FORTUNE MINERALS PROVIDES NICO COBALT-GOLD-BISMUTH- COPPER PROJECT TECHNICAL REPORT UPDATE The 6,000 tpd throughput rate that was being considered for the development is not justified in the current cobalt price environment - Efforts are refocusing on the previous 4,650 tpd rate
October 3, 2019 Issued Capital: 347,303,220
NEWS RELEASE
FORTUNE MINERALS PROVIDES NICO COBALT-GOLD-BISMUTH-
COPPER PROJECT TECHNICAL REPORT UPDATE
The 6,000 tpd throughput rate that was being considered for the development is not justified
in the current cobalt price environment - Efforts are refocusing on the previous 4,650 tpd rate
LONDON, ONTARIO, Fortune Minerals Limited (TSX: FT) (OTCQB: FTMDF) (“Fortune” or the
“Company”) (www.fortuneminerals.com) is providing a progress report on the study by Hatch Ltd.
(“Hatch”), P&E Mining Consultants Inc. (“ P&E”) and Micon International Limited (“ Micon”) that was
updating the 2014 National Instrument 43-101 Technical Report on the NICO Project Feasibility Study
(“Technical Report ”) by Micon. The previous Technical Report validated the feasibility of the NICO
Cobalt-Gold-Bismuth-Copper Project (“NICO Project”) at a mill production rate of 4,650 tonnes of ore
per day (“tpd”) using a combined open pit and underground mining strategy and vertically integrated
development. The updated study was assessing an expanded mill throughput rate of 6,000 tpd and a
number of process improvements for the vertically integrated development reflecting the demands for
greater cobalt product output from potential strategic partners. It was also assessing lower capital cost
options of producing gold and metal concentrates at the mine site for sale to third-party processors
that would eliminate or defer the need to construct a vertically integrated refinery. The base case for
both studies contemplated a mine and concentrator in Canada’s Northwest Territories and a related
refinery in southern Canada producing cobalt sulphate used in lithium-ion rechargeable batteries, gold
doré, bismuth ingot, and copper cement.
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After assessing the indicative economics of the expanded 6,000 tpd mill throughput rate, Fortune has
concluded that the additional capital required to construct a larger project would not deliver a
commensurate increase in cash flows to justify the expansion from 4,650 tpd at prevailing cobalt and
bismuth prices. The Company has been evaluating a number of high level financial models assessing
NICO Project indicative economics using different open pit sizes, various production rate sensitivities
and factoring the updated capital and operating cost estimates from the 6,000 tpd case. This work has
concluded that the 4,650 tpd rate used in the prev ious Micon Technical Report was likely optimum to
produce the best balance between economies of scale and capital costs, while focusing on a smaller
open pit with higher cobalt and gold grades. The modelling has also confirmed that using a mining
strategy of combined open pit and underground mining in early years of the mine life will improve
project economics. Focus on mining higher grade ores would also produce a higher quality cobalt
concentrate to reduce transportation and downstream processing costs at the proposed refinery and
is also a more attractive product to sell to third party processors if the Company elects to defer
construction of the refinery.
Work on the 6,000 tpd project has been suspended. However, before completing an updated
technical report based on a smaller, higher grade project, Fortune is evaluating a number of additional
opportunities to optimize project economics as follows:
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- Constraining the interpolation boundaries to reduce smearing of grades into lower grade areas
of the deposit;
- Further optimization of the open pit shell to achieve the best balance between maximizing
cobalt and gold grades, while keeping stripping ratios and mining costs low;
- A new mine plan based primarily on low cost open pit mining while augmenting production in
early years of the mine life with selective underground mining of gold-rich mineralized material
located close to the existing decline ramp developed for bulk sampling in 2007 and 2008;
- Optimize the size of the open pit mine equipment fleet to match the lower mining rate;
- Validate the optimum mill processing rate to minimize capital costs, while achieving sufficient
economies of scale to keep operating costs low;
- Align the construction schedule for the mine with availability of the Tlicho all-season road (the
“Tlicho Road ”) to eliminate construction from winter ice roads to reduce capital costs and
construction risks;
- Continue dialogue with third party processors interested in purchasing cobalt and bismuth
concentrates directly from the mine site to defer the capital associated with building a refinery
in southern Canada;
- Finalize the best site to build the vertically integrated refinery in southern Canada, including
further evaluation of a brownfield location with existing synergistic facilities that is scheduled to
close and could materially reduce capital costs for the development;
- Assess options for collaboration with other North American cobalt developers for a shared
refinery that would treat similar cobalt concentrates using the same process technologies;
- Align the development schedule with the expected deficit in cobalt supply in 2022-23 when
demand for batteries in electric vehicles is an ticipated to outstrip production from existing
mines and known development projects;
Robin Goad, President and CEO of Fortune commented , “An environment that has seen curtailment
from the world’s largest cobalt mines is not conducive for an expanded, capital intensive project at this
time. However, the world continues to transition to electric mobility and will require new sources of
cobalt that are independent of the Congo to meet the increase in demand from the battery sector.
