Fortune Minerals Limited · TSX:FT

Fortune Minerals — Investor Presentation (October 2014)

47 slides from Fortune Minerals's investor presentation, October 2014

  1. Slide 1: Investor Presentation October 2014

    Investor Presentation October 2014 1

  2. Slide 2: Disclaimer and forward-looking information

     This management presentation(the “presentation”) was prepared as a summary overview of current information about Fortune Minerals Limited (the “Company”) only and is not a prospectus or other offering documentintended to provide investors with the information required to make investmentdecisions.

  3. Slide 3: Scientific and technical information notes

     The scientific and technical information with respect to the RSM contained in this presentation is based on the technical report dated July 23, 2014 prepared by SRK Consulting entitled “NI 43-101 Technical Report Preliminary Economic Assessment The Revenue Mine, Sneffels, Colorado” (the “SRK Techn

  4. Slide 4: Corporate Information, Share Performance and Ownership

    Corporate Information Share Performance Listings: TSX (Canada): FT $0.50 Daily Volume 500 $0.45 Closing Price 450 OTC QX (USA): FTMDF $0.40 400 Trading Volume (M) Share Price C$0.24 $0.35 350 Share Price (C$) Shares Out – Basic 194.6 $0.30 300 Shares Out – Fully Diluted 206.5 $0.25 250 $0.20 200 Mar

  5. Slide 5: Two late-stage projects and a producing silver mine

     Headquartered in London, Ontario, Canada  Operating in mining friendly jurisdictions  Strong management team with proven records Revenue Silver Mine  Historical 15 million oz silver producer in southwest Colorado, U.S.A.  Producing mine & ramping up to 400 tons per day Two late-stage projects

  6. Slide 6: More than C$250 million invested in key North American assets

    More than C$ 250 million invested in Fortune’s key North American assets • Producing underground high grade silver mine & mill with byproduct gold, Revenue Mine lead & zinc 38 M ozs Ag Eq. • Ramping up to 400 tons per day contained • Historical production of ~15 M ozs of silver 1876 - 1912 • Late st

  7. Slide 7: Multi-asset producer with combined forecast annual revenues

     Fortune will be a multi-asset producer once NICO enters production, with combined average annual revenues forecast at US$ 207 million & EBITDA of US$ 99 million LOM Forecast Average Annual US$ Revenue by Metal for Revenue & NICO Mines $250 $4 $1 $0.5 $207.5 $32 $200 $46 $150 $58 $100 $66 $50 US $-

  8. Slide 8: 100% interest in producing silver mine and mill

    100 % interest in producing silver mine & mill in historic Sneffels Silver District in southwest Colorado  Historical production of 15 million ozs of silver between 1876 and 1912  Strong community support in local community of Ouray & pool of skilled underground miners  Commissioning & ramping up

  9. Slide 9: Production of silver, gold, lead and zinc

     Production of silver, gold, lead & zinc  Lead & Zinc concentrates containing silver & gold sold to Teck Resources smelter in Trail, BC  Gravity gold sold to Johnson Matthey in Salt Lake City, Utah  Potential to produce copper concentrate  Potential to negotiate recovery of other metals Annual

  10. Slide 10: Compact site layout and excellent infrastructure

     Compact site layout & excellent infrastructure  County maintained road to mine from highway  Connection to Colorado electrical grid with excess capacity  Underground workings serviced primarily with electric & air powered equipment  Underground mill & concentrator to reduce mine footprint  Ex

  11. Slide 11: Geology well understood from a century of mining

     Geology well understood from more than a century of mining & exploration work  Current resources are in Yellow Rose & Virginius Veins – Upside opportunities in 6 other veins  Resources in narrow, steeply dipping, high-grade epithermal quartz-carbonate veins containing tetrahedrite & freibergite

  12. Slide 12: Revenue Virginius resource estimate

    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) Revenue Indicated 485,600 26.95 0.044 4.30 0.25 1.37 13.1 21,000 41.8 2.4 13.3 Virginius Revenue Inferred 646,100 14.93 0.038 3.04 0.13 0.99 9.65 24,500 39.25 1.6 12.8 Virginius

