Fortune Minerals Limited · TSX:FT
Fortune Minerals — Investor Presentation (October 2004)
32 slides from Fortune Minerals's investor presentation, Oct 20, 2004
Slide 1: Fortune Minerals Limited
FORTUNE MINERALS LIMITED 148 Fullarton Street, Suite 1508 London, Ontario, Canada N6A 5P3 Tel (519) 858-8188 Fax (519) 858-8155 info@fortuneminerals.com www.fortuneminerals.com A diversified natural resources company creating sustainable shareholder value through the acquisition, exploration & devel
Slide 2: Corporate Profile
CORPORATE PROFILE Information as at Oct 20, 2004 LISTING: The Toronto Stock Exchange, Symbol “FT” SHARE PRICE: $3.40 (52 week high/low : $3.95/1.00) ISSUED SHARES: 27.2 million FULLY DILUTED: 30.3 million INSIDER HOLDINGS: 8.4 million (31%) OFFICERS & DIRECTORS: George Doumet, MSc, MBA, Chairman Rob
Slide 3: Institutional Shareholders and Analyst Reports
INSTITUTIONAL SHAREHOLDERS ~ 20 Canadian & US institutions Sprott Asset Management owns >13.9% ANALYST REPORTS Michael Fowler - Desjardins Securities Inc. ($6.60 target price) Coverage by Dundee Securities Corporation Additional reports in preparation
Slide 4: Fortune Minerals Projects
FORTUNE MINERALS PROJECTS NICO Gold-Cobalt- Bismuth SUE-DIANNE FORMOSA Copper-Silver High Ca Limestone MOUNT KLAPPAN Anthracite Coal 7 mineral deposits & prospective exploration projects, all in Canada
Slide 5: Investment Opportunity
INVESTMENT OPPORTUNITY Commodity prices & capital markets favourable for resource companies Fortune has high quality projects with known resources & reserves The two principal projects are at bankable feasibility Deposits provide exposure to energy (coal), gold, specialty & base metals & industrial
Slide 6: 100% Interest in Mount Klappan Anthracite Coal Project
100% INTEREST IN MOUNT KLAPPAN ANTHRACITE COAL PROJECT Purchased in 2002 for ~$3.3 million from Canadian subsidiary of ConocoPhillips Test mining 1985-86 Railway sub-grade World Class resources & reserves (2.8 billion tonnes) of anthracite rank coal near existing infrastructure & tide water in north
Slide 7: Mount Klappan Location & Infrastructure
MOUNT KLAPPAN LOCATION & INFRASTRUCTURE • Proximity to tide water • 150km from Stewart & 330km from Prince Rupert • Leases straddle railway right-of-way • Railway sub-grade provides road access to highway • Track 70km south • CNR recently purchased BC Rail & will provide proposal to extend track to
Slide 8: Mount Klappan Ports
MOUNT KLAPPAN PORTS Port of Stewart • Prince Rupert 1 day closer to Asian markets Port of Prince Rupert Closest major coal deposit to tide water in western North America
Slide 9: Mount Klappan Expenditure History
MOUNT KLAPPAN EXPENDITURE HISTORY $69 million expended on the project to date $65 million by Gulf & $4+ million by Fortune
Slide 10: Mount Klappan Exploration & Development Work
MOUNT KLAPPAN EXPLORATION & DEVELOPMENT WORK Resource delineation, test burns, marketing, transportation, environmental & feasibility studies 200,000 tonne bulk sample in 1985-86 & quality verified in 100,000 tonnes of finished coal products produced in pilot plant at site
Slide 11: Mount Klappan Resources & Reserves
MOUNT KLAPPAN RESOURCES & RESERVES Mineral Resource Category (MT) AREA MEASURED INDICATED DEMONSTRATED INFERRED SPECULATIVE LOST-FOX 107.9 109.5 217.4 91.5 749.6 HOBBIT-BROATCH - 13.5 13.5 258.4 753.0 SUMMIT - - - 9.6 508.9 NASS - - - - 201.5 TOTAL 107.9 123.0 230.9 359.5 2,213.0 TOTAL RESOURCES IN
Slide 12: About Anthracite
ABOUT ANTHRACITE Premium product with highest rank by carbon & energy content
Slide 13: Mount Klappan Product Quality
MOUNT KLAPPAN PRODUCT QUALITY Processing by washing & heavy media separation to produce 4 main products @ 67% recovery Coarse Fines Fines Fines Low Ash Low Ash Med. Ash High Ash Size Range 50 X 6 mm 6 X .15 mm 6 X 0 mm 3 X 0 mm Residual Moisture 1-2% 1-2% 1-2% 1-2% Ash (ar) 7.50% 7.00% 8-10% 14-22%
Slide 14: World Anthracite Markets
WORLD ANTHRACITE MARKETS • World production 2003 ~ 300 million tonnes/yr • World trade 2004 ~ 22.5 million tonnes/yr • Growth in trade market 2004 ~ 25% • Growth in low volatile PCI > hard coking coal Filtre Media ~ US $ 250/T Charge Carbon & Sized Solid Fuel ~ US $ 100/T Metallurgical Reductants ~
Slide 15: Mount Klappan Current Status
