Robust project economics confirmed

Fortune Minerals Limited (TSX-FT) (�Fortune� or the �Company�) is pleased to announce an updated *bankable (definitive) feasibility study for the Lost Fox deposit area at its 100% owned Mount Klappan anthracite coal project in northwest British Columbia.  This study was conducted by Marston Canada Ltd. (Marston), a subsidiary of St. Louis-based Marston & Marston Inc., and provides an update to the 2005 Marston definitive feasibility study for the project (see Fortune Minerals news release, dated October 17, 2005).  Fortune is pleased to report that the Lost Fox deposit continues to show attractive economics at current capital and operating costs, currency exchange rates, and at coal prices significantly lower than the current price for the metallurgical coal products that the Company would produce. 

Lost Fox is one of four deposit areas within the Mount Klappan project and this feasibility study update assesses only the initial pit in the Lost Fox deposit.  The study assesses the economics for an open pit coal mine and process plant to be constructed at the site to produce 3 million tonnes of clean coal per annum (Mtpa), consisting of a premium 10% ash ultra-low volatile pulverized coal injection (PCI) product used in the manufacture of steel.  The PCI product would be transported by truck from the mine site to the port of Stewart for loading and delivery to overseas steel customers.  Alternative transportation methods from the mine to the ports of Stewart and Prince Rupert were also investigated.

(*A bankable feasibility study is a comprehensive engineering and economic analysis of a project (typically prepared to +/- 15% precision) that is used by financial institutions to determine the credit worthiness of a proposed development and project financing.)    

HIGHLIGHTS OF THE STUDY:

�         In-situ reserves of 102 million tonnes for a minimum 20-year mine life at the planned production rate of 3 Mtpa

�         Capital costs of C$617.2 million to be incurred over the first 3 years

�         Cash costs FOB loading vessel average C$ 107 / tonne of premium PCI

�         Base Case Pre-tax Internal Rate of Return (IRR) of 28.9%, and 8% discounted Net Present Value (NPV) of C$ 702.7 million at a price of US$ 175 per product tonne of premium PCI in years 1-5, dropping to US$ 150 per product tonne for the remainder of the mine life

�         Coal price sensitivities with Pre-tax IRR up to 86.6% and 8% discounted NPV of C$ 3.8 billion at a current approximate coal price of US$ 300 / product tonne of premium PCI

�         Significant opportunities for improvement of project economics

�         Significant engineering completed for mine infrastructure and transportation routes

Fortune Minerals has retained CIBC World Markets Inc. to act as the Company�s financial advisor in pursuing strategic alternatives for the advancement of Mount Klappan (see Fortune Minerals news release, dated July 2, 2008).  CIBC World Markets will assist Fortune in identifying potential strategic partners and evaluating potential transactions for the project, while Fortune pursues of strategy of independent development of its 100% NICO Cobalt-Gold-Bismuth deposit in the Northwest Territories.

GENERAL INFORMATION:

Fortune Minerals owns more than 15,000 hectares of contiguous coal licenses located 150 km northeast of the port of Stewart and 330 km northeast of the port of Prince Rupert in northwest British Columbia.  The property straddles the BC Railway right-of-way and roadbed, which provides road access to the site from Highway 37.  The Canadian National Railway Company (CN) has trains operating on the portion of the right-of-way between Prince George and Minaret, 150 km south of the proposed minesite.

RESOURCES AND RESERVES:

The Mount Klappan project contains very large resources of high quality anthracite, a hard coal with the highest rank, carbon and energy content and lowest moisture and volatile content of all coals.  Unique properties make anthracite ideal for use in a broad range of metallurgical and thermal applications, including reductants used in metallurgical processing, blend coals for blast furnace coke replacement, and charge carbon, sinter and PCI coals used in the manufacture of steel.  Only about 1% of world coal reserves are anthracite grade, making the Mount Klappan coal a relatively uncommon premium product.  Notably, the two largest producers of anthracite products in the world, China and Vietnam, have curtailed exports in order to satisfy their domestic consumption, creating an attractive development opportunity for Mount Klappan.

The resources for the Mount Klappan project are identified in four distinct deposit areas referred to as Lost Fox, Hobbit-Broatch, Summit and Nass.  Collectively, these contain Measured resources of 107.9 million tonnes, Indicated resources of 123 million tonnes, plus 2.572 billion tonnes in the Inferred and Speculative classes (see News Release, dated June 22, 2004).  The in-situ and PCI product reserves were estimated for the initial open pit mine at the Lost Fox deposit as part of the 2005 Marston feasibility study and are presented in the table below.

MINERAL RESERVES FOR THE LOST FOX DEPOSIT AREA

The Mount Klappan mineral resource and mineral reserve estimates were prepared in 2002 and 2005, respectively by Marston in compliance with National Instrument 43-101.  Richard Marston, P.E. is the Qualified Person responsible for the estimates.  Further information can be obtained regarding the Mount Klappan mineral resource and mineral reserve estimates is available in the Company�s disclosures under the Company�s profile on the SEDAR website at www. sedar.com.

