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 The previous Lost Fox reserves were also based on lower coal price assumptions in 2005 and are now out of date.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.
For further information:
Renmark Financial Communications
Barbara Komorowski: [email protected], or
Bettina Filippone: [email protected]
Montreal Tel: (514) 939-3989, Toronto Tel. (416) 644-2020
Montreal Fax: (514) 939-3717, Toronto Fax. (416) 644-2021