MOUNT KLAPPAN CURRENT STATUS Updated bankable feasibility study in progress by Marston • Open pit mine, wash plant & site infrastructure • Initial production 1.75 MT/yr (clean coal @ 8:1 BCM/tonne strip) includes: - 1.6 million tonnes bulk 10% ash PCI - 150,000 tonnes coarse low ash - +/- specialty
Slide 16: Mount Klappan Mine Plan
MOUNT KLAPPAN MINE PLAN POTENTIAL MOUNT KLAPPAM ANTHRACITE PROJECT PROJECT DESCRIPTION CONCEPTUAL PLAN © Marston venous CAAA www marston.com ocTosen 2004
Slide 17: Mount Klappan Proposed Development Schedule
MOUNT KLAPPAN PROPOSED DEVELOPMENT SCHEDULE
Slide 18: 81% Interest in NICO Gold-Cobalt-Bismuth Deposit
81% INTEREST IN NICO GOLD-COBALT-BISMUTH DEPOSIT Discovered by Fortune in 1995 NICO block model & pit optimization • Hydrothermal Fe oxide-hosted (Olympic Dam) class • Large gold deposit (1.4 million ozs) with cobalt & bismuth co-products • Close to existing infrastructure near Yellowknife, Northwes
Slide 19: NICO Location & Infrastructure Map
NICO LOCATION & INFRASTRUCTURE MAP • Winter road access • Power within 22km • New all-weather road planned • Process plant in Yellowknife • Highway to Edmonton 80km to south
Slide 20: NICO Expenditure History
NICO EXPENDITURE HISTORY $11 million expended on project to date
Slide 21: NICO Cross Section 20+50W
NICO CROSS SECTION 20+50W • Large mining widths up to 80m in individual lenses (100+ m collectively) • Mineralization at & close to surface in inclined lenses • Deposit amenable to open pit & bulk underground mining methods • Gold-rich, high-grade core
Slide 22: NICO Underground & Open Pit Mining Approach
NICO UNDERGROUND & OPEN PIT MINING APPROACH Advantages: • Lower capital costs • Little pre-stripping with waste used to backfill stopes • Early access to highest grade gold-rich parts of deposit • Greater leverage to gold • Higher metal recoveries • Less impact on cobalt & bismuth markets • Fewer mo
Slide 23: NICO Underground & Open Pit Mining Approach
NICO UNDERGROUND & OPEN PIT MINING APPROACH Engineered 3-D fly-by of proposed mine development
Slide 24: 2002 NICO Economic Analysis @ 7% Discount
2002 NICO ECONOMIC ANALYSIS @ 7% DISCOUNT (out of date) Operating Metal Price Capital Cash Flow IRR NPV Payback (C$ million) (C$ million) (%) (C$ million) (YRS) @ 4000 T/D, US$315/oz Au, US$10/lb Co & 43 $100 - $133 - US$3.25/lb Bi @ 2500 T/D, US$315/oz Au, US$10/lb Co & $77 $225 27 $70 3.5 US$3.25/
Slide 25: NICO Measured & Indicated Mineral Resources
NICO MEASURED & INDICATED MINERAL RESOURCES Resources prepared by Micon International Ltd. in compliance with NI 43-101 (US$375/oz Au, US$10/lb Co & US$3.25/lb Bi) Au Co Bi NSR GMV GMV NSR CUT-OFF ($C/t) TONNES (g/t) (%) (%) ($C/t) (C$/T)* (C$/T)** $100 1,161,000 8.28 0.15 0.21 $132 $205 $260 $70 3,
Slide 26: Metal Markets
METAL MARKETS Metal prices stronger than current engineering work gold >US$400/oz vs. US$375/oz cobalt >US$20/lb vs. US$10 & 15/lb bismuth US$3.70/lb vs. US$3.25/lb COBALT: Consumption 43,000T @ 8% growth in 2003, 5-6% growth prior yrs Main markets: 50% metallurgical - high strength alloys for aeros
Slide 27: NICO Current Status
NICO CURRENT STATUS Bankable feasibility study in progress by Micon International • Underground & open pit mine, process plant & site infrastructure • Initial production 3000 tonnes/day (1 million tonnes/yr) - 1500 tonnes/day underground - blasthole with delayed cemented rock fill & access by declin
Slide 28: NICO Site Infrastructure
NICO SITE INFRASTRUCTURE
Slide 29: NICO Process Flow Sheet
NICO PROCESS FLOW SHEET 5% sulphide fraction contains all recoverable metals in bulk flotation concentrate Downstream processing on only 5% sulphide fraction Saleable products: gold-bismuth concentrate, cobalt & gold doré
Slide 30: NICO Proposed Development Schedule
NICO PROPOSED DEVELOPMENT SCHEDULE
Slide 31: 100% Interest in Sue-Dianne Copper-Silver Deposit
100% INTEREST IN SUE-DIANNE COPPER-SILVER DEPOSIT Tonnage Copper Silver Class (Tonnes) % g/t 24,259,200 Measured & 0.56 2.2 (@ 0.10% Cu cutoff) Indicated 17,330,100 Measured & 0.72 2.7 (@ 0.25% Cu cutoff) Indicated 10,569,800 Measured & 0.95 3.3 (@ 0.50% Cu cutoff) Indicated Cathode copper can be pr
Slide 32: Summary
SUMMARY • Fortune well positioned with 7 deposits providing participation in energy, gold & specialty metals Feasibility: Mount Klappan (Lost-Fox), NICO Permitting: Formosa Quarry Advanced: Sue-Dianne, Hobbit-Broatch, Summit, Nass • Large size of main projects allows expansion of production internal
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