Fortune is optimizing its NICO development to be more robust at various cobalt prices and position
the Company to support the transformation of the auto industry.”
Fortune is pleased to report that construction of the Tlicho Road began in September and is
progressing quickly. This C$200 million initiative of the Canadian, Northwest Territories and Tlicho
governments will provide important road access to the community of Whati, located 50 km south of
the NICO deposit, by connecting the community to the Territorial highway system. Fortune has
already received environmental assessment approv al for a spur road between Whati and the mine
site. The Tlicho Road is a critical enabler for the NICO development that will allow metal concentrates
produced at the mine to be trucked to Hay River for transportation by rail to a refinery in southern
Canada for processing or to a port of export.
Cobalt is an Energy and Technology Metal with gr owing demand for use in lithium-ion batteries used
in electric vehicles (“ EV’s”), energy stationary storage to make electricity use more efficient and to
power portable electronic devices such as mobile telephones, tablets, power tools and toys. Cobalt is
also used in various superalloys, cutting tools, c hemicals, catalysts and pigments. The cobalt market
has had a cumulative annual growth rate of approxim ately 6% over the last 25 years, primarily due to
increasing demand in the cathodes for rechargeable batteries, which now accounts for more than
50% of demand. Double digit growth in the market is expected over the next decade with greater
adoption of EV’s as a result of government legislation restricting greenhouse gas emissions, and as
cost parity and performance superiority is achieved over cars with internal combustion engines. The
more than one million ounces of gold contained in the NICO deposit is a highly liquid, countercyclical
co-product that is receiving increasing investor interest because of concerns over trade and the global
economy. Bismuth is an Eco Metal used primarily in the automotive and pharmaceutical industries
and has growing use as an environmentally safe replac ement for lead in various solders, brasses,
paint pigments and free-machining steels where lead-toxi city is a concern or has been legislated from
use.
Fortune is continuing discussions with potential strategic partners interested in a reliable North
American supply of cobalt, gold and bismuth, while optimizing the development plans for NICO in an
environment of metal price volatility. Fortune will continue to advance the NICO Project and position
the development to support the transformation of the global automotive industry to electric mobility
with an attractive gold co-product.
The disclosure of scientific and technical informatio n 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. Certain technical informati on in this news release is derived from the Technical
Report on the NICO Project, entitled "Technical R eport 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 which 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 NICO Cobalt-Gold-Bismuth-
Copper Project in the Northwest Territories. The Company has an option to purchase lands in
Saskatchewan where it may build the hydrometallurgic al plant to process NICO metal concentrates.
Fortune also owns the Sue-Dianne Copper-Silver-Gold Deposit located 25 km north of the NICO
Project, which is a potential future source of in cremental mill feed to extend the life of the NICO
Project mill.
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For further information please contact:
Fortune Minerals Limited
Troy Nazarewicz
Investor Relations Manager
Tel.: (519) 858-8188
www.fortuneminerals.com
This press release contains forward-looking informat ion and forward-looking statements within the meaning of
applicable securities legislation. This forward-looking information includes statements with respect to, among
other things, the proposed construction of the Tlicho Ro ad, the Company’s plans to develop the NICO Project,
the preparation of an updated techni cal report for the NICO Project and the potential for the Sue-Dianne
property to provide incremental mill feed to 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 timing of completion of the Tlicho Road; the timing of the updated technical report for the NICO Project and
the results thereof; the Company’s ability to arrange the necessary financing to continue operations and develop
the NICO Project; the receipt of all necessary regulatory approvals for t he construction and operation of the
NICO Project and the related hydrometallurgical refinery and the timing thereof; growth in the demand for cobalt;
the time required to construct the NICO Project; and the economic environment in which the Company will
operate in the future, including the price of gold, c obalt and other by-product metals, anticipated costs and the
volumes of metals to be produced at the NICO Project). Ho wever, 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 Tlicho Road may
not be completed in the anticipated time frame, the updated technical report for the NICO Project may take
longer than anticipated and the results thereof may not be as positive as anticipated, the Company may not be
able to finance and develop NICO on favourable terms or at all, uncertainties with respect to the receipt or timing
of required permits, approvals and agreements for the devel opment of the NICO Project, including the related
hydrometallurgical refinery, the construction of the NICO Project may take longer than anticipated, the Company
may not be able to secure offtake agreements for the metals to be produced at the NICO Project, , the Sue-
Dianne property may not be developed to the point wher e it can provide mill feed to the NICO Project, 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 limit ed 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 estima ted metallurgical recoveries, uncertainties associated
with estimating Mineral Resources and Reserves and the ri sk that even if such resources prove accurate the
risk that such Mineral Resources may not be convert ed into Mineral Reserves, once economic conditions are
applied, the Company’s production of cobalt and ot her 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 po ssible that predictions, forecasts, projections and other
forms of forward-looking informati on will not be achieved by the Compan y. The forward-looking information
contained herein is made as of the date hereof and th e Company assumes no responsibility to update or revise
it to reflect new events or circumstances, except as required by law.