Fortune Minerals Limited · TSX:FT
Fortune Minerals — Investor Presentation (May 2014)
34 slides from Fortune Minerals's investor presentation, May 2014
Slide 1: Revenue Silver Mine Presentation
Revenue Silver Mine Presentation May 2014
Slide 2: Forward-looking information
This document contains forward-looking information. This forward-looking information includes statements with respect to, among other things, the proposed acquisition of the 88% interest in the Revenue Silver Mine (the "RSM") not currently owned by the Company, the anticipated production from and ec
Slide 3: Corporate Information and Share Performance
Corporate Information Share Performance $0.50 Daily Volume 5,000 Listings: TSX (Canada): FT $0.45 Closing Price 4,500 OTC QX (USA): FTMDF $0.40 4,000 Share Price $0.39 $0.35 3,500 Share Price (C$) Trading Volume (M) Shares Out – Basic 188.2 $0.30 3,000 Shares Out – Fully Diluted 199.7 $0.25 2,500 Ma
Slide 4: Fortune Minerals, Revenue Silver Mine acquisition, two late-stage projects
Fortune Minerals Limited Canadian mineral development company Headquartered in London, Ontario, Canada Operating in mining friendly jurisdictions Acquisition of Revenue Silver Mine Historical 14 million oz silver producer in southwest Colorado, U.S.A. Producer in advanced stages of commiss
Slide 5: Staged transaction to acquire 100% of Revenue Silver Mine
Staged transaction to acquire 100% of Revenue Silver Mine in southwest Colorado for up to US$ 64.4 million US$ 13.6 million for a 12% interest already completed Assume payments of US$ 4.5 million & 2% NSR Fully permitted & constructed mine, mill & surface facilities currently ramping up to 4
Slide 6: Revenue by Metal Type
Mill & concentrator throughput being expanded from 300 to 400 tons / day or 134,000 tons / yr Production of silver, gold, lead & zinc Lead & Zinc concentrates to be sold under contract to Teck Resources smelter in Trail, B.C. Gravity gold sold to Johnson Matthey Potential to produce copper
Slide 7: Cash cost per AgEq/oz
Project Pre-tax 6% discounted NPV of US$ 121 M Average cash cost of US$8.02/oz Life of Mine (LOM) while at full capacity Breakeven free cash flow silver price of US$ 12.42 – Includes OPEX, royalty & capital costs Projected average annual EBITDA of US$ 15.5 M/yr, US$ 202M LOM Average Annual C
Slide 8: Financial model assumptions
Project financial model prepared using discounted cash flows Metal price assumptions include: US$ 21.50 / oz Ag, US$ 1.00 / lb Pb, US$ 1.00 / lb Zn, US$ 1350 / oz gold & no revenue for copper 2% NSR capped at US$ 9 million paid from cash flow Additional capital of US$ 5.75 million for mine &
Slide 9: Southwest Colorado location near Ouray
Southwest Colorado, U.S.A., 11 km south of town of Ouray (pop. 1,000), 58 km from town of Montrose (pop. 19,000) & 490 km southwest of Denver Mine has strong community support Extensive history of underground mining in area dating back to 19th century Warehouse facilities in Ouray to service
Slide 10: Land package of 147 claims
Total land package of 147 claims, totalling 1,079.9 acres, including 110 patented claims, totalling 736.89 acres Apex down-dip right of ownership Ouray, Colorado 10
Slide 11: Compact mine, plant, tailings and site services
Compact mine, plant, tailings & site services layout Excellent infrastructure near highway with county maintained road to mine site Connection to Colorado electrical grid with excess capacity to allow for growth Mine access from horizontal tracked & serviced portal & tunnel Most mine equip
Slide 12: Site facilities
Site includes office / dry, warehouse & surface shop facilities Underground shop for mine External crusher for waste rock sold to county Shop Underground shop Dry Portal Electrics Tails Filter 12
Slide 13: Decentralized operations management model
Decentralized model to manage operations Currently ~90 employees & most senior positions filled Full production will require ~100+ employees locally sourced from workers laid off in November Site Manager Safety and Environmental Mine Manager Mill Manager Surface and Finance and Admin Services
Slide 14: Regional geology: Tertiary volcanics
Tertiary age volcanics 35+ to 22.5 Ma, consisting primarily of andesite flows & breccias transitioning to rhyolite tuffs & basalt flows in large caldera structures San Juan andesite is the dominant rock type in Revenue Mine area 14
Slide 15: Epithermal quartz-carbonate vein systems
Geological systems in mine well understood & consist of narrow, steeply dipping high grade epithermal quartz-carbonate veins with sulphide minerals Mineralization consisting of tetrahedrite & freibergite (silver), gold, galena (lead), sphalerite (zinc), chalcopyrite (copper) & pyrite Sharp con
Slide 16: Virginius vein
Virginius vein trends northwesterly & dips 70 to 80 degrees southwest Vein pinches & swells between 6 inches (0.15 m) & 10 feet (3.05 m), averaging 18 inches (0.46 m) High-grade with sulphides diluted to 3 foot (0.91 m) minimum mining width by SRK Consulting Fortune assumes 25% additional ex
Slide 17: Yellow Rose vein
