Fortune Minerals Limited · TSX:FT

Fortune Minerals — Investor Presentation (January 2013)

52 slides from Fortune Minerals's investor presentation, January 2013

1. Slide 1: Emerging Strategic Metal & Coal Producer

   Emerging Strategic Metal & Coal Producer Fortune Minerals Limited Investor Presentation TSX-FT, OTC QX-FTMDF January 2013

2. Slide 2: Forward-Looking Information

   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 min

3. Slide 3: Financial Summary

   Financial Summary Corporate Information Share Performance $1.20 1,400 Listings: TSX (Canada): FT Daily Volume $1.00 1,200 OTC QX (USA): FTMDF Closing Price Share Price (C$) 1,000 Share Volume (M) $0.80 Share Price $0.53 800 Shares Out – Basic 121.3 $0.60 600 Shares Out – Fully Diluted 127.9 $0.40 Ma

4. Slide 4: Fortune Minerals Limited

   Fortune Minerals Limited 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 (formerly Mount Klappan Anthracite Coal Project): 

5. Slide 5: Introduction to Arctos Anthracite Project

   Introduction to Arctos Anthracite Project (formerly the Mount Klappan Anthracite Metallurgical Coal Project) Summary Highlights  One of the world’s premier metallurgical coal development projects  Advanced project with nearly $100 million of work completed  Definitive Feasibility Study with robus

6. Slide 6: Anthracite: Highest Quality Coal

   Anthracite: Highest Quality Coal 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 Re

7. Slide 7: Significant Future Metallurgical Coal Demand Growth

   Significant Future Metallurgical Coal Demand Growth Insufficient supply of metallurgical Global Met Coal Demand coals to meet forecast global demand 1,600 >500 million mt demand  Increasing demand for anthracite increase over the next decade 1,440 due to new steel technologies & with limited new pr

8. Slide 8: Growing Demand in Steel Industry

   Growing Demand in Steel Industry  Use of Pulverized Coal Injection (PCI) reduces the amount of coke required in steel production  ~1/3 of the world’s blast furnaces use PCI  Steelmakers around the world are expanding PCI use to reduce costs  Low-vol PCI typically priced at 70% to 80% of high qua

9. Slide 9: Emergence of China as Net Coal Importer

   Emergence of China as Net Coal Importer China became a net coal importer of anthracite in 2004, coking coal in 2007, all coals in 2009 Coal & Anthracite Net Imports by China 350.0 $350 Coal Net Imports (Mt) $300 $291 300.0 $300 Anthracite Net Imports (Mt) 250.0 Met Coal Price (US$/t) $250 $215 200.0

10. Slide 10: Decreasing Supply of Anthracite

    Decreasing Supply of 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 m

11. Slide 11: Strategic Location & Infrastructure

    Strategic Location & Infrastructure  Large license area in northwest BC (16,411 Ha)  Close proximity to deep water shipping ports  Stewart Port (150 km)  Ridley Terminals in Prince Rupert (330 km)  Mine site straddles railway right-of-way  Track (CN) installed to 150 km south of mine  Railway

12. Slide 12: Joint Venture with POSCO

    Joint Venture with POSCO Secured world-class investor & strategic partner – one of the world’s largest steel producers  POSCO Canada has acquired 20% interest in Arctos for anticipated initial payments & cash contributions of $188 million based on current capital cost estimates  $30 million paid t

13. Slide 13: Resources & Reserves

    Resources & Reserves  Recent upgrade & increase in resources & new reserves (October 15, 2012)  Lost Fox deposit remains open for possible expansion & additional coal seams identified below 350 meters & on adjacent lands  Historical Resources include 2.2 billion tonnes in the Speculative class (1

14. Slide 14: Railway Partially Constructed

    Railway Partially Constructed  Railway transportation allows for scalable expansion of production to take advantage of large resource base  CN Rail operates between Prince George & Port of Prince Rupert & on Dease Lake Line to Minaret, 150 km south of Arctos  Railway road bed largely constructed

15. Slide 15: Rail Update – Moving Forward

    Rail Update – Moving Forward  Canadian & BC Government engaged at very high levels  Premier, Ministers & senior staff in BC Government  COO of Transportation & Executive VP level at CN  Collaborating with CN Rail for railway extension to site  Negotiating optimal land tenure arrangement with th

16. Slide 16: Port with Capesize Capacity

    Port with Capesize Capacity Ridley Coal Terminal a world-class coal & bulk materials handling facility  Ice-free, deep water port 30 hours closer to Asia than Port of Vancouver  Capable of handling full Capesize vessels up to 250,000 dwt that reduces ocean freight  16 Mtpa design capacity  Expan

