FORTUNE MINERALS UPDATES NICO FRONT-END
ENGINEERING
Process, design and mine engineering
improvements - On target for development
LONDON, ON, November 4, 2009 - Fortune Minerals Limited (TSX-FT)
(�Fortune Minerals� or the �Company�) is pleased to provide an update of the front-end engineering and
design (�FEED�) that is being conducted for the Company�s NICO
gold-cobalt-bismuth-copper development, which is presently in the
environmental assessment process for mine permitting. NICO is a
planned vertically integrated project to mine and concentrate ores from
the Company�s deposit in the Northwest Territories, located 160 km
northwest of the City of Yellowknife and 50 km north of the community of Whati. Bulk concentrates produced at the mine
will be transported by truck and rail to a refinery the Company proposes
to construct in Saskatchewan for processing to high value metal prod ucts. Fortune Minerals has an agreement to
purchase the site for this Southern Hydrometallurgical Facility (�SHMF�),
subject to certain conditions and completion of satisfactory
due-diligence the Company is now conducting. Fortune Minerals is
pleased to report that process, design and mine engineering are
progressing well and improvements being recognized that will positively
impact project economics. Updated capital and operating costs for
the project from FEED are expected to be available in the second quarter
of 2010.
Mineral Reserves:
The Mineral Reserves for the NICO deposit were estimated for the
Company�s definitive feasibility study and economic update (see Fortune
Minerals News Releases, dated, January 16, 2007 and May 8, 2008) and
total 21.8 million tonnes. They are comprised of Proven and
Probable Underground Mineral Reserves of 1.2 million tonnes, averaging
5.1 grams of gold per tonne, 0.14% cobalt and 0.19% bismuth, plus Proven
and Probable Open Pit Mineral Reserves of 20.6 million tonnes, averaging
0.85 grams of gold per tonne, 0.13% cobalt and 0.16% bismuth.
New
reserve estimates are being prepared by P&E Mining Consultants Inc. (�P&E�),
based on updated, higher commodity prices from those used in the
Company�s definitive feasibility study and update. The new reserves
will also incorporate the planned operational improvements for the
project that have been developed over the past year, which include: a new
more efficient mine plan, a higher 4,650 tonne per day production rate,
and the higher metal recoveries and the production of additional metal
cathode products that were proved in the Company�s pilot plant (see
Fortune Minerals News Release, dated February 24, 2009). By-product
copper cathode is now also planned to be produced from NICO and consequently,
copper will be included in the new reserve estimates in p
reparation. Fortune Minerals expects to release the new reserve
estimates later this year.
The NICO Mineral Reserve Estimates were prepared by Micon International Limited and P&E with Mr.
Terrence Hennessey, P.Geo. and
Mr. Eugene Puritch P.Eng.
as the Qualified Persons in accordance with NI
43-101. For detailed information about the NICO Mineral Reserve
Estimates, please see the Company�s disclosures on the Sedar website at www.sedar.com.
Mine Planning:
P&E is working with Fortune�s engineers on an improved mine plan for
the NICO deposit. The previous and new updated mine plans are based
on a combined open pit and underground operation in the first two years,
and then transitioning to only open pit mining for the remainder of the
mine life. This is the result of cash flow scheduling that
determined that early access to the gold-rich, higher-grade ores in the
underground part of the mine improves project economics. Fortune�s
engineers and P&E, with geotechnical advice from Golder
Associates Limited (�Golder�), have eliminated
backfilling during underground operations, reducing underground mining
costs. This, together with the process engineering improvements
disc losed over the past year, and higher gold
price, will enable the Company to increase the amount of gold-rich,
higher grade underground ores that will be available to mine during the
first 2 years of the mine life. Accordingly, the percentage of
plant mill feed from underground ores will increase from 30% to more than
50% and generate even higher revenues during this period.
Fortune
and P&E have also identified a low waste to ore strip ratio starter
pit in the open pit part of the mine. This, together with the
greater contribution of underground ores during the first 2 years of
production, will allow the Company to defer pre-production stripping of
waste rock by up to 2 years, defer the acquisition of some high cost
components of the mine fleet, and reduce the up-front capital required
for mine construction.
