report on the Feasibility Study in
progress (as defined below) is completed with the ultimate goal of
achieving a complete project finance solution.
NICO Project Progress Update:
Fortune has engaged Hatch Ltd. ("Hatch"), P&E Mining
Consultants Inc. ("P&E") and Micon International Limited
("Micon") to update the NICO Project 2014 NI-43-101
Technical Report on the Feasibility Study (the "Feasibility
Study") based on design developments and improvements, current
capital and operating costs, commodity prices and currency exchange
rates. Responding to feedback from potential strategic partners,
Fortune changed the scope of the project to include an up to 30%
increase in the planned production rate over the 4,650 metric
tonnes of ore per day used in the previous 2014 Feasibility Study.
This increase in planned mine and mill throughput required much of
the engineering to be re-done to provide the basis for equipment
specifications and costing. Some improvements have also been made
to the layout for both the mine and refinery sites. New Mineral
Reserves are also being developed based on an optimized
Mine Plan and Schedule incorporating
a new grade control and stockpiling strategy to better align
production of the metals with their markets and to selectively mine
and process ores where possible to better optimize production,
improve project economics, mitigate risk and improve margins in
early years of the mine life. The back end of the cobalt and
bismuth production facilities have also been improved to ensure the
products meet the specifications required by the battery industry
and to mitigate some identified commissioning and operational
risks. The Bismuth Circuit is also being modified to eliminate
electro-winning of metal cathodes following ferric chloride
leaching to simplify the process and mitigate commissioning and
operating risks. When the NICO Project is fully commissioned, it is
expected to achieve peak annual production of approximately 2,000
tonnes of cobalt units per year in a battery grade cobalt sulphate
heptahydrate (see Fortune's news release dated November 9, 2017).
The current status of the work is as follows:
1) Additional Cobalt Sulphate Metallurgical testwork -
Completed
2) Mine Plan incorporating grade
control and stockpiling strategy – Completed
3) Mine site Lay-out - Completed
4) Updated Ore Reserves – Approximately 90%-95% Complete
5) Determination of concentrator and refinery throughput rates –
Completed
6) Development of refinery Mass Balance – 95% Complete
7) Capex and Opex - Approximately 75% Complete
The updated Technical Report for the Feasibility Study is
expected to be finalized by the end of the second quarter of
2018.
Tlicho All-Season Road:
The Government of the Northwest
Territories ("GNWT") is working in partnership with
the Tlicho Government to advance the Tlicho All-Season Road
("TASR") and provide access from Highway 3 west of
Yellowknife to the community of
Whati. Fortune's NICO deposit and proposed mine is located ~50 km
north of Whati and has already received its environmental
assessment approval and the major mine permits for construction,
including a spur road servicing the mine. The TASR is required for
mine operations to allow the Company to truck metal concentrates
south to the rail head at Hay
River for railway delivery to its proposed refinery in
Saskatchewan and downstream
processing. Construction of the NICO mine facilities will be
accomplished using the existing GNWT winter ice road and a new
airstrip.
In January 2017, the Government of
Canada announced it will provide
up to 25% of the construction costs for the TASR through the P3
Canada Fund. The GNWT subsequently approved funding for
construction of the remaining 75% cost of the TASR. By December 2017, the Request for Proposals for the
construction of the TASR was issued to three qualified consortia of
international finance and construction companies and the GNWT and
federal government executed the final financial agreement for the
TASR project. The TASR environmental assessment is now nearing
completion with the Mackenzie Valley Environmental Impact Review
Board's Report of Environmental Assessment due on March 30, 2018. Subject to requisite approvals
and licensing, it is expected that the TASR tender will be selected
by the fourth quarter of 2018 and commencement of road construction
is targeted for early 2019.
Provided Fortune receives the requisite financing for the NICO
Project and the remaining regulatory approvals in 2018,
construction of the mine facilities could begin in early
2019. Construction of the mine, mill, concentrator and
related facilities in the NWT is expected to take approximately two
years dependent on ice-road logistics, whereas the refinery
requires about 18 months for construction.
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, 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 mining
company focused on developing the vertically integrated NICO
cobalt-gold-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 potentially
extend the life of the NICO 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 Company's plans
to develop the NICO Project (including the Company's plans to
secure project financing to start construction), the timing and
results of the updated Feasibility Study, the completion of the
TASR and timing thereof, the estimated capital costs for the
construction of the NICO Project, 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, assumptions
regarding the construction of the TASR and the timing of its
completion; assumptions regarding the results of the updated
Feasibility Study, 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 updated Feasibility Study may take
longer than anticipated, uncertainties with respect to the receipt
or timing of required permits and agreements for the development of
the Nico project, the risk that the Feasibility Study may not
generate improved economics for the NICO project to the extent
anticipated, the risk that the TASR may not be constructed in a
timely fashion or at all, the inherent risks involved in the
exploration and development of mineral properties and in the mining
industry in general; 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 risk of decreases in the market prices of Cobalt
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 the risk that even if such
resources prove accurate the risk that such resources may not be
converted into mineral reserves, once economic conditions are
applied; 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