17. Slide 17: Positive Definitive Feasibility Study

    Positive Definitive Feasibility Study  October 2012 update to 2005 & 2010 DFS  Based on railway transport of coal to Ridley Coal Terminal in Prince Rupert  Initial 3 Mtpa production from Lost Fox deposit open pit mine, wash plant & site infrastructure  69.2 Mt of product coal reserves – 25+ year

18. Slide 18: Permitting Update – Work Underway

    Permitting Update – Work Underway Arctos project identified on BC Government Major Investment Office list Project Description Report completed & submission pending  Report completed by technical leads with input from EA agencies  Document has been forwarded to Aboriginal groups for comment  Antic

19. Slide 19: Aboriginal Update

    Aboriginal Update Tahltan Nation Gitxsan Nation  Agreements to Date  Proposed new railway passes through 5  Environmental Assessment Process Gitxsan house territories Funding  Memorandum of Understanding being  Traditional Knowledge Agreement finalized  Confidentiality Agreement – PEM Data  A

20. Slide 20: Government Update – Overview

    Government Update – Overview  What’s new:  Federal & BC Government recognition that permitting process needs to be streamlined  Federal & BC Government harmonization of EA process  A re-energized approach to mine development  BC Government focused on Premier Clark’s BC Jobs Plan  Premier commi

21. Slide 21: Significant Upside Potential

    Significant Upside Potential One of world’s largest undeveloped deposits – railway transportation solution provides scalable expansion potential  Rail transportation allows for higher annual production than 3 Mtpa & will lower some cost for inbound freight  DFS reserves only represents 4.5% of tot

22. Slide 22: Accelerated Development Strategy

    Accelerated Development Strategy  Accelerated development program underway  Next steps include:  Continue Tahltan, Gitxsan, Skii km Lax Ha & stakeholder engagement  Environmental, socio-cultural & economic studies underway in support of permitting process  Project Description has been submitted

23. Slide 23: Targeted Milestones

    Targeted Milestones Proposed Development Timeline 2013 2014 2015 2016 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Project Description submission Baseline field work & document prep Filing of EIS-EAC documents EAO-CEAA review process Ministerial decision process Mine permitting Construction Commi

24. Slide 24: NICO Gold-Cobalt-Bismuth-Copper Project Highlights

    NICO Gold-Cobalt-Bismuth-Copper Project Highlights  Positive Front End Engineering & Design Study (FEED) completed in 2012 based on a vertically integrated mine & mill in the Northwest Territories & refinery in Saskatchewan  FEED - ~30% of detailed engineering complete for procurement  Robust eco

25. Slide 25: Gold: Counter Cyclical Hedge

    Gold: Counter Cyclical Hedge Historical & Forecast Gold Price  Gold price increased consistently in past 9 years, $2,000 especially after recent economic downturn $1,800 $1,749  While mine supply remains relatively flat, future demand continues to grow: $1,574 $1,600  Growing physical demand from

26. Slide 26: Cobalt: Robust & Diverse Market

    Cobalt: Robust & Diverse Market  Wide chemical and metallurgical market Wide Application of Industrial Usage applications in batteries, high strength alloys, cutting tools, catalysts, etc.  Cobalt sulphate is used in lithium ion & nickel 5% 4% Batteries (27%) metal hydride batteries for electronic

27. Slide 27: Cobalt: Rechargeable Batteries Drive Demand

    Cobalt: Rechargeable Batteries Drive Demand  Cobalt is critical for manufacturing batteries used in electric vehicles*, computers, cell phones & other electronic devices  Nickel metal hydride car batteries contain approximately 3 to 5 lbs of cobalt  Lithium-ion car batteries contain 5 to 7 lbs of

28. Slide 28: Cobalt: Shortage of Reliable Supply

    Cobalt: Shortage of Reliable Supply  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

29. Slide 29: Bismuth: Environmentally Friendly

    Bismuth: Environmentally Friendly  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, ho

30. Slide 30: Bismuth: Limited Supply

    Bismuth: Limited Supply  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 & China’s exports could

31. Slide 31: Introduction to NICO Project & SMPP

    Introduction to NICO Project & SMPP NICO Project  Large scale cobalt-gold-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 S

32. Slide 32: Mine Location & Infrastructure

    Mine Location & Infrastructure  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 o

33. Slide 33: Saskatchewan Metals Processing Plant

    Saskatchewan Metals Processing Plant  Hydrometallurgical plant to process bulk concentrate from NICO mine & mill to produce gold doré, cobalt sulphate or cathode, bismuth ingot & copper metal  High concentration ratio of ore using simple flotation allows concentrate to be shipped to Saskatchewan f