  13. Slide 13: Yellow Rose resource estimate

    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

  14. Slide 14: Mine Plan Resources

     Mine Plan Resources of 888,283 tons (diluted), averaging 14.6 ounces of silver per ton, 0.02 ounces of gold per ton, 2.26 percent lead, and 0.90 percent zinc  Subset of the total mineral resource inventory Description Tons (kt) Ag (oz/t) Au (oz/t) Pb (%) Zn (%) Measured Indicated 369.8 19.68 0.03

  15. Slide 15: Veins accessed from Revenue Tunnel

     Veins accessed from ~7400 foot (2.3 km) long tracked Revenue Tunnel, plus ~5600 feet (1707 m) of drifting on 2 main veins  Internal winze ~710 feet deep (216 m) & planned ramp to access 4 additional levels  Mining primarily by underground shrinkage methods from Alimak raises  Slushers used to s

  16. Slide 16: Underground crushing, grinding and flotation plant

    Ball Mill & Flotation Bulk Flotation Crushing Gallery  Underground crushing & grinding plant & flotation concentrator with gravity gold circuit ramping up to 400 tons per day production rate 16

  17. Slide 17: SRK Preliminary Economic Assessment Highlights

     Attractive economics indicated from SRK PEA using SRK Preliminary Economic Assessment Highlights Mine Plan Resource & excluding surface & 8 years based on Mine Plan Resource underground stockpiles Mine Life including ramp up & ramp down  Underground mining using shrinkage methods LOM Sustaining C

  18. Slide 18: Total Silver Equivalent Ounces by Silver Mine

    Total Silver Equivalent Ounces by Silver Mine Great Panther Silver Ltd - Topia United Silver Corp. -Crescent Cresent Mine Great Panther Silver Ltd - Guanajuato District Silvercrest Mines Inc. - El Octo Scorpio Mining Corp. - Nuestra Senora Excellon Resources Inc. - Miguel Auza Fortune Minerals - Rev

  19. Slide 19: Silver equivalent grade for comparable companies

    Silver Equivalent grade (Troy oz/t) for comparable companies 20.0 18.8 17.7 17.7 18.0 16.5 16.0 15.2 14.0 AgEq Grade (oz/t) 12.0 10.0 8.8 8.3 7.7 8.0 6.5 6.0 5.0 4.7 4.0 3.4 2.1 2.2 2.3 1.8 2.0 1.3 0.0  Source: SNL Metals & Mining, Company Reports & SRK Technical Report  Silver equivalent ounces f

  20. Slide 20: Cash cost per silver equivalent ounce vs peers

     Average C1 cash cost of US$10.28/oz will be among the lowest of TSX silver peer group $20.00 Cash Costs per Silver Oz net of By-Products $18.65 $18.77 $17.76 $18.00 $16.00 $14.32 $13.76 $14.00 Cash cost per EqAg/oz $12.00 $11.32 $10.28 $10.42 $10.00 $7.65 $8.00 $6.53 $6.00 $4.00 $2.00 $- Fortuna -

  21. Slide 21: Silver peer valuation comparables

    Market Cap EV EBITDA P / CF EV / EBITDA NAV* Public Companies P / NAV (C$M) (C$M) 2014E 2015E 2014E 2015E 2014E 2015E (C$M) Primero Mining Corp. 1,041 1,088 97 161 11.1x 7.3x 11.2x 6.8x 906 1.15x Fortuna Silver Mines Inc. 647 583 72 96 9.9x 8.8x 8.1x 6.1x 507 1.28x Endeavour Silver Corp. 560 543 73

  22. Slide 22: Virginius Vein – Ore Production Zones

     High grade gold shoots not modelled separately in resource model & are likely understated  Potential production of copper concentrate  Upside to add tonnage from horizontal & vertical projection of Virginius & Yellow Rose Veins  Process broken mineralized material in surface & underground stock

