Fortune Minerals announces significant increase in NICO project mineral

Issued Capital: 94,779,407

LONDON, ON, Jan. 14 /CNW/ - Fortune Minerals Limited (TSX-FT) ("Fortune Minerals" or the "Company") is pleased to announce a new mine plan and a 43% increase in the mineral reserves for its 100% owned NICO gold-cobalt-bismuth-copper project in the Northwest Territories, Canada. The update, prepared by P&E Mining Consultants Inc. ("P&E"), has increased the proven and probable mineral reserves for NICO to 31 million tonnes from the 21.8 million tonnes established previously in the 2007 definitive feasibility study for the project (updated in 2008) by Micon International Limited ("Micon") (see Fortune Minerals news releases, dated January 16, 2007 and May 8, 2008). The new mine plan and larger mineral reserves will extend the operating life of the NICO mine and process plant from 15 to 18 years at a higher, 4,650 tonnes per day production rate, and positively impact project economics.

Highlights of the Updated NICO Mine Plan and Mineral Reserves:

    -   43% increase in Proven and Probable Mineral Reserves to 31 million
    -   Increase in contained metals:
        -  Gold content increased by 147,000 ounces to 907,000 ounces;
        -  Cobalt content increased by 21 million pounds to 82 million
        -  Bismuth content increased by 32 million pounds to 109 million
        -  Copper now included in reserves and totals 27 million pounds;
    -   Gold is now the largest projected source of revenue for the project
        during the first two years of operations at current metal prices;
    -   Reserves contain 4.9 million ounces gold equivalent at metal price
        assumptions used in study;
    -   Mine life increased from 15 to 18 years;
    -   Identification of 6.5 million tonnes of additional marginal
        sub-economic mineralized material to be stockpiled for potential
        future processing;
    -   New open pit mine plan reduces initial capital by eliminating
        10 million tonnes of waste pre-stripping;
    -   New underground mine plan lowers mining costs with greatly reduced
        backfill requirements;
    -   Includes higher metal recoveries verified from pilot plant:
        -  Gold recovery is 56% to 84%, averaging 72%, depending on head
        -  Cobalt recovery of 83%;
        -  Bismuth recovery of 70%;
        -  Copper recovery of 52%;
    -   16% increase in mill throughput to 4,650 tonnes per day;
    -   Operating costs reflect processing of concentrates to metals in

NICO is a proposed vertically integrated project to mine and concentrate ores from the Company's deposit in the Northwest Territories ("NWT"), located 160 km northwest of the City of Yellowknife and 50 km north of the Tlicho community of Whati. Bulk concentrates produced at the mine will be transported by truck and then rail for delivery to the refinery that the Company plans to construct in Saskatchewan for processing to high value metal products. Fortune Minerals has an agreement to purchase the site for this Saskatchewan Metals Processing Plant ("SMPP") located 26 km west of Saskatoon, subject to certain conditions, including appropriate re-zoning and completion of satisfactory due-diligence currently being conducted.

NICO Mineral Reserves:

The updated mineral reserves for the NICO deposit are compiled in the following tables:

                         Underground Mineral Reserves

      Class        Tonnes      Au (g/t)     Co (%)      Bi (%)      Cu (%)
      Proven      1,403,000      2.23        0.16        0.22        0.04
     Probable       767,000      2.92        0.17        0.19        0.03
      Total       2,170,000      2.47        0.16        0.21        0.03

                          Open Pit Mineral Reserves

      Class        Tonnes      Au (g/t)     Co (%)      Bi (%)      Cu (%)
      Proven     15,019,000      0.85        0.12        0.16        0.04
     Probable    13,797,000      0.71        0.12        0.15        0.03
      Total      28,816,000      0.79        0.12        0.15        0.04

                          Combined Mineral Reserves

      Class        Tonnes      Au (g/t)     Co (%)      Bi (%)      Cu (%)
      Proven     16,422,000      0.97        0.12        0.16        0.04
     Probable    14,564,000      0.83        0.12        0.15        0.03
      Total      30,986,000      0.91        0.12        0.16        0.04
    Contained                  907,000    82 million 109 million  27 million
      Metal                     ounces      pounds      pounds      pounds

In addition to the mineral reserves, there are 6.5 million tonnes of marginal sub-economic material that will be mined and stockpiled for processing during periods of higher metal prices. This material has the potential to be processed at a profit and extend the mine life up to an additional 4 years.

The mineral reserves for the NICO deposit were updated in compliance with National Instrument ("NI") 43-101 and CIM guidelines by P&E using an updated resource model also prepared by P&E. The increase in the NICO reserves is a result of: a more efficient open pit and underground mine plan; increased mill throughput using equipment the Company already owns from its purchase of the Golden Giant Mine mill at Hemlo, Ontario; higher metal recoveries confirmed by the Company's pilot plant (see Fortune Minerals news releases, dated February 5, 2008 and February 24, 2009); and greater revenues using higher metal price assumptions and the production of some higher value metal products over those used in the Micon 2007 feasibility study and 2008 update.

The updated mineral reserves are based on operating cost net smelter return ("NSR") cut-off values that have been updated from recent front-end engineering and design studies. The C$48.07/tonne NSR open pit reserve cut-off was derived from a C$41.82/tonne processing cost and a C$6.25/tonne general and administration ("G&A") cost. The open pit unit rock mining cost for optimization, design and reserve delineation is C$2.59/tonne. The C$85.64/tonne NSR underground reserve optimization, design and reserve delineation cut-off was derived from a $37.57/tonne mining cost, a C$41.82/tonne processing cost, and C$6.25/tonne for G&A.

