Issued Capital: 214,822,180
LONDON, ON, Dec. 22, 2014 /CNW/ - Fortune Minerals Limited (TSX: FT) (OTCQX: FTMDF) ("Fortune" or the "Company") (www.fortuneminerals.com) announces that it has closed an additional US$ 7 million financing from Lascaux Resource Capital Fund LP ("Lascaux") to provide working capital for the commissioning of the Revenue Silver Mine ("RSM") in southwest Colorado, U.S.A. Lascaux has already provided US$ 35 million to Fortune to finance the acquisition of the RSM under a metal prepay facility that will be repaid with a fixed schedule of metal shipments from the mine plus cash interest over a five-year period (see Fortune news releases, dated October 1, and 16, 2014). Fortune owns a 100% interest in the RSM through its wholly-owned subsidiary, Fortune Revenue Silver Mines, Inc. ("FRSMI"). The RSM is an operating silver mine with a 400 ton per day mill and concentrator that is ramping up to the planned production rate.
Pursuant to the agreement, Lascaux provided an additional US$ 7 million to FRSMI that is also structured as a metal prepay facility. The working capital facility, together with interest accruing at 15% per annum, will be repaid in metal by December 31, 2015. Lascaux will also receive 25% of any copper production from the mine until the original metal prepay facility is satisfied. In addition, Lascaux is entitled to a Net Smelter Return Royalty commencing January 2016 ranging between 2 and 4% until the original facility is satisfied and between 1 and 2% thereafter, depending on when the working capital prepay facility is repaid in full. FRSMI will be required to maintain minimum net working capital and cash of US$ 2 million during the term of the facility and Fortune will be required to raise additional funds to satisfy FRSMI's obligations in this regard. Fortune is pursuing various alternatives for sourcing the required additional funding. Fortune is a guarantor of FRSMI's obligations under both the original metal prepay facility and the new working capital facility.
The additional working capital is required by FRSMI in order to fund operations and capital projects due to unanticipated delays with commissioning the mill and regulatory issues that prevented blasting in the higher-grade Virginius Vein during September and October. Revenues at the mine are also being impacted by low metal prices, particularly for silver.
The Company is planning for operations in a conservative metal price environment by reducing costs and by making adjustments to the Mine Plan to focus production from the higher grade areas of the Virginius and Yellow Rose Veins to compensate for the low commodity prices. With improved mine ventilation established with the completion of the 1500 foot, 8 foot diameter raise bore to surface, and resolution of regulatory issues, production ramp up is continuing toward the targeted 400 ton per day rate. The revised Mine Plan is now in place and the mining workforce was been increased by 30 personnel since mid-November. The capital received in October as part of the original prepay facility has also been deployed and as projects are completed and equipment is received in both the mine and the mill, additional production and reliability is being realized. These improvements have taken more time than initially anticipated and the revised plan targets full silver production being achieved by February 2015. The current focus is on getting reliable production from the existing developed workplaces while a decline ramp is installed to access lower levels of the Virginius Vein beneath the main Revenue Tunnel where there are additional stopes that have been developed, some with broken mineralized material already available from previous test mining activities.
About the Revenue Silver Mine:
The RSM is situated on 146 patented and unpatented mining claims, totaling approximately 1,095 acres in 11 km southwest of Ouray and 490 km southwest of Denver, Colorado. The RSM is an historic producer that operated between 1876 and 1912 by Caroline Mining Co. and had production estimated at approximately 15 million ounces of silver before the mine closed. The RSM is located in the prolific Sneffels silver mining district where there are many past producers. Fortune believes there is very good potential to identify additional resources on the mine property and in the district generally.
About Fortune Minerals:
Fortune is a diversified North American mining and development company that owns and operates the Revenue Silver Mine in Colorado. The Company is developing the vertically integrated NICO gold-cobalt-bismuth-copper project that is comprised of a proposed mine and mill in Canada's Northwest Territories ("NT") that will produce a bulk concentrate for shipment to a refinery in Saskatchewan for processing to high value metal and chemical products. Fortune is also developing the Arctos anthracite metallurgical coal project in British Columbia and 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.
The disclosure of scientific and technical information contained in this press release has been approved by Robin Goad, M.Sc., P.Geo., President and Chief Executive Officer of Fortune Minerals Limited, who is a "Qualified Person" under National Instrument 43-101.
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This press release contains forward-looking information and forward-looking statements within the meaning of applicable securities legislation. This forward-looking information includes statements with respect to, among other things, the Company's plans to increase production at the RSM and the proposed development of the NICO and Arctos projects. Forward-looking information is based on the opinions and estimates of management as well as certain assumptions at the date the information is given (including, in respect of the forward-looking information contained in this press release, assumptions regarding the Company's financial and technical abilities to increase production at the RSM and complete the development of the NICO and Arctos projects). However, such forward-looking information 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 risk that the Company may not be able to arrange the necessary financing to satisfy its obligations under the working capital prepay facility from Lascaux or complete the NICO and Arctos projects; the risk that the Company may not be able to increase production at the RSM to targeted levels; the risk that operating and/or capital costs may be materially higher than anticipated; the risk of decreases in the prices of relevant commodities; potential loss of key personnel; potential discrepancies between actual and estimated production; potential discrepancies between actual and estimated mineral resources or between actual and estimated metallurgical recoveries; potential labour shortages; the risk of mining accidents; the risk of changes in applicable laws or regulations; uncertainties with respect to the timing and receipt of all necessary permits; and other factors. In addition, the risk factors described or referred to in Fortune's Annual Information Form for the year ended December 31, 2013, which is available on the SEDAR website, should be reviewed in conjunction with the information contained in this news release. 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: Fortune Minerals Limited, Robin Goad, President, or Troy Nazarewicz, Investor Relations Manager, [email protected], Tel.: (519) 858-8188, www.fortuneminerals.com; Renmark Financial Communications, Barbara Komorowski: [email protected], or Farialle Pacha: [email protected], Montreal Tel: (514) 939-3989, Toronto Tel. (416) 644-2020 www.renmarkfinancial.com