Fortune Minerals Limited · TSX:FT

Fortune Minerals — Investor Presentation (January 2014)

48 slides from Fortune Minerals's investor presentation, January 2014

1. Slide 1: Investor Presentation January 2014

   Investor Presentation January 2014

2. Slide 2: Forward-looking information

   This document contains certain forward-looking information. This forward-looking information includes, or may be based upon, estimates, forecasts, and statements as to management’s expectations with respect to, among other things, the size and quality of the Company’s mineral resources, progress in

3. Slide 3: Corporate Information, Share Performance, Analyst Coverage, Ownership

   Corporate Information Share Performance $0.70 Daily Volume 5,000 Listings: TSX (Canada): FT Closing Price 4,500 $0.60 OTC QX (USA): FTMDF 4,000 Share Price (C$) Share Price $0.45 Share Volume (M) $0.50 3,500 Shares Out – Basic 150.5 $0.40 3,000 Shares Out – Fully Diluted 157.5 2,500 $0.30 2,000 Mark

4. Slide 4: Fortune Minerals Limited: Two late-stage projects

   Fortune Minerals Limited  Canadian mineral development company  Headquartered in London, Ontario, Canada  Canada Focus - operating in mining friendly jurisdictions Two late-stage projects  Arctos Anthracite Project, BC  Positive Feasibility Study  In BC Environmental Assessment process  NICO

5. Slide 5: One of the world's premier late stage met coal projects

   One of the world’s premier, late stage met coal projects – poised to make final steps to production  Joint venture with POSCO, a committed partner & leading steel player  The most advanced major met coal project in Western Canada  Over $100 million of work completed over 30+ years  Updated Feasi

6. Slide 6: Validation of Arctos with strategic partnership with POSCO

    Validation of Arctos with strategic partnership with POSCO – one of the world’s largest steel companies  Among top 200 global companies - US$ 58 billon revenue - US$ 25 billion market capitalization  Lead innovator in global steel industry  Raw materials investment for vertical integration  PO

7. Slide 7: Feasibility Study completed October 2012

    Feasibility Study completed October 2012, rail to port & custom power solution  Initial 3 Mtpa production from Lost Fox deposit open pit mine, wash plant & site infrastructure  69.2 Mt of product coal reserves – 25+ years production  Premium ultra-low volatile PCI product  Life of mine average

8. Slide 8: Arctos resources and reserves

    M&I at 230mt - Small fraction of total global resource  Lost Fox deposit remains open for possible expansion - additional coal seams  Historical Resources include 2bn + tonnes in the Speculative class (1) Historical Arctos Global Resources (million tonnes) (1) Area Measured Indicated M&I Inferre

9. Slide 9: 2013 summer field season and EA process timeline

   June 2013 to October 2013 – Summer season work undertaken  2013 summer field season completed & advancement on EA process  Multiple agreements negotiated with CN Rail  Schedule, costs & milestones established with BC government  Aboriginal engagement plan completed & under review by government &

10. Slide 10: Ridley Coal Terminal

    Ridley Coal Terminal a world-class coal & bulk materials handling facility  Port currently has ~5 Mtpa capacity available  Ice-free, deep water port 30 hours closer to Asia than Port of Vancouver to reduce ocean freight  Capable of handling full Capesize vessels up to 250,000 dwt  16 Mtpa design

11. Slide 11: Railway road bed to mine site

     Railway road bed largely constructed to mine site by BC Government  Project economics supports 150 km brownfield extension from Minaret  Environmental Assessment on railway extension underway as part of mine development  MOU in negotiation with CN to operate railway  Other parties interested i

12. Slide 12: Railway permitting: What's new

    What’s new:  Railway permit approval requirements established with BC & federal governments  Permits will be completed in parallel with mine permits – similar to a resource road  New section of rail is included in the project’s environmental assessment  BC Government officials will authorize rai