MINING:

The Proven and Probable mineral reserves in the Lost Fox deposit support clean coal production of 3 Mtpa from an open pit mine over a minimum mine life of 20 years.  Conventional truck and shovel mining methods will be employed using diesel hydraulic shovels.  The strip ratio averages 11.6 bank cubic metres (bcm) / product tonne over the life of the mine. 

PROCESS PLANT:

The current study contemplates a wash plant and supporting infrastructure to be constructed at the Mount Klappan site.  The plant would initially process run of mine coal to produce a 10% ash, ultra-low volatile PCI coal product for export to overseas steel manufacturers.  The plant would use standard processing methods of heavy media separation, cyclones and froth floatation equipment to produce yields averaging 57% from 14 coal seams.  The plant would also be configured to produce other premium anthracite products in the future.  Quality data for the 10% Ash PCI product is shown below.

 INFRASTRUCTURE:

The 2008 Marston study was focussed on truck transportation of product from the mine to the port of Stewart.  The site is currently accessible by truck from Highway 37 using the BC Railway right-of-way and roadbed.  The feasibility study assumes a new 100-km short-cut limited access road would be built to reduce the truck haulage distance to Stewart to 250 km.  Trucks with a capacity for 110 tonnes of coal would be used on the new limited access road with a transfer station at Highway 37 for re-load to 40-tonne highway compliant trucks for the remaining 150 km to the port.  Additional infrastructure would be required for the port facility at Stewart, including two new 60,000 tonne storage silos, a stacker - reclaimer system, and a new 2,000 tonne / hour ship loader, all of which are assumed to be paid for by the project.

Power for the process plant and all other facilities will be supplied with diesel generation, although there is a possibility of future connection to the BC electrical grid.  Electrical requirements for the initial Lost Fox development total 6.3 Megawatts.

ECONOMIC ANALYSIS:

The base case economic analysis assumes a price of US$ 175 / tonne for premium PCI coal for the first 5 years, and then US$ 150 / tonne for the remainder of the mine life.  A summary of the base economics is shown in the table below.  The current price for ultra-low volatile PCI product is between US$ 275 and US$ 300 / tonne.  A sensitivity analysis to coal price in increments of US$ 25 / tonne is shown in the second table below.  In all cases the Canadian : US dollar exchange rate is assumed to be C$ 1.03 = US$ 1.

 A summary of the major capital cost items for the proposed Lost Fox development is shown in the table below. 

CAPITAL COST SUMMARY

 OPPORTUNITIES:

A number of opportunities exist to further improve the economics of the Mount Klappan project and have been identified in the new Marston feasibility study.  They include:

• Drilling to Increase the Resource  � There is a significant opportunity to expand the economic resource base for Mount Klappan.  Marston has recommended a four-phase drill program to increase and upgrade the resources for the Lost Fox, Hobbit-Broatch, Summit and Nass deposits from the Inferred and Speculative classes to Measured and Indicated.
• Slurry Pipeline � Preliminary feasibility level work has been done by Marston and Pipeline Services Inc. of Concord, California, which indicates potential cost efficiencies from using a 14-inch buried pipeline to transport coal from the mine to the port of Stewart or Prince Rupert (see Fortune Minerals news release, dated January 15, 2008).  While such a pipeline would increase the initial capital for the project, it would significantly reduce the project�s exposure to increasing fuel and labour costs.
• Extension and Upgrading of the Railway � Opportunities exist to extend the Dease Lake rail line from its current terminus at Minaret to the minesite for transportation of coal by unit train to the port of Prince Rupert.  In order to accommodate fully-loaded unit trains, the existing railway facilities to Fort Saint James would need to be upgraded or, a 200 km shortcut constructed to the main CN Line at Hazelton.  The expense of a rail line would be justified in a larger project with a production rate greater than the project currently envisioned by Fortune.  Notably, the governments of Alaska and the Yukon Territory announced the results of a bi-lateral feasibility study initiative that recommends the extension of this railway (see Fortune Minerals news release, dated June 27, 2007).
• Access to Grid Power � The current study is predicated on diesel-generated power and the use of diesel hydraulic trucks and shovels.  The B.C. government is considering extending the provincial electrical grid from Meziadin up the Highway 37 resource corridor.  Access to grid power would eliminate the need for on-site power generation, allow for the use of more efficient electric cable shovels and electric assisted haul trucks, and alleviate uncertainties associated with fluctuations in the price of diesel.
• Lease�to-Purchase of Mobile Equipment Fleet � Opportunities exist to finance mobile equipment for both the mine site and coal haul through a �lease-to-purchase� program.  This would lower the up-front capital for the mine and would result in a higher IRR for the project.

 CURRENT ACTIVITIES:

In addition to the engineering and feasibility work that has been conducted for the Mount Klappan project, Fortune is also working on environmental studies in support of the environmental assessment process.  Rescan Environmental Services Ltd. and Rescan Tahltan Environmental Consultants have conducted most of this work.  In addition, Allnorth Consultants Limited have conducted alignment studies and engineering for the proposed new limited access haul road to be constructed between the mine and Highway 37. 

About Fortune Minerals

Fortune Minerals 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 cobalt-gold-bismuth deposit, 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.

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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 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. 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, 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, the possibility of project cost overruns or unanticipated costs and expenses, uncertainties relating to the availability and costs of financing needed in the future and other factors. 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.  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.