Process, design and mine engineering improvements - On target for
Issued Capital: 68,240,857
LONDON, ON, Nov. 4 /CNW/ - 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 products. 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.
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 preparation. 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.
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 disclosed 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 doré 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 benefit a broad spectrum of 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.
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 timing 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.
SOURCE Fortune Minerals Limited
For further information: For further information: Fortune Minerals Limited: Robin Goad, President or Lindsay Simmons, IR Coordinator, firstname.lastname@example.org, Tel.: (519) 858-8188, Fax: (519) 858-8155, www.fortuneminerals.com; Renmark Financial Communications: Dan Symons: email@example.com or Barbara Komorowski: firstname.lastname@example.org; Media Contact: Valerie Lacasse: email@example.com, Tel: (514) 939-3989, Fax: (514) 939-3717, www.renmarkfinancial.com