34. Slide 34: NICO Mineral Reserves

    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 Probabl

35. Slide 35: Well-Understood Geology

    Well-Understood Geology The NICO mineral reserves are based on 327 drill holes & surface trenches  Deposit is an Iron Oxide Copper Gold (“IOCG”) class deposit, commonly referred to as Olympic Dam-type after the dominant “Super Giant” deposit in South Australia  Ore is hosted in three lenses of bre

36. Slide 36: Underground Test Mining Complete

    Underground Test Mining Complete  Mining conditions, geometry & grades confirmed  Environmental impacts assessed  Portal, 2 km of decline ramp & 2 mine levels established with ventilation raise to surface  ~$20 million pre-production development completed  Large sample collected for pilot plant

37. Slide 37: Extensive Metallurgy Work

    Extensive Metallurgy Work  1997-2012 Metallurgical expenditures ~$12 M  Lab & bench scale test work  2007 200 t bulk sample pilot plant study  Proved process flow sheet  Established baseline process performance & products  Improved recoveries over feasibility study  Provided samples for envir

38. Slide 38: Positive Pilot Plant Results

    Positive Pilot Plant Results  Continuous flotation tests to produce separate cobalt & bismuth concentrates  Recovery improvements to Co, Bi, Au & Cu  Proved process flow sheet, production of high value products & improved metal recoveries  Cobalt pressure oxidation, precipitation & electrowinnin

39. Slide 39: 2012 FEED Study

    2012 FEED Study 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: conventional truck & loader Mining method an open pit & under

40. Slide 40: Balanced Production Scenario

    Balanced Production Scenario 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 Average Annual Revenue by Metal – Base Case 100 $89 90 80 70 $61 C$M 60 50 $43 40 30 20 1

41. Slide 41: Negative Cash Costs

    Negative Cash Costs 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

42. Slide 42: Low Capital Costs

    Low Capital Costs Capital costs total $441 million for the first 2 years of the project, including all direct & indirect costs & contingencies Summary of Capital Costs $500 $450 SMPP Site Capital Costs $400  Refinery $350 230  Rail load out Capital Costs (C$M) $300  Ponds $250 $200 NICO Site Capi

43. Slide 43: Economics – Highly Leveraged to Gold

    Economics – Highly Leveraged to Gold NICO demonstrates robust economics through a range of commodity prices Economics for Cobalt Sulphate Option $1,000 $951 $900 NPV (7% discount) $800 NPV (5% discount) $707 $700 $660 $600 C$M $500 $466 $467 $400 $309 $300 $270 $228 $200 $147 $110 $100 $0 Base Case

44. Slide 44: Additional Upside

    Additional Upside Significant opportunity existing to further strengthen project economics  Extend mine life for 3+ years with stockpiled subeconomic material  Move forward gold production via additional underground mining to access high grade material  Generate additional returns from SMPP  Cus

45. Slide 45: Production Targeted in 2015

    Production Targeted in 2015 Progressing through final stages of permitting process  Environmental Assessments well advanced for mine & SMPP permitting  For the mine & mill, public hearings completed, government approval pending  For SMPP, an addendum to the Environmental Impact Statement has been

46. Slide 46: Production Targeted in 2015

    Production Targeted in 2015 Proposed Development Timeline 2012 2013 2014 2015 2016 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 SMPP EA SMPP fully permitted NICO environmental review NICO Minister’s approval NICO fully permitted Financing Engineering & procurement Construction Commissioning Commerci

47. Slide 47: Summary Highlights

    Summary Highlights  Positive FEED Study completed based on a vertically integrated mine, mill & refinery  Attractive economics – highly leveraged to increased cobalt & gold prices with low downside risk  Negative cash cost – cobalt cash cost (net of credits) of negative US$0.81/lb at Base Case pr

48. Slide 48: Experienced Team

    Experienced Team 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 y

49. Slide 49: Appendix: Economics & Price Assumptions

    Appendix: Economics & Price Assumptions 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

50. Slide 50: Notes

    Notes SO FORTUNE 1%) MINERALS LIMITED Wh 49

51. Slide 51: Notes

    Notes SO FORTUNE 1%) MINERALS LIMITED Wh 50

52. Slide 52: Emerging Strategic Metal & Coal Producer

    Emerging Strategic For further information, please contact: Metal & Coal Troy Nazarewicz, Investor Relations Manager Producer 148 Fullarton Street, Suite 1600 London, Ontario, Canada N6A 5P3 Tel. (519) 858-8188 Fax. (519) 858-8155 E-mail. tnazarewicz @fortuneminerals.com Website. www.fortuneminerals

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