  23. Slide 23: Advancing mine plan to ensure mill feed for 400 tons per day

     Advancing mine plan & development to ensure sufficient mill feed for 400 tons per day  Develop minimum of 10 working faces  Completing capital improvements for additional escape ways & improved ventilation  Completing ramp up & improvements to mill to improve performance  Eliminating process c

  24. Slide 24: NICO vertically integrated shovel-ready project

     Vertically integrated shovel-ready project to recover gold, cobalt, bismuth (12% of global reserves) & by-product copper  Mine & concentrator in NT  Saskatchewan Metals Processing Plant (SMPP) in SK to process concentrates from mine to high value metals & chemicals  Bulk flotation concentrate (

  25. Slide 25: Proven flow sheet to produce high value metals and chemicals

     Proven flow sheet to produce high value metal & chemical products  Gold: Doré Bars  Cobalt: Sulphate Heptahydrate (~20.9% Co) & potential to diversify production with cathode & other chemicals  Bismuth: ingot (>99.995% Bi), needles (>99.995% Bi) & Oxide (89.7% Bi)  Copper: Cement (~90% Cu) & p

  26. Slide 26: Cobalt Consumption by End Use

     Wide chemical & metallurgical market applications in batteries, high strength alloys, cutting tools, magnets, catalysts & pigments Cobalt Consumption by End Use  Cobalt sulphate & oxide used in lithium ion & 2013 nickel metal hydride batteries for portable Battery Chemicals electronic devices & h

  27. Slide 27: Cobalt: Battery Use Drives Demand

    Cobalt: Battery Use Drives Demand BATTERY USAGE ACCOUNTS NICKEL-METAL HYDRIDE LITHIUM-ION FOR 42% OF COBALT DEMAND BATTERIES BATTERIES 159 UP TO 15% 6 UP TO 60% ‘> GOBALT BY WEIGHT COBALT BY WEIGHT 1-4 1-4kg OF COBALT 2-8 2-8KG OF COBALT k IN ACAR BATTERY kg INACAR BATTERY Cobalt is recognized as st

  28. Slide 28: Tesla lithium-ion battery plant in Nevada

     Tesla has started construction of its $5 billion lithium-ion battery plant in Nevada  By 2020 anticipated to produce more lithium-ion batteries annually than were produced globally in 2013  Model S uses Nickel Cobalt Aluminum (NCA) cathode chemistry from Panasonic (contains ~9% cobalt)  Tesla p

  29. Slide 29: World bismuth production and reserves

     World market ~20,000 tonnes per year  China principal source of bismuth & accounts for 60% of world reserves & 80% of world production  China closed 20% of its production due to environmental & mine safety issues & has policies to restrict exports  NICO is World’s largest deposit - 12% of globa

  30. Slide 30: Bismuth: Automotive and Health Use

    Pie iL ° fo LJ \ A E om U |_ am Ll > Gr Bismuth: Automotive & Health Use per vehicle of bismuth in the winc secures thi 80 million ca ind around the shield frit. This black id to the vehic Automotive Health Pepto-Bismol? & Rust protection similar stomach Lei ei settling medicines Paint pigments & Co

  31. Slide 31: Growing bismuth applications as lead replacement

     Traditional uses in low temperature & fusible alloys, cosmetics, chemicals, fire retardants & sprinkler systems  New markets focus on non-toxic, environmentally safe replacement for lead in plumbing & electronic solders, brass, steel & aluminum, ceramic glazes, hot dip galvanizing, pigments & aut

  32. Slide 32: NICO mineral reserves and deposit geology

    The NICO mineral reserves are based on 327 drill holes & surface trenches  Iron Oxide Copper Gold (“IOCG”) class (Olympic Dam-type) deposit  Ore hosted in 3 lenses of ironstone breccia up to 1.3 km in length, 550 m in width, & 70 m in thickness  Underground test mining has verified geometry & gra