13. Slide 13: Formal agreement with CN being proposed

    Formal agreement with CN being proposed  Fortune has held numerous discussions with CN regarding rail development  Multiple agreements completed with CN & additional agreements will include all aspects of rail development & operations  In cooperation with CN, AECOM engaged to complete engineering

14. Slide 14: Government harmonized EA process

    What’s new:  Federal & BC Governments harmonized Environmental Assessment substitution process  Schedule, costs & milestones established with BC government to better understand permitting completion timeframe  Ongoing dialogue with BC government to communicate strategies  Rail approval requireme

15. Slide 15: Gitxsan Nation Supportive; Tahltan Nation

    Gitxsan Nation Supportive  Continued excellent relationship with Gitxsan  MOU & Access Agreements signed with Gitxsan Chiefs  Annual presentations at Gitxsan Summit  Gitxsan Community Liaisons hired  Traditional Use & Knowledge hired Tahltan Nation – Government Leading  Fortune supporting the

16. Slide 16: Environmental assessment process continues to advance

    What’s New:  Environmental assessment process continues to advance  2013 summer field season undertaken  Additional drilling (17 holes) (+2 partial) to collect necessary samples  Field work ongoing in support of environmental assessment for power line, rail & mine site  Mine plan adjusted for f

17. Slide 17: Next steps

     Next steps include:  Complete permitting activities  Continue Tahltan, Gitxsan & stakeholder engagement  Advance rail engineering & permitting, & establish agreements with rail operator  Secure port capacity  Secure low cost power for the site with extension of electrical grid  Conduct addit

18. Slide 18: Arctos Milestones to Production

    Initial Mine Closure and Reclamation Engineering & Economic Studies Production Operation Exploration Concept Mineral Resource Construction Mineral Reserve Early Exploration Target Testing MINE PEA PFS FS Arctos 3 – 6 Years 6 – 7 Years 0.5 – 2 Years 5 – 25 Years Arctos Milestones to Production Baseli

19. Slide 19: Largest and most advanced Canadian high rank anthracite project

    Arctos is the largest & most advanced Canadian project of high rank anthracite coal  Highest quality metallurgical coal with very high carbon & energy content  Represents only 1% of world coal reserves Metallurgical coal with diverse applications  Metallurgical Reductants / charge carbon  Ultra-

20. Slide 20: Ultra low volatile PCI product properties

    Arctos will produce ultra low volatile PCI that will demand price premium – optimization with other products Properties Charge Carbon PCI Sinter / Thermal (adb) Product Product Product Fixed Carbon (%) 84.8 82.6 77.5 Ash (%) 8 10 15 Volatiles (%) 6.4 6.5 6.2 Sulphur (%) 0.5 0.5 0.5 Residual Moisture

21. Slide 21: Steelmakers expanding PCI use

     Steelmakers expanding Pulverized Coal Injection (PCI) use to reduce costs, improve margins  PCI reduces the amount of coke in blast furnace (made from coking coal)  Seaborne PCI market expected to grow at 8% CAGR to 2018  Low-vol PCI typically priced at 70% to 80% of high quality hard coking co

22. Slide 22: Supply constraints for anthracite

    Supply constraints due to declining exports & lack of new supply  China: 547 million tonnes – net importer since 2004  Vietnam: 44.5 million tonnes – reducing exports to 5% of production by 2015 to utilize production domestically  Few new high-quality deposits in mining friendly jurisdictions Sup

23. Slide 23: China net imports of coal and anthracite

    China became a net coal importer of anthracite in 2004, coking coal in 2007, all coals in 2009 Coal & Anthracite Net Imports by China 450 $350 Coal Net Imports (Mt) $300 Anthracite Net Imports (Mt) $291 $300 350 Hard Coking Coal Price (US$/t) $250 $215 $209 Hard Coking Coal Price (US$/t) $200 250 $1

24. Slide 24: China remains key consumer of met coal

    China will remain a key consumer, with growing demand from other emerging market  China’s demand for metallurgical coal is expected to grow by 83% percent over 2012/18e, comprising 24% of total seaborne met coal demand in 2018e.  Urbanization projected in India, Africa & other emerging markets fro

