FORTUNE MINERALS ANNOUNCES SIGNIFICANT INCREASE
IN NICO
PROJECT MINERAL RESERVES
LONDON,
ON, January 14, 2010 - Fortune Minerals Limited (TSX-FT) (�Fortune
Minerals� or the �Company�) is
pleased to announce a new mine plan and a 43% increase in the mineral
reserves for its 100% owned NICO gold-cobalt-bismuth-copper project in
the Northwest Territories, Canada. The update, prepared by P&E
Mining Consultants Inc. (�P&E�), has increased the proven and
probable mineral reserves for NICO to 31 million tonnes from the 21.8
million tonnes established previously in the 2007 definitive feasibility
study for the project (updated in 2008) by Micon International Limited
(�Micon�) (see Fortune Minerals news releases, dated January 16, 2007 and
May 8, 2008). The new mine plan and larger mineral reserves will
extend the operating life o f the NICO mine and process plant from 15 to
18 years at a higher, 4,650 tonnes per day production rate, and positively
impact project economics.
Highlights
of the Updated NICO Mine Plan and Mineral Reserves:
� 43%
increase in Proven and Probable Mineral Reserves to 31 million tonnes;
� Increase in contained
metals:
o Gold content increased by
147,000 ounces to 907,000 ounces;
o Cobalt content increased
by 21 million pounds to 82 million pounds;
o Bismuth content increased
by 32 million pounds to 109 million pounds;
o Copper now included in
reserves and totals 27 million pounds;
� Gold is now the largest
projected source of revenue for the project during the first two years of
operations at current metal prices;
� Reserves contain 4.9
million ounces gold equivalent at metal price assumptions used in study;
� Mine life increased from
15 to 18 years;
� Identification of 6.5
million tonnes of ad ditional marginal sub-economic mineralized material
to be stockpiled for potential future processing;
� New open pit mine plan
reduces initial capital by eliminating 10 million tonnes of waste
pre-stripping;
� New underground mine plan
lowers mining costs with greatly reduced backfill requirements;
� Includes higher metal
recoveries verified from pilot plant:
o Gold recovery is 56% to
84%, averaging 72%, depending on head grade;
o Cobalt recovery of 83%;
o Bismuth recovery of 70%;
o Copper recovery of 52%;
� 16% increase in mill
throughput to 4,650 tonnes per day;
� Operating costs reflect
processing of concentrates to metals in Saskatchewan.
NICO is a proposed
vertically integrated project to mine and concentrate ores from the Company�s
deposit in the Northwest Territories (�NWT�), located 160 km northwest of
the City of Yellowknife and 50 km north of the Tlicho community of
Whati. Bulk concentrates produced at the mine will be transported
by truck and then rail for delivery to the refinery that the Company
plans to construct in Saskatchewan for processing to high value metal
products. Fortune Minerals has an agreement to purchase the site
for this Saskatchewan Metals Processing Plant (�SMPP�) located 26 km west
of Saskatoon, subject to certain conditions, including appropriate
re-zoning and completion of satisfactory due-diligence currently being
conducted.
NICO
Mineral Reserves:
The updated mineral reserves
for the NICO deposit are compiled in the following tables:
Underground
Mineral Reserves
|
Class
|
Tonnes��������
|
Au (g/t)
|
Co (%)
|
Bi (%)
|
Cu (%)
|
|
Proven
|
1,403,000
|
2.23
|
0.16
|
0.22
|
0.04
|
|
Probable
|
��� 767,000
|
2.92
|
0.17
|
0.19
|
0.03
|
|
Total
|
2,170,000
|
2.47
|
0.16
|
0.21
|
0.03
|
Open Pit
Mineral Reserves
|
Class
|
Tonnes��������
|
Au
(g/t)
|
Co
(%)
|
Bi
(%)
|
Cu
(%)
|
|
Proven
|
15,019,000
|
0.85
|
0.12
|
0.16
|
0.04
|
|
Probable
|
13,797,000
|
0.71
|
0.12
|
0.15
|
0.03
|
|
Total
|
28,816,000
|
0.79
|
0.12
|
0.15
|
0.04
|
Combined Mineral Reserves
|
Class
|
Tonnes
|
Au
(g/t)
|
Co
(%)
|
Bi
(%)
|
Cu
(%)
|
|
Proven
|
16,422,000
|
0.97
|
0.12
|
0.16
|
0.04
|
|
Probable
|
14,564,000
|
0.83
|
0.12
|
0.15
|
0.03
|
|
Total
|
30,986,000
|
0.91
|
0.12
|
0.16
|
0.04
|
|
Contained Metal
|
|
907,000 ounces
|
82 million pounds
|
109 million pounds
|
27 million pounds
|
In addition to the mineral
reserves, there are 6.5 million tonnes of marginal sub-economic material
that will be mined and stockpiled for processing during periods of higher
metal prices. This material has the potential to be processed at a
profit and extend the mine life up to an additional 4 years.
