Introduction: Fortune's 100%-owned NICO gold-cobalt- bismuth-copper deposit is the largest known IOCG (Olympic Damtype) deposit in Canada.
Discovered by Fortune in 1996, NICO has had more than $65 million of work carried out and is now in the environmental assessment process to permit a combined open pit and underground mine and process plant. Notably, most of the pre-production development for the underground part of the mine has already been completed as part of two $10 million test mining programs conducted in 2006 and 2007. The mining conditions, geometry and grade of the deposit were verified and a composite sample of ore collected for a $5 million pilot plant test that was recently completed at SGS Lakefield Research Limited in Ontario. This pilot plant proved the process flow sheet and production of high quality metal products, and also improved the recoveries for metals from earlier estimates that were used in the Company's definitive feasibility study prepared by Micon International Limited in 2007. Fortune Minerals is in discussions with financial institutions for a senior debt facility to finance construction of the mine and ancillary facilities.
Reinforcing the collar for the NICO mine
ventilation shaft.
NICO is located 160 kilometres northwest of the City of Yellowknife in the southern part of the Northwest Territories. The project is only 22 kilometres west of the Snare hydro complex, 50 kilometres north of the community of Whatì, and 85 kilometres north of Behchoko and the highway to Edmonton, Alberta. Although currently accessible by winter road, the Canadian, Northwest Territories and Tlicho governments, together with private industry, are re-aligning this road for upgrade to an all-season gravel road.
Metal Markets: Using the increased project feed rate of 4,650 tonnes/day, NICO will have an estimated average annual production annual production of 81,200 ounces of gold in the first two years, and then 27,840 ounces for the remainder of the mine life.
Average annual production of cobalt and bismuth will be 4 million pounds and 4.2 million pounds, respectively. Notably, NICO will be the largest producer of bismuth in the world. Copper and nickel will also be produced as by-products.
Gold is a significant co-product in the NICO deposit and represents a counter cyclical hedge, particularly with the current economic and geo-political uncertainties, which is driving investors to gold as a store of wealth. The price of gold at the time of writing this report is more than US$ 950/ounce. NICO also presents an opportunity to participate in two specialty metals whose consumption is growing as a result of increasing use in traditional applications as well as new technologies, including markets resulting from concerns for the environment.
Bismuth is a relatively uncommon metal, recognized by scientists as one of the safest metals. This, together with its other physical and chemical properties makes bismuth ideal for numerous pharmaceuticals and medicines, including Pepto-bismol(r), bandage dressings, cosmetics, and medical devices. Bismuth's other unusual properties include its very high density, low melting temperature, and the fact that, like water, it expands upon cooling, making it ideal for a variety of chemicals, fusible alloys, and dimensionally stable alloys and compounds. Although similar to lead in its physical properties, bismuth is not toxic and is replacing lead in solders for plumbing and electronics, brasses, alloys used in hot-dip galvanizing, paint pigments, ceramic glazes, ammunition, radiation shielding and free-cutting steel. A growing use for bismuth is in the production of bismuth-tellurium alloys for electricity generation from heat recovery, and coolants for compact discs. Bismuth consumption is about 15,000 tonnes with annual growth of about 10%. Again, much of this growing demand has come from Asia. However, supply constraints have held back the bismuth market, an issue being exacerbated by the fact that most bismuth production comes as a by-product from lead mining. Thus, as lead consumption is constrained by concerns over toxicity, bismuth is expected to remain in tight supply. Bismuth is currently selling for about US$ 10/pound and prices reached US$ 20/pound in 2008.
Cobalt is a high-strength, magnetic metal that has had a relatively steady 20-year increase in demand in both chemical and metallurgical applications. The greatest market growth has been in chemicals, and primarily those used in the manufacture of high performance nickel metal hydride and lithium ion rechargeable batteries used to power portable electronic devices, such as cellular telephones, computers, power tools, MP3 players, and toys. Approximately five to seven pounds of cobalt is also contained in the batteries used to power each hybrid-electric and plug-in-electric car whose popularity is growing with concerns over rising fuel costs and air quality emissions. Cobalt catalysts are also required in petroleum refining, liquid natural gas, and the manufacture of automobile tires and plastics. Metallurgical uses for cobalt include super-alloys for the aerospace industry, cutting tools, cemented carbides and industrial magnets. Cobalt is a food additive (vitamin B12), and is used for pigments and audio recording tape. The market for cobalt in 2008 was approximately 65,000 tonnes with annual compounded growth at approximately 8% over the past five years. Consumption is expected to nearly double to 120,000 tonnes in the next few years, as a result of Asian economic growth and the demand for electric cars. The price for 99.8% cobalt metal is currently approximately US$ 17/pound and prices in April 2008 reached more than US$ 50/pound.