25. Slide 25: Insufficient supply of metallurgical coals

    Insufficient supply of metallurgical coals Global Met Coal Demand to meet forecast global demand  Increasing demand for anthracite due 1,600 to new steel technologies & lower emissions 1,440 1,400  Emerging economies are driving forces for future metallurgical coal 1,185 demand 1,200  Steel produ

26. Slide 26: NICO Positive FEED Study

     Positive Front End Engineering & Design Study (FEED) in 2012 based on a vertically integrated mine & mill in the Northwest Territories & refinery in Saskatchewan  FEED - ~20% of detailed engineering complete for procurement  Attractive economics – FS generates NPV of $309 million* – highly lever

27. Slide 27: Gold price increased consistently in the past decade

    Historical & Forecast Gold Price $1,800  Gold price increased consistently in the past $1,669 decade $1,600 $1,574 $1,504  While mine supply remains relatively flat, future $1,400 demand continues to grow: $1,211 $1,200  Growing physical demand from Asia & central banks $1,000 $873 $873  Growing

28. Slide 28: Cobalt market applications

     Wide chemical & metallurgical market applications in batteries, high strength alloys, Wide Application of Industrial Usage cutting tools, catalysts, etc.  Cobalt sulphate used in lithium ion & nickel 4% Batteries (27%) metal hydride batteries for electronic devices & 5% Superalloy (19%) 6% hybrid

29. Slide 29: Cobalt demand from electric vehicle batteries

     Cobalt critical for manufacturing batteries used in electric vehicles*, computers, cell phones & other electronic devices  Nickel metal hydride car batteries contain approximately 4 kg of cobalt  Lithium-ion car batteries contain 2 to 6 kg of cobalt  Cobalt usage in batteries is expected to gro

30. Slide 30: World cobalt production

     World market of refined cobalt production ~82,000t, excluding some secondary processing & scrap  Vast majority of cobalt sourced from regions that are politically unstable or prone to export restrictions  Congo (DRC) currently accounts for 51% of global supply  China has the largest refining ca

31. Slide 31: Bismuth applications

     Traditionally used in fusible alloys, cosmetics, chemicals etc.  New markets focus on super conductors, CDs & auto anti-corrosion materials  Environmentally safe replacement for lead in plumbing & electronic solders, brass, ceramic glazes, free cutting steel, hot dip galvanizing & paint pigments

32. Slide 32: World bismuth reserves

     World market between 15,000 & 20,000 t per year  China is the principal source of bismuth (240 Kt reserve), accounting for 80% of world reserves & 73% of world production in 2010  China has closed 20% of its production due to environmental concerns & exports reduced due to restrictions  NICO co

33. Slide 33: NICO Project and Saskatchewan Metals Processing Plant

    NICO Project  Large scale gold-cobalt-bismuth deposit  160 km from City of Yellowknife  450 km from railway at Hay River  High concentration ratio using simple flotation – 4,650 t of ore / day reduced to 180 t of concentrate  Allows shipping to Saskatchewan or third-party lower cost processor S

34. Slide 34: NICO lease and access

     5,140 Ha lease in southern NWT  Winter access roads  All-weather road planned by governments to highway (135 km)  $1.5 million in place for baseline environmental survey  Engineering & environmental work underway  450 km from railway at Hay River for transport of concentrates to SMPP  160 km

35. Slide 35: NICO Mineral Reserves

    Underground Mineral Reserves Tonnes Au (g/t) Co (%) Bi (%) Cu (%) Proven 282,000 4.93 0.14 0.27 0.03 Probable 94,000 5.6 0.11 0.19 0.01 Total 376,000 5.09 0.13 0.25 0.02 Open Pit Mineral Reserves Tonnes Au (g/t) Co (%) Bi (%) Cu (%) Proven 20,513,000 0.94 0.11 0.15 0.04 Probable 12,099,000 1.05 0.11