The mineral reserves for the
NICO deposit were updated in compliance with National Instrument (�NI�)
43-101 and CIM guidelines by P&E using an updated resource model also
prepared by P&E. The increase in the NICO reserves is a result
of: a more efficient open pit and underground mine plan; increased mill
throughput using equipment the Company already owns from its purchase of
the Golden Giant Mine mill at Hemlo, Ontario; higher metal recoveries
confirmed by the Company�s pilot plant (see Fortune Minerals news
releases, dated February 5, 2008 and February 24, 2009); and greater
revenues using higher metal price assumptions and the production of some
higher value metal products over those used in the Micon 2007 feasibility
study and 2008 update.
The updated mineral reserves
are based on operating cost net smelter return (�NSR�) cut-off values
that have been updated from recent front-end engineering and design
studies. The C$48.07/tonne NSR open pit reserve cut-off was derived
from a C$41.82/tonne processing cost and a C$6.25/tonne general and
administration (�G&A�) cost. The open pit unit rock mining cost
for optimization, design and reserve delineation is C$2.59/tonne. The
C$85.64/tonne NSR underground reserve optimization, design and reserve
delineation cut-off was derived from a $37.57/tonne mining cost, a
C$41.82/tonne processing cost, and C$6.25/tonne for G&A.
The metal prices and
Canadian to US dollar exchange rates used in the updated mineral reserves
are the 2-year trailing average adjusted downwards for certain metals to
reasonable round values. They are: US$900/oz gold, US$20/lb cobalt,
US$10/lb bismuth and US$2.75/lb copper at a Canadian$ to US$ exchange
rate of C$1=US$0.92.
Eugene Puritch, P.Eng. and Fred H. Brown, CPG PrSciNat, both of P&E, are
the Qualified Persons responsible for the updated mineral reserves as
defined by NI 43-101.
Mining:
The NICO deposit will be
mined primarily by open pit with the gold-rich, higher grade underground
ores contributing mill feed during the initial 2 years of
operations. Changes have been made to the mine plan to improve the
economics during early years of production.
The underground part of the
mine will be mined by retreat blast hole open stoping. The tonnage
available from the underground part of the mine has been increased by 83%
to 2.2 million tonnes as a result of higher projected revenues from
higher metal prices and metal recoveries, and also from lower underground
mining costs achieved by the significant reduction in the amount of back
filling that will be required in mined out stopes. Gold-rich,
higher grade ores from the underground part of the mine are now projected
to contribute 60% of the mill feed at the higher 4,650 tonnes per day
production rate, as compared to 30% of 4,000 tonnes per day in the Micon
feasibility study. The greater amount of high-grade ores will
increase the cash flow for the project during the first 2 years of the
operation.
The open pit part of the
mine will be a conventional truck and hydraulic shovel operation,
accomplished in 4 phases at an average strip ratio of 3.4:1. The
mine plan for the open pit has been re-scheduled with the identification
of a low strip ratio starter pit. This, together with the greater
availability of underground ores, allows the previously planned 10
million tonne waste pre-stripping program to be eliminated. This
quantity of waste now becomes part of normal production stripping and can
be financed from cash flow. This change also has the potential to
defer the acquisition of some of the more expensive components of the
mine fleet by 1 to 2 years.