Notably,
approximately $20 million of underground pre-production development has
already been completed for the NICO mine from the test mining that was
conducted in 2006 and 2007 (see Fortune Minerals News Releases, dated
October 17, 2006 and September 11, 2007). These assets include: a
portal and production scale 5 X 5 metre ramp to within 30 metres of the
bottom of the mine, which together with development on 2 mine levels,
totals approximately 2 km of underground workings, and there is a
ventilation raise to surface.
NICO Mine Site Engineering:
Aker Metals, a division of Aker Solutions Canada Inc. (�Aker�), is
leading the FEED work for the NICO mine site, including the crushing
plant, mill and concentrator, camp, truck shop, power plant and related
support services. This work is substantially complete and Aker is
now working on updating the capital and operating cost estimates.
Fortune
Minerals has already purchased the Golden Giant Mine buildings, equipment
and spare parts inventory at Hemlo, Ontario
from Newmont Canada Limited. These assets have been successfully
dismantled and the components that will be relocated to NICO are in
storage at the Hemlo site pending receipt of
the NICO mine permits. Fortune Minerals retained Metso Minerals Canada Inc. to conduct inspections of
the crushing and grinding equipment and provide estimates for
refurbishment. Similar inspections have also been conducted for the
electrical equipment. Refurbishment of this equipment is planned
for 2010.
Golder has been
retained to update the tailings and mine rock management areas for
NICO. The decision to move the downstream processing of
concentrates to high value metal products to Saskatchewan has enabled the
Company to investigate consolidating the tails and waste rock into a
single location. Co-deposition of thickened mill tails and waste
rock, would allow the Company to significantly reduce the size of
containment dams and lower capital costs. The reduced overall
footprint for the waste management area would also reduce impacts on the
environment, reclamation, simplify closure, and should be reflected in
lower bonding costs. The new waste management plan will be
completed this year.
Southern Hydrometallurgical Facility (�SHMF�) Engineering:
Aker is also leading the FEED work
for the SHMF, including the process and design engineering required to
treat bulk sulphide concentrates produced at NICO to high-value metal
products. The cobalt circuit is based on pressure acid leach,
purification by ion exchange and electro-winning to 99.8% cobalt and
99.9% copper cathode metals. A nickel precipitate is also produced
as a by-product. The bismuth circuit utilizes ferric chloride acid
leach, filtration and electro-winning to 99.5% cathode metal. Gold dor� is recovered by cyanidation
of the leach residues. Notably, the process flow sheet, the
production of high-value metal products, and improved metal recoveries
have all been verified by pilot plant tests conducted in 2007 and 2008
(see Fortune Minerals News Releases, dated February 5, 2008 and February
24, 2009). The bismuth process and design engineering work for the
refinery is also being conducted by SGS Lakefield Research Limited, EHA
Engineering Ltd., Dan Mackie & Associates and Hydroproc.
The processing part of the SHMF FEED engineering has been completed,
except for components that are specific to the Saskatchewan site. With
the decision to locate the SHMF to Saskatchewan now made, Fortune
Minerals will progress the structural, geotechnical and electrical
components of FEED for completion in the first quarter of 2010.
Fortune
Minerals has an experienced team of in-house and independent engineers
and scientists who are leaders in their respective fields, many of whom
have also worked together for many years advancing NICO from discovery
through feasibility and now to mine and process plant engineering for
construction. Fortune Minerals continues to make engineering
improvements to enhance the economics for the NICO project and reduce
project risk. NICO is now in the second phase of environmental
assessment for mine permitting and is under review for senior project
financing by BNP Paribas, a world class bank and highly ranked market
leader in global mine finance. NICO will be a leading producer of
specialty metals for the future with a significant gold co-product that
will be nefit a broad spectrum of 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 resourc e projects.
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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, the proposed purchase of the site for the SHMF, the
anticipated timing of updated capital and operating costs for the NICO
project, the anticipated timing of updated reserve estimates for the
NICO project and the anticipated operational and economic impact of
FEED work to date. 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 timin g of updated capital and operating costs for
the NICO project and reserve estimates for the NICO project, 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
related to metal recoveries 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 them or
revise it to reflect new events or circumstances, except as required by
law.
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