Mineral Reserves and Resources: NICO contains Proven and Probable Mineral Reserves of 21.8 million tonnes containing 760,000 ounces of gold, 61 million pounds of cobalt, and 77 million pounds of bismuth or, an equivalent 3.2 million ounces of gold at the base case metal price assumptions used in the 2007 Micon feasibility study. Copper and nickel by-products will also be produced as a result of processing the cobalt, but were not quantified in the current Mineral Reserve estimates. The ore reserves are contained within a larger Mineral Resource inventory, which at lower Net Smelter Return (NSR) cut-off value sensitivities, contains in excess of 57 million tonnes. A significant amount of these lower grade resources will be mined to access the ore and can be processed during periods of higher metal prices.
Mine and Process Plant: The NICO reserves will support a minimum 15-year mine life at 4,000 tonnes of ore/day (1,460,000 tonnes/year) production rate used in the 2007 Micon feasibility study. Recent engineering studies have determined that the grinding mills Fortune purchased from the Golden Giant Mine at Hemlo, Ontario can be re-configured to increase the production rate by 16% to 4,650 tonnes/day (1,696,000 tonnes/year) at essentially the same operating cost. Ores sourced from the pit will be mined by conventional truck and shovel methods. Approximately 30% of the mill feed during the first two years of the mine-life will be sourced from the underground part of the mine using open stoping methods, scoop trams, and underground haul trucks.
Ores will be processed by conventional crushing, grinding and flotation to generate gold-bearing cobalt and bismuth concentrates. Significant parts of the NICO mill and concentrator have already been purchased from the Golden Giant Mine. Cobalt will be processed by pressure acid leach of the cobalt concentrate, followed by ion exchange and electro-winning to produce 99.8% cathode (equivalent to Umicore Grade A). Bismuth will be processed by acid leach of the bismuth concentrate, followed by electro-winning to produce 99.5% cathode. Gold is recovered by cyanidation of the cobalt and bismuth leach residues. Copper and nickel carbonate are also produced as a by-product of the cobalt circuit. Fortune has recognized an opportunity for significant capital and operating cost reductions by relocating the hydrometallurgical part of the process plant to a location in southern Canada with lower power and labour costs. The Company is actively looking at various sites for this plant.
Grinding circuit for Fortune's pilot plant at SGS
Lakefield Research in Ontario.
3-dimensional structural model of the proposed
NICO grinding plant that was previously in use at
the Golden Giant Mine at Hemlo.
This study concluded that the project will generate a very attractive rate of return for the development at conservative base case metal price assumptions. In 2008 Micon, prepared an update to this study as a result of the materially improved metal recoveries achieved in the flotation part of the Company's pilot plant test at SGS Lakefield Research. The 2008 study did not include updates for the capital and operating costs for the project as these are being updated in the Front-End Engineering and Design work currently being conducted by Aker Metals, a division of Aker Solutions Canada Inc. Results of the Micon studies are summarized in the table below.
Plan of the NICO minesite,plant,and surface facilities,open pit,
and waste rock and tailings impoundment areas.
Fortune President Robin Goad and 2006 Site Superintendent
Charlie Sobey inspect the ore during underground test
mining at NICO.
Average annual production of cobalt and bismuth will be 4 million pounds and 4.2 million pounds, respectively. Notably, NICO will be the largest producer of bismuth in the world. Copper and nickel will also be produced as by-products.
Gold is a significant co-product in the NICO deposit and represents a counter cyclical hedge, particularly with the current economic and geo-political uncertainties, which is driving investors to gold as a store of wealth. The price of gold at the time of writing this report is more than US$ 950/ounce. NICO also presents an opportunity to participate in two specialty metals whose consumption is growing as a result of increasing use in traditional applications as well as new technologies, including markets resulting from concerns for the environment.
Bismuth is a relatively uncommon metal, recognized by scientists as one of the safest metals. This, together with its other physical and chemical properties makes bismuth ideal for numerous pharmaceuticals and medicines, including Pepto-bismol(r), bandage dressings, cosmetics, and medical devices. Bismuth's other unusual properties include its very high density, low melting temperature, and the fact that, like water, it expands upon cooling, making it ideal for a variety of chemicals, fusible alloys, and dimensionally stable alloys and compounds. Although similar to lead in its physical properties, bismuth is not toxic and is replacing lead in solders for plumbing and electronics, brasses, alloys used in hot-dip galvanizing, paint pigments, ceramic glazes, ammunition, radiation shielding and free-cutting steel. A growing use for bismuth is in the production of bismuth-tellurium alloys for electricity generation from heat recovery, and coolants for compact discs. Bismuth consumption is about 15,000 tonnes with annual growth of about 10%. Again, much of this growing demand has come from Asia. However, supply constraints have held back the bismuth market, an issue being exacerbated by the fact that most bismuth production comes as a by-product from lead mining. Thus, as lead consumption is constrained by concerns over toxicity, bismuth is expected to remain in tight supply. Bismuth is currently selling for about US$ 10/pound and prices reached US$ 20/pound in
2008.