Processing:
The NICO ore will be
processed in 2 stages at the NICO site and SMPP, respectively. At
the NICO site, 4,650 tonnes per day of ore will be processed in a
crushing, grinding and flotation concentrator to produce approximately
180 tonnes of bulk concentrate per day. The high concentration
ratio (low mass pull) of NICO ores is a significant economic attribute to
the deposit, which allows the Company to transport a high-value
concentrate to southern Canada where significant process cost savings can
be achieved. Notably, a significant amount of the crushing,
grinding and other equipment that will be required at NICO has already
been purchased by Fortune Minerals from its acquisition and dismantling
of the Golden Giant Mine mill at Hemlo, Ontario.
The NICO bulk concentrate
will be transported by truck to Hay River, NWT for transfer to rail and
delivery to the Company�s proposed SMPP on the CN main line in
Saskatchewan, located 26 km northwest of Saskatoon. At the SMPP,
the bulk concentrate will undergo additional grinding and flotation to
produce separate gold-bearing cobalt and bismuth concentrates, followed
respectively by pressure acid leach and acid leach, hydrometallurgical
processing, and then electro-winning to gold dor�, 99.8% cobalt cathode,
99.5% bismuth cathode, 99.99% copper cathode and a nickel by-product.
The decision to move the
downstream processing of metals to Saskatchewan was driven primarily by
the availability of lower cost power and the proactive support of the
Government of Saskatchewan, which has also proposed attractive tax
legislation to encourage processing of raw materials that have been sourced
from outside of the province. This legislation is expected to be
passed in the spring of 2010 and will benefit NICO project
economics.
The NICO project is in the
second half of the environmental assessment process in the Northwest
Territories to permit the mine and concentrator. Fortune Minerals
is also working with the Tlicho and Northwest Territories Governments on
making infrastructure improvements in the vicinity of the mine that will
also improve the quality of life in nearby Tlicho communities.
Front-end engineering and
design (�FEED�) work is substantially complete for the NICO mine site and
is nearing completion for the proposed SMPP in Saskatchewan. This
work is being done by Aker Metals, a division of Aker Solutions Canada
Inc., P&E, Golder Associates Limited, SGS Lakefield Research Limited,
Faradelk Ltd., Dan Mackie and Associates, EHA Engineering Ltd. and
Hydroproc. Updated economics for the NICO project will be announced
upon completion of this work, targeting the second quarter of this
year.
Concurrently with FEED, JDS
Energy and Mining Inc., together with Tlicho Logistics, are reviewing
NICO Constructability and logistics.
Fortune Minerals is very
pleased to continue reporting operational improvements for the NICO
project, including the new mine plan and updated mineral reserves that
will extend the employment and economic opportunities for the project for
the benefit of all stakeholders.
About Fortune Minerals:
Fortune Minerals Limited is
a diversified natural resource company with several mineral deposits and
a number of exploration projects, all located in Canada. They
include the Mount Klappan anthracite coal deposits in British Columbia,
and the NICO gold-cobalt-bismuth-copper deposit, the Sue-Dianne
copper-silver deposit and other base and precious metals exploration
projects in the Northwest Territories. Fortune Minerals owns the
buildings and equipment from the Golden Giant Mine at Hemlo, Ontario,
which have been dismantled for relocation to NICO. Fortune Minerals
is focused on outstanding performance and growth of shareholder value
through assembly and development of high quality mineral resource
projects.
The contents of this press
release have been reviewed and approved by Eugene Puritch, P.Eng., President of P&E Mining Consultants Inc.
and Robin Goad, P.Geo., President of Fortune Minerals Limited.
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Forward Looking Information
This
press release contains forward-looking information. This
forward-looking information includes statements with respect to, among
other things, projected rates of production and sources of revenue for
the NICO project, the projected mine life of the NICO project, the
proposed purchase and development of the site for the SMPP, and the
proposed implementation of corporate income tax incentives by the
Saskatchewan government. Forward-looking information is based on the
opinions and estimates of management at the date the information is
given, and 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 inherent risks involved in the exploration and
development of mineral properties, the inherent volatility of metal
prices, the r isk that the Company may not be able to arrange the
necessary financing to construct and operate the NICO mine and the
SMPP, uncertainties with respect to the receipt or timing of required
permits for the development of the NICO project and the SMPP, the
possibility of delays in the commencement of production from the NICO
project and construction of the SMPP, uncertainties related to the
implementation of the proposed tax incentives and other factors. 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.
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