Fortune Minerals provides NICO cobalt-gold-bismuth-copper project technical report update

4 October 2019

Fortune Minerals Limited 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. 
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.