Cobalt is a high-strength, magnetic metal that has had a relatively steady 20-year increase in demand in both chemical and metallurgical applications. The greatest market growth has been in chemicals, and primarily those used in the manufacture of high performance nickel metal hydride and lithium ion rechargeable batteries used to power portable electronic devices, such as cellular telephones, computers, power tools, MP3 players, and toys. Approximately five to seven pounds of cobalt is also contained in the batteries used to power each hybrid-electric and plug-in-electric car whose popularity is growing with concerns over rising fuel costs and air quality emissions. Cobalt catalysts are also required in petroleum refining, liquid natural gas, and the manufacture of automobile tires and plastics. Metallurgical uses for cobalt include super-alloys for the aerospace industry, cutting tools, cemented carbides and industrial magnets. Cobalt is a food additive (vitamin B12), and is used for pigments and audio recording tape. The market for cobalt in 2008 was approximately 65,000 tonnes with annual compounded growth at approximately 8% over the past five years. Consumption is expected to nearly double to 120,000 tonnes in the next few years, as a result of Asian economic growth and the demand for electric cars. The price for 99.8% cobalt metal is currently approximately US$ 17/pound and prices in April 2008 reached more than US$ 50/pound.
Sustainable Development: Fortune has been actively collecting baseline environmental data at NICO and access road since 1998 through Golder Associates Limited. Work has included traditional use, archaeology, socio-economics, vegetation, wildlife, habitat mapping, hydrogeology, surface hydrology, water quality, fisheries, meteorology and geochemistry studies. In 2008, Fortune conducted a program to consolidate the ore piles from its earlier test mining programs at the site and cover them to prevent metal leaching while the project undergoes its environmental assessment. These ore piles will be the first ores processed in the proposed NICO plant.
NICO is located on Crown lands that are surrounded by fee simple lands owned by the Tlicho Government that were established pursuant to a landmark agreement with the governments of Canada and Northwest Territories. Fortune has been working collaboratively with the Tlicho since its first exploration programs and was the first company to establish an office in the Tlicho capital of Behchoko. The Company is in discussions with the Tlicho Government for an impacts and benefits agreement for mutual respect, cooperation and economic benefits.
The NICO development presents many opportunities
for northern and aboriginal businesses in providing
employment and demand for services during
construction and operations for the mine.
These assets will provide lower cost, used equipment for use at NICO to materially reduce the capital costs. Fortune has a team of employees and contractors working at the Golden Giant site, including the principal contractor Tri-Venture FE&C. As of the date of this report, Fortune had completed approximately 80% of the dismantling and salvage of high value process, electrical and structural equipment from Golden Giant. It is being stored at the Hemlo site for eventual relocation to NICO and Newmont recently agreed to extend the deadline for its removal to April 2011. Notably, Fortune is not responsible for environmental liabilities at the Hemlo site other than to remove the assets to their foundations.
In addition to the equipment being salvaged for re-use at NICO, Fortune has been selling surplus equipment on the used equipment market. Fortune has also identified gold, silver and other valuable metals that are contained in materials and residues within the buildings and equipment it purchased. These materials have been collected and the metals are being recovered as part of two joint venture agreements. Fortune is further reducing its net cost of dismantling the Golden Giant Mine facilities through the sale of scrap and other high value materials, including stainless and structural steels, aluminum and copper.
Fortune is recovering gold and silver from residues and
other materials contained in the Hemlo equipment.
The ball mills at Golden Giant are being reconfigured
for reuse at NICO allowing for a 16% increase in
production rate to 4,650 tonnes of ore per day.
Fortune Minerals is a diversified natural resource company with seven mineral deposits and a number of exploration projects, all located in Canada . They include the NICO cobalt-gold-bismuth deposit, the Mount Klappan anthracite coal deposits in British Columbia , and, the Sue-Dianne copper-silver deposit and other base and precious metals exploration projects in the Northwest Territories . Fortune Minerals is focussed on outstanding performance and growth of shareholder value through assembly and development of high quality mineral resource projects.
For further information please contact:
Fortune Minerals Limited
Robin Goad, President
Tel.: (519) 858-8188
Fax: (519) 858-8155
info@fortuneminerals.com
www.fortuneminerals.com
Information on this site contains forward-looking information. This forward-looking information includes, or may be based upon, estimates, forecasts, and statements as to management's expectations with respect to, among other things, the size and quality of the Company's mineral resources, progress in development of mineral properties, demand and market outlook for metals and future metal prices. Mineral resources that are not mineral reserves do not have demonstrated economic viability. Inferred mineral resources are considered too speculative geologically to have economic considerations applied to them that would enable them to be categorized as mineral reserves. There is no certainty that mineral resources will be converted into mineral reserves. These forward-looking statements are made as of the date hereof and the Company assumes no responsibility to update them or revise them to reflect new events or circumstances, except as required by law.
Information presented in this website was accurate at the time of posting; however, some information may be superseded by subsequent disclosures. The reader is cautioned to review all postings to ensure they are aware of any updated information.