Fortune poised to start construction at NICO

VANCOUVER — With one last permit to clear, Fortune Minerals (TSE: FT; US-OTC: FTMDF) is reaching the final pre-construction stages at its Nico gold–cobalt–bismuth project, 160 km northwest of Yellowknife. The next challenge for the company will involve raising the US$440 million required for development.

Fortune spent just under US$4 million at Nico during 2013, achieved federal environmental approvals and reached the final stages before receiving its Class-A permits from the Northwest Territories government. NICO’s open-pit and underground operation would produce on-site concentrates that would be shipped to a processing facility in Saskatchewan, which would produce gold doré, cobalt chemicals, copper cement and bismuth metal.

“The focus last year was on a couple of things. We were working really closely with the Northwest Territories and Tlicho Nation governments on the permitting aspects, and we were continuing with our site-preparation activities so that we could get things in line for when we eventually solidify our project funding,” comments chief operating officer Mike Romaniuk during a phone interview. “Our progress really speaks to the level of co-operation we’re seeing with the governments up there. Everyone has been extremely supportive of the project.”

Auguring well for NICO has been the new the Northwest Territories power-system plan, which the government unveiled in late December. The crux of the plan involves linking the territory’s Snare and Taltson hydro grids. With the consolidated infrastructure, Fortune can connect to the Snare–Yellowknife grid, which lies 22 km from its proposed mine site. Romaniuk explains that the territorial government is completing power-line studies, after which Fortune will enter into “full-blown negotiations” for a long-term power agreement.

On Jan. 9 Fortune announced it had a received an interim land-use permit for its early construction and staging activities. The permit was approved by the Wek’eezhii Land and Water Board so that the company could continue its pre-construction schedule, pending the results of its regulatory reviews.

“The interim permit we received set us up for that early work. It’s truly just to cover the next few months, as we fully anticipate we’ll have our Class-A permits and licences in place by June or July of this year,” Romaniuk adds. “It’s an additional demonstration of the support we’ve received. Everybody has been really good in regards to helping us fill those gaps in order to keep the project advancing.”

Fortune forged a financial link with Asia in mid-2013, when Procon Resources committed US$11 million to Nico’s development with an equity investment that totalled 29.5 million shares at 40¢ per share. The investment gave Procon — which is majority owned by China CAMC Engineering — a 19.4% stake in Fortune.

Romaniuk mentions during the interview that president and CEO Robin Goad is in China pursuing potential financing options for NICO’s development.

“We’re investigating off-take agreements,” he continues. “In the cobalt and bismuth markets we have the option of going that route or going straight to customers. There are interesting uses emerging there, with the cobalt going primarily to the battery business, which is obviously exploding, as the environment and things like that become more of a focus.”

Nico’s proven and probable reserves for underground and open pit total 33 million tonnes grading 1.02 grams gold per tonne, 0.11% cobalt, 0.14% bismuth and 0.04% copper. A conventional grinding and flotation circuit would produce 180 tonnes of wet-bulk concentrate, which would be shipped off for final processing at the company’s proposed metals processing plant near Saskatoon. The mine would annually produce 40,500 oz. gold, 3.4 million lb. cobalt, 3.7 million lb. bismuth and 559,400 lb. copper.

Fortune reported cash and equivalents of US$19 million at the end of the third quarter. Shares have jumped 42%, or 14¢ per share, since the company announced its interim land-use permit on Jan. 9, and closed at 45.5¢ per share at press time. Fortune has 150 million shares outstanding for a $68.5-million market capitalization.