36. Slide 36: Risk mitigation

    Risk mitigation  Test mining completed to confirm deposit geometry & grades  ~$20 million pre-production development completed by Procon for with 2 km of decline ramp, 2 mine levels & ventilation raise to surface  Large samples collected for pilot plant testing  Piloting completed to confirm pro

37. Slide 37: Process flow sheet and metal products

     Continuous flotation tests to produce separate cobalt & bismuth concentrates  Recovery improvements for all metals  Proved process flow sheet, production of high value products  Cobalt pressure oxidation, precipitation & electrowinning to demonstrate production of 99.8% cobalt cathode or solven

38. Slide 38: FEED Study Highlights

    FEED Study Highlights – Base Case, Cobalt Sulphate Positive FEED Study demonstrating very low costs & strong economics Mine type Open pit with underground in 2nd year  Vertically integrated project consisting of open pit Open pit: conventional truck & loader & underground mine, mill & hydrometallur

39. Slide 39: NICO annual revenue by metal

    NICO will be a reliable Canadian-based producer of strategic metals:  Gold doré, 99.8% cobalt cathode &/or 20.9% cobalt sulphate, 99.99% bismuth ingot, & a copper metal precipitate 100 Average Annual Revenue by Metal – Base Case (gold) & Recent Price (black) $89 90 80 $69 70 $67 $61 C$M 60 50 $43 $

40. Slide 40: Negative operating costs net of by-product credits

    NICO has negative operating costs for all metals net of by-product credits  Demonstrates that after capital has been repaid, operations can be sustained during periods of low metal prices & volatility Cobalt Gold Bismuth Base Case Current Price Base Case Current Price Base Case Current Price $0.00

41. Slide 41: Opportunity to strengthen project economics

    Significant opportunity existing to further strengthen project economics  Custom processing of concentrates to defer SMPP  Extend mine life for 3+ years with stockpiled subeconomic material  Alternative power supply to mine to lower costs  Move forward gold production via additional underground

42. Slide 42: Progressing through final stages of permitting

    Progressing through final stages of permitting process  Environmental Assessments well advanced for mine & SMPP permitting  Mine & mill approved by Federal Minister & Tlicho Government  For SMPP, addendum to Environmental Impact Statement submitted for review & public comment, after which governm

43. Slide 43: Proposed Development Timeline

    Proposed Development Timeline – Assumes access to full financing 2013 2014 2015 2016 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 SMPP EA SMPP fully permitted NICO Minister’s approval NICO fully permitted Financing Engineering & procurement Construction Commissioning Commercial operations 43

44. Slide 44: Strategic investment by Procon Resources / CAMCE

    June 27, 2013 - Strategic (19.4%) investment of C$11.7million by Procon Resources Inc.  CAMCE via its controlled subsidiary, Procon, acquired its interest in Fortune as first stage investment for a proposed equity & debt project financing transaction for NICO  Long-term strategic & financial partn

45. Slide 45: Two advanced Canadian development assets

     Two advanced Canadian development assets  One of the world’s premier metallurgical coal developments, significant gold, cobalt & 15% of global bismuth reserves  $210 million combined expenditures  Positive Feasibility Studies, test mined, pilot plant processed & in permitting  Low cost product

46. Slide 46: 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

47. Slide 47: NICO sensitivity to metal price cases

    Cobalt Metal Option Cobalt Sulphate Option Pre-Tax After Tax Pre-Tax After Tax Metal Price & $M $M $M $M $M $M $M Exchange Rate Case IRR $M IRR IRR IRR NPV NPV NPV NPV NPV NPV NPV % NPV (5%) % % % (7%) (7%) (5%) (7%) (5%) (7%) (5%) Base Case Prices 10.8 164.5 293.2 9.6 101.0 207.1 14.0 308.5 466.0 1

48. Slide 48: Fortune Minerals contact

    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

Fortune Minerals — Investor Presentation (January 2014) on 6ix