Yellow Rose vein trends northwesterly with an average dip of 63 degrees to the southwest High-grade vein with sulphides that pinches & swells between 1 foot (0.30 m) & 9 feet (2.74 m), averaging 4 feet (1.22 m) Fortune applies 20% additional external dilution after diluting to 3 foot minimum m
Slide 18: Vulcan plan and cross section of Yellow Rose Vein
Vulcan Plan & cross section of Yellow Rose Vein Extensive geological database in Vulcan software includes historical & modern data 1880-2014 Virginius Vein has 257 drill holes, totalling 70,025.3 feet with 738 samples of vein & 2,225 chip samples of vein, totalling 2,785.9 feet Yellow Rose Vei
Slide 19: Resource estimate by SRK: Virginius
Contained Metal Ag Au Pb Cu Zn Area Category Tons (opt) (opt) (%) (%) (%) Ag Au Pb Cu Zn (M oz) (oz) (M lb) (M lb) (M lb) Virginius Indicated 485,600 26.95 0.044 4.30 0.25 1.37 13.1 21,000 41.8 2.4 13.3 Virginius Inferred 646,100 14.93 0.038 3.04 0.13 0.99 9.65 24,500 39.25 1.6 12.8 Mineral Resour
Slide 20: Resource estimate by SRK: Yellow Rose
Contained Metal Ag Au Pb Zn Area Category Tons (opt) (opt) (%) (%) Ag Au Pb Zn (M oz ) (oz) (M lb) (M lb) Yellow Rose Measured 215,300 10.08 0.034 1.71 1.69 2.17 6,400 7.37 7.28 Yellow Rose Indicated 100,700 10.92 0.036 1.96 1.74 1.10 4,000 3.95 3.5 Yellow Rose Measured & Indicated 316,100 10.35 0.0
Slide 21: Revenue Tunnel and primary veins access
Virginius & Yellow Rose Veins accessed from Revenue Tunnel ~7500 foot 2.29 km) long crosscut, plus ~1100 feet (335 m) of drifting on 2 main veins Virginius at terminus of crosscut Yellow Rose is 600 feet (182.4 m) from portal Internal winze ~600 feet deep (183 m) to access 700 & 550 Levels &
Slide 22: Revenue Tunnel rehabilitation and development
Revenue Tunnel Extensive rehabilitation & development work completed, including underground & surface portions of the mine Revenue Tunnel rehabilitated with track, piping, air & ventilation 3 Alimak systems for raise development in place – 5 required for full production All necessary operati
Slide 23: Mining methods
Drift development using track mounted jumbo & muck machines, typically in waste Mining with jack legs, stopers & slushers to prepared draw points 2 different mining methods will be used depending on vein width to limit dilution & maximize ore recovery - Stopes with width wider than 3 feet will
Slide 24: Revenue Virginius Vein – Ore Production Zones
Revenue Virginius Vein – Ore Production Zones 24
Slide 25: Yellow Rose Vein – Ore Production Zones
Yellow Rose Vein – Ore Production Zones 25
Slide 26: Underground crushing plant, mill and concentrator
Underground crushing plant, mill & concentrator designed by CH2MHill Built with primarily new equipment Mill designed with oversized components for initial 300 tons / day rate & being expanded to 400 tons / day Two flotation concentrates, including silver lead & silver zinc with contracts in
Slide 27: Raw ore receiving and crushing gallery
Raw ore Receiving Underground Jaw & Cone Crushing gallery 27
Slide 28: Ball mill, flotation and concentrate bagging
Bulk Flotation Ball Mill & Flotation Concentrate Bagging Lead – Zinc Flotation 28
Slide 29: Tailings Facility
Fully permitted project Waste rock has neutralizing potential Co-mingled tailings facility (20% waste rock / 80% tails) After process (sulphide removal) tails will be neutral 65% brownfield site Water rights to Sneffels Creek Site is not of archaeological significance No contaminatio
Slide 30: Virginius Vein – Ore Production Zones
Upside to add tonnage from exploring & mining strike & dip-projection of known workings Process broken mineralized material in stopes from historical hand cobbing after upgrading with jigs 5 additional known veins are intersected by main production tunnel, including Silver Queen, Hard Cash / T
Slide 31: Conclusions and next steps
CONCLUSIONS Accretive & transformational acquisition transitioning Fortune to a producer with cash flow Measured & Indicated Resources containing 16.3 million ozs & Inferred Resources containing 10.1 million ozs with significant upside to identify new resources 6% discounted pre-tax project NP
Slide 32: Revenue Silver Mine acquisition
Revenue Silver Mine acquisition Fully permitted & constructed producing underground mine ramping up to 400 tons / day Low cost producer of high grade silver, gold, lead & zinc Two advanced Canadian development assets One of world’s premier metallurgical coal developments, significant gold,
Slide 33: Directors and Management
Directors Mahendra Naik, B Comm, CA Chairman, Director CFO Fundeco - Founding director & former CFO, IAMGOLD George Doumet, MSc, MBA Honorary Chairman, Director Chemical Engineer – President & CEO, Federal White Cement Robin Goad, MSc, PGeo President & CEO, Director Geologist - 30 yrs mining & explo
Slide 34: Fortune Minerals contact details
ee FORTUNE \ | y) ) MINERALS LIMITED Z, Join Fortune’s email list TSX:FT / OTC QX: FTMDF 148 Fulllarton Street, Suite 1600, London, Ontario, Canada N6A 5P3 Troy Nazarewicz, Investor Relations Manager info@fortuneminerals.com | 519-858-8188 | fortuneminerals.com