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
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 previous
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:
- 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 anticipated 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 approval 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 growing 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, chemicals, catalysts
and pigments. The cobalt market has had a cumulative annual growth
rate of approximately 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 replacement for lead in
various solders, brasses, paint pigments and free-machining steels
where lead-toxicity 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 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. Certain
technical information in this news release is derived from the
Technical Report on the NICO Project, 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 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 hydrometallurgical 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 incremental mill feed to
extend the life of the NICO Project 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 proposed
construction of the Tlicho Road, the Company’s plans to develop the
NICO Project, the preparation of an updated technical 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 the 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, 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 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 development 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 where 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 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 Reserves and the risk that even if such resources
prove accurate the risk that such Mineral 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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20191003005425/en/
Fortune Minerals Limited Troy Nazarewicz Investor
Relations Manager info@fortuneminerals.com (519) 858-8188
www.fortuneminerals.com
Fortune Minerals (TSX:FT)
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