The metal prices and Canadian to US dollar exchange rates used in the updated mineral reserves are the 2-year trailing average adjusted downwards for certain metals to reasonable round values. They are: US$900/oz gold, US$20/lb cobalt, US$10/lb bismuth and US$2.75/lb copper at a Canadian$ to US$ exchange rate of C$1=US$0.92.

Eugene Puritch, P.Eng. and Fred H. Brown, CPG PrSciNat, both of P&E, are the Qualified Persons responsible for the updated mineral reserves as defined by NI 43-101.


The NICO deposit will be mined primarily by open pit with the gold-rich, higher grade underground ores contributing mill feed during the initial 2 years of operations. Changes have been made to the mine plan to improve the economics during early years of production.

The underground part of the mine will be mined by retreat blast hole open stoping. The tonnage available from the underground part of the mine has been increased by 83% to 2.2 million tonnes as a result of higher projected revenues from higher metal prices and metal recoveries, and also from lower underground mining costs achieved by the significant reduction in the amount of back filling that will be required in mined out stopes. Gold-rich, higher grade ores from the underground part of the mine are now projected to contribute 60% of the mill feed at the higher 4,650 tonnes per day production rate, as compared to 30% of 4,000 tonnes per day in the Micon feasibility study. The greater amount of high-grade ores will increase the cash flow for the project during the first 2 years of the operation.

The open pit part of the mine will be a conventional truck and hydraulic shovel operation, accomplished in 4 phases at an average strip ratio of 3.4:1. The mine plan for the open pit has been re-scheduled with the identification of a low strip ratio starter pit. This, together with the greater availability of underground ores, allows the previously planned 10 million tonne waste pre-stripping program to be eliminated. This quantity of waste now becomes part of normal production stripping and can be financed from cash flow. This change also has the potential to defer the acquisition of some of the more expensive components of the mine fleet by 1 to 2 years.


The NICO ore will be processed in 2 stages at the NICO site and SMPP, respectively. At the NICO site, 4,650 tonnes per day of ore will be processed in a crushing, grinding and flotation concentrator to produce approximately 180 tonnes of bulk concentrate per day. The high concentration ratio (low mass pull) of NICO ores is a significant economic attribute to the deposit, which allows the Company to transport a high-value concentrate to southern Canada where significant process cost savings can be achieved. Notably, a significant amount of the crushing, grinding and other equipment that will be required at NICO has already been purchased by Fortune Minerals from its acquisition and dismantling of the Golden Giant Mine mill at Hemlo, Ontario.

The NICO bulk concentrate will be transported by truck to Hay River, NWT for transfer to rail and delivery to the Company's proposed SMPP on the CN main line in Saskatchewan, located 26 km northwest of Saskatoon. At the SMPP, the bulk concentrate will undergo additional grinding and flotation to produce separate gold-bearing cobalt and bismuth concentrates, followed respectively by pressure acid leach and acid leach, hydrometallurgical processing, and then electro-winning to gold doré, 99.8% cobalt cathode, 99.5% bismuth cathode, 99.99% copper cathode and a nickel by-product.

The decision to move the downstream processing of metals to Saskatchewan was driven primarily by the availability of lower cost power and the proactive support of the Government of Saskatchewan, which has also proposed attractive tax legislation to encourage processing of raw materials that have been sourced from outside of the province. This legislation is expected to be passed in the spring of 2010 and will benefit NICO project economics.

The NICO project is in the second half of the environmental assessment process in the Northwest Territories to permit the mine and concentrator. Fortune Minerals is also working with the Tlicho and Northwest Territories Governments on making infrastructure improvements in the vicinity of the mine that will also improve the quality of life in nearby Tlicho communities.

Front-end engineering and design ("FEED") work is substantially complete for the NICO mine site and is nearing completion for the proposed SMPP in Saskatchewan. This work is being done by Aker Metals, a division of Aker Solutions Canada Inc., P&E, Golder Associates Limited, SGS Lakefield Research Limited, Faradelk Ltd., Dan Mackie and Associates, EHA Engineering Ltd. and Hydroproc. Updated economics for the NICO project will be announced upon completion of this work, targeting the second quarter of this year.

Concurrently with FEED, JDS Energy and Mining Inc., together with Tlicho Logistics, are reviewing NICO Constructability and logistics.

Fortune Minerals is very pleased to continue reporting operational improvements for the NICO project, including the new mine plan and updated mineral reserves that will extend the employment and economic opportunities for the project for the benefit of all stakeholders.

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 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 resource projects.

The contents of this press release have been reviewed and approved by Eugene Puritch, P.Eng., President of P&E Mining Consultants Inc. and Robin Goad, P.Geo., President of Fortune Minerals Limited.

This press release contains forward-looking information. This forward-looking information includes statements with respect to, among other things, projected rates of production and sources of revenue for the NICO project, the projected mine life of the NICO project, the proposed purchase and development of the site for the SMPP, and the proposed implementation of corporate income tax incentives by the Saskatchewan government. 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, the inherent volatility of metal prices, the risk that the Company may not be able to arrange the necessary financing to construct and operate the NICO mine and the SMPP, uncertainties with respect to the receipt or timing of required permits for the development of the NICO project and the SMPP, the possibility of delays in the commencement of production from the NICO project and construction of the SMPP, uncertainties related to the implementation of the proposed tax incentives 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 or revise it to reflect new events or circumstances, except as required by law.

SOURCE Fortune Minerals Limited

For further information: For further information: Fortune Minerals Limited, Robin Goad, President - or - Lindsay Simmons, IR Coordinator,, Tel.: (519) 858-8188, Fax: (519) 858-8155,; Renmark Financial Communications, Dan Symons: - or - Barbara Komorowski:; Media Contact: Valerie Lacasse:, Tel: (514) 939-3989, Fax: (514) 939-3717,

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