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Fortune Minerals updates Mount Klappan coal project feasibility study with lower Canadian dollar
Project economics materially enhanced Issued Capital: 55,550,107 LONDON, ON, Jan. 8 /CNW/ - Fortu...
About this update from Fortune Minerals Limited
[{"type":"text","content":"\n\n\n\nProject economics materially enhanced\n\nIssued Capital: 55,550,107\n\n\nLONDON, ON, Jan. 8 /CNW/ - Fortune Minerals Limited (TSX-FT) ("Fortune\nMinerals" or the "Company") is pleased to announce significantly improved\neconomics for the Lost Fox deposit at its 100% owned Mount Klappan anthracite\ncoal project in northwest British Columbia as a result of the current lower\nCanadian dollar. The Lost Fox deposit (x)bankable (definitive) feasibility study\noriginally produced by Marston & Marston Inc. ("Marston") in August 2005, was\nrecently updated in July 2008 by Marston using an exchange rate of C$1.00 (equal sign)\nUS$0.97 as the base case (see Fortune Minerals news release dated August 7,\n2008). Since completion of this feasibility study update, the value of the\nCanadian dollar has steadily declined to approximately C$1.00 (equal sign) US$0.83.\nBecause production costs for the mine would be incurred primarily in Canadian\ncurrency, whereas revenues would be derived from sale of products in U.S.\ndollars, Fortune requested Marston to prepare a further update based on\ncurrent exchange rates. Marston has done so and results of its update show\nthat the cash costs per tonne of coal sold would be significantly lower and\nproject economics would be materially enhanced.\n\n\nThe impact of the decline in the Canadian dollar relative to the U.S.\ndollar from US$0.97 to US$0.83, increases the base case Pre-Tax Internal Rate\nof Return (IRR) from 28.9% to 40.9% and the base case 8% discounted Pre-Tax\nNet Present Value (NPV) from C$702.7 million to C$1.281 billion. The base case\ncash cost per tonne of coal FOB vessel at the loading port also decreases from\nUS$103.59 to US$88.64 (C$106.79). However, capital costs for the first three\nyears of the project would increase from C$617 million to C$655 million to\nreflect the cost of equipment purchased in U.S. currency.\n\n\nLost Fox is one of four deposit areas within the Mount Klappan project\nand the Marston feasibility study and its updates assess only the initial pit\nin the Lost Fox deposit area. The feasibility study assessed the economics of\nan open pit coal mine and process plant to produce 3 million tonnes of clean\ncoal products per year, consisting of a premium 10% ash ultra-low volatile\npulverized coal injection (PCI) product used...