Issued Capital: 117,076,976
LONDON, ON, Feb. 7, 2012 /CNW/ - Fortune Minerals Limited (TSX: FT)
("Fortune" or "the Company") and POSCO Canada Ltd. ("POSCAN") are
pleased to announce that the Klappan Coal Joint Venture ("KCJV") has
retained Marston Canada Ltd. ("Marston"), a division of Golder
Associates Ltd., to update the geological model, coal reserves and
feasibility study for the Lost Fox deposit area at the Mount Klappan
anthracite metallurgical coal project in northwest British Columbia,
Canada. KCJV is a joint venture between Fortune (80%) and POSCAN
(20%), the Canadian subsidiary of Korean steel producer POSCO, the
world's third largest steel producer. Fortune has also engaged
Deloitte & Touche Corporate Finance Canada Ltd. to help attract
additional strategic and financing partners for the project. The
updated Marston study will incorporate the results of additional
drilling and survey data that was conducted earlier by Fortune as well
as updated coal price assumptions that are anticipated to materially
impact the reserves for the proposed mine. The new reserves and
updated feasibility study are expected to be completed in mid-2012.
Fortune conducted additional drilling at the Lost Fox deposit area in
2005. This work was done to verify the geological model and coal
resources in an area that had previously been classified as Inferred
within the former pit shell and were therefore excluded from the
reserves and financial model. Drilling was also carried out to test
for lateral extensions to the coal seams beyond the former pit shell,
as well as to collect geotechnical and environmental information to
support project permitting. The results of this work were very
successful in confirming the coal and its geometry within the former
pit configuration, and also in extending the Lost Fox deposit beyond
the pit limits. Fortune also conducted a detailed airborne LIDAR laser
topographic survey of the Lost Fox deposit area and proposed mine site
that was not incorporated into the previous geological model. This
more detailed survey information will improve the accuracy of
calculating the waste to coal ratios and strip volumes. The previous
Lost Fox reserves were also based on lower coal price assumptions in
2005 and are now out of date. Marston is updating the geological model
and the in-situ and clean coal reserves to reflect the results of the
new drilling and survey data and more up-to-date coal price
assumptions.
Based on the updated Lost Fox geological model and reserve estimates,
Marston will re-optimize the open pit shell and develop new production
schedules. Marston will also redesign the mine rock stockpiles, and
locations for the wash plant and site infrastructure based on the
revised pit limits. The initial planned annual production rate will
remain at 3 million tonnes per annum and the design of the process
plant and railway infrastructure will not be changed from the previous
Lost Fox feasibility study that was conducted by Marston in 2010.
However, the capital and operating costs and financial model and
sensitivities will be updated based on current information. Mr. Ted
Minnes, P.E. at Marston is the Qualified Person responsible for the new
reserve estimates and feasibility study update.
The Mount Klappan project consists of 15,866 hectares of coal
exploration licenses, located 330 km northeast of the port of Prince
Rupert. The licenses straddle the existing B.C. Rail right-of-way and
its largely completed rail bed, 150 km north of the current terminus of
track at Minaret where the Canadian National Railway ("CN") is
operating under a long-term lease. KCJV and CN are collaborating on an
upgrade and extension of this railway to the project site.
Mount Klappan is an advanced development project with previous
exploration expenditures of more than $87 million. It is one of the
world's premier anthracite metallurgical coal projects with Measured
Resources of 107.9 million tonnes, Indicated Resources of 123.0 million
tonnes and Inferred Resources of 359.5 million tonnes1 (see News Release, dated June 22, 2004). The 2010 Lost Fox feasibility
study was based on an open pit mine and wash plant producing 3 million
tonnes of premium ultra-low volatile pulverized coal injection ("PCI")
product per annum for export to the overseas steel industry and an
ability to diversify production with other metallurgical coal
products. The study was based on railway transportation of clean coal
to the port of Prince Rupert for loading onto ocean vessels at the
Ridley Coal Terminal. The study demonstrated robust economics with
Run-of-Mine Coal Reserves of 106.3 million with a 25% pre-tax internal
rate of returns and $1.03 billion pre-tax net present value at a base
case price of US$175 / tonne of 10% ash PCI product (see News Release,
dated November 4, 2010)2.
1The Mount Klappan mineral resource and mineral reserve estimates were
prepared in 2004, 2005 and 2010, by Marston in compliance with National
Instrument 43-101. Richard Marston, P.E. is the Qualified Person responsible for the
estimates and supervising the preparation of the 2010 Lost Fox
feasibility study.
2Further information regarding the Mount Klappan Mineral Resource and Mineral Reserve estimates and
feasibility studies is available from the Company's disclosures under
the Company's profile on the SEDAR website at www.sedar.com.
About Fortune Minerals:
Fortune is a diversified resource company with several mineral deposits
and a number of exploration projects, all located in Canada. The
Company is focused on the development of the Mount Klappan anthracite
metallurgical coal deposits in BC and the NICO
gold-cobalt-bismuth-copper deposit in the Northwest Territories
("NT"). As part of the development of the NICO deposit, Fortune is
developing a hydrometallurgical plant in Saskatchewan to process NICO
concentrates to high value metal products. The Company has also
acquired the buildings and equipment from the Golden Giant Mine at
Hemlo, Ontario, which have been dismantled, moved, and stored for
relocation to NICO. In addition, the Company owns the Sue-Dianne
copper-silver-gold deposit and other exploration projects in the NT.
Fortune is focused on outstanding performance and growth of shareholder
value through assembly and development of high quality mineral resource
projects.
This press release 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 generation of updated reserve estimates and
an updated feasibility study for the Mount Klappan project, the
proposed development of and anticipated production from the Mount
Klappan project and the establishment of a railway link to Prince
Rupert. 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 risk that the updated reserve estimates and feasibility study may not be available when expected or have the anticipated impact on the
economics of the project, the risk that the Company may not be able to
arrange the necessary financing to construct and operate the Mount
Klappan mine and/or the railway link to Prince Rupert, the risk that
the JV may be terminated in accordance with its terms, the risk that
the Company may not be able to conclude an agreement with CN for the
transportation of coal from Mount Klappan to Prince Rupert, the
possibility of delays in the commencement of production from the Mount
Klappan project, the inherent risks involved in the exploration and
development of mineral properties, the risk that actual capital and
operating costs for the Mount Klappan project may differ from those
anticipated, uncertainties with respect to the receipt or timing of
required permits and regulatory approvals, the uncertainties involved
in interpreting drilling results and other geological data, fluctuating
metal prices 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 given as of the date
hereof and the Company assumes no responsibility to update or revise
such information to reflect new events or circumstances, except as
required by law.