  33. Slide 33: NICO Mineral Reserves

    Tonnes Au Co Bi Cu Underground Mineral Reserves (Thousands) (g/t) (%) (%) (%) Proven 282 4.93 0.14 0.27 0.03 Probable 295 5.00 0.07 0.07 0.01 Total 577 4.96 0.10 0.17 0.02 Tonnes Au Co Bi Cu Open Pit Mineral Reserves (Thousands) (g/t) (%) (%) (%) Proven 20,453 0.92 0.11 0.15 0.04 Probable 12,047 1.0

  34. Slide 34: 20 year mine life at 4,650 tpd

     20 yr mine life at 4,650 tpd  Additional 5.5 Mt low grade to be stockpiled for future processing  Primarily open pit mining  Underground mining in first 2 years  Early access to high grade improves economics  Co-mingled waste rock & mill tailings  Plant site  Mill & flotation concentrator 

  35. Slide 35: Saskatchewan Metals Processing Plant

     Saskatchewan Metals Processing Plant (SMPP) is a hydrometallurgical refinery that will be built on land owned by Fortune 27 km north of Saskatoon near the Town of Langham  SMPP will process NICO concentrate to high value metals & chemicals in a low cost jurisdiction  Low cost power (~5.7 cents k

  36. Slide 36: Feasibility Study Highlights – Base Case

    Feasibility Study Highlights – Base Case Positive Feasibility Study with strong economics Mine type Open pit with underground in 2nd year  Vertically integrated project consisting of open pit & underground mine & mill in NT & refinery in SK Open pit: conventional truck & loader Mining method Underg

  37. Slide 37: Permitting and Project Financing and Development

    Permitting substantially complete  EA’s completed for mine & SMPP  Land Use Permit & Class A Water License approvals received Advanced relationships with NT & Tlicho Governments  Co-operative Relationship Agreement with Tlicho (aboriginal) Government  Infrastructure, Socio-Economic & Participati

  38. Slide 38: Arctos Summary Highlights

    Summary Highlights  One of the world’s premier metallurgical coal development projects  Joint Venture partnership with South Korean steel producer POSCO  C$110 million of work completed including test mining, pilot plant processing & trial cargos  Positive Feasibility Study with robust economics

  39. Slide 39: Arctos high rank anthracite coal and applications

    Arctos is one of the largest & most advanced Canadian projects 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

  40. Slide 40: China coal and anthracite net imports

    China became net coal importer of anthracite in 2004, coking coal in 2007 & all coals in 2009 Coal & Anthracite Net Imports by China 600 $400 Coal Net Imports (Mt) Anthracite Net Imports (Mt) 500 $300 Hard Coking Coal Price (US$/t) $291 $300 400 $215 $209 Hard Coking Coal Price (US$/t) $200 $160 300

  41. Slide 41: Arctos resources and reserves

     Measured & Indicated Resources of 230 Mt - Small fraction of total global resource  Run-of-Mine Coal Reserves of 125 Mt in Lost Fox deposit remains open for possible expansion  Historical Resources include 2 Bn + tonnes in the Speculative class (1) Arctos Global Resources (million tonnes) Area M

  42. Slide 42: Railway road bed and extension to mine site

     Railway road bed largely constructed to mine site by BC Government  Project economics supports 150 km brownfield extension from Minaret  EA on railway extension underway as part of mine development  MOU advanced with CN to operate railway  Other parties interested in the rail – Dramatic reduct

  43. Slide 43: Arctos Feasibility Study economics

     Marston (Golder) Feasibility Study completed October 2012 based on rail transport to port & diesel power supply  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 P

  44. Slide 44: 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

  45. Slide 45: Upcoming milestones for Revenue, NICO and Arctos

     Revenue Silver Mine  Complete capital improvements & ramp up to full production  Achieve cash flow from operations  NICO & SMPP Project  Complete detailed engineering & secure remaining permits for construction readiness  Complete re-zoning of SMPP lands  Complete Participation & Socio-econo

  46. Slide 46: Directors and Management

    Directors Mahendra Naik, B Comm, CPA,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 & e

  47. Slide 47: Fortune Minerals contact information

    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

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