Overview
Cobalt is an often-overlooked critical mineral in the transition to clean energy. Cobalt is required to make the cathodes of many lithium-ion batteries used in electric vehicles (EVs), stationary storage cells and consumer electronics. Cobalt is also used in superalloys for the aerospace industry, cemented carbides, cutting tools, permanent magnets, surgical implants, catalysts, pigments and agricultural products.
The global cobalt market is expected to grow by 8.90 percent between 2023 and 2028 to reach a volume of almost 306,000 metric tons by 2028. Cobalt outlook in the long-term is expected to double by 2030 with the EV segment accounting for 89 percent of growth, energy storage at 3 percent and superalloys at 2 percent.
Fortune Minerals (TSX:FT,OTCQB:FTMDF) is a Canadian mining company developing its wholly owned, vertically integrated NICO primary cobalt project in Canada to produce cobalt chemicals for the rapidly expanding lithium-ion battery industry. The NICO mineral reserves also contain 1.1 million ounces (Moz) of gold, 12 percent of global bismuth reserves, and copper as a minor by-product. NICO comprises a planned mine and concentrator in the Northwest Territories and a related refinery in Alberta, where concentrates from the mine will be processed into energy and eco-metals for the growing clean energy economy.
The company has an option agreement in place to acquire the JFSL Field Services ULC brownfield site in Lamont County, Alberta, where Fortune plans to construct a hydrometallurgical refinery to support the NICO project. The refinery is located on 76.78 acres of land northeast of Edmonton, with 42,000 square feet of service shops and buildings and is adjacent to the Canadian National Railway. Fortune Minerals will process metal concentrates from the mine’s ore into gold dore, bismuth ingots and oxide, copper cement, and cobalt sulphate for use in manufacturing of lithium-ion batteries.
NICO is a primary-cobalt deposit, but the mineral reserves also contain 1.1 Moz of gold as a countercyclical and highly liquid co-product that can be easily converted to cash. The gold contained in the NICO deposit stands out among other cobalt projects, where the metal is produced primarily as a by-product of copper or nickel.
The brownfield refinery site
NICO is also the largest known deposit of bismuth in the world with about 12 percent of global reserves – even though it represents only about 10 percent of the company’s projected revenue from operations at recent metal prices. The cobalt, bismuth and copper contained in the NICO deposit are all classified as critical minerals by Canada, as they have essential use in new technologies, cannot be easily substituted with other minerals, and because supply chains may be threatened by geopolitical issues.
The mineral reserves for the NICO deposit were estimated in compliance with NI-43-101 and total 33.1 million tonnes (Mt), containing 82.3 million lbs (37,341 tonnes) of cobalt, 1.1 Moz of gold, 102.1 million lbs (46,325 tonnes) of bismuth and 27.2 million lbs (12,296 tonnes) of copper to support a 20-year mine life at a mill throughput rate of 4,650 tonnes of ore per day.
Sums of the combined reserves may not exactly equal sums of the underground and open pit reserves due to rounding error.
The mineral reserves are based on 327 drill holes plus surface trenches and underground test mining verifying the deposit grades, geometry and mining conditions. Both of Fortune Minerals’ deposits are open for potential expansion, extending the deposits with additional drilling or identifying new zones or deposits.
The company’s other assets include the Sue-Dianne deposit, which has near-surface, copper-silver-gold deposits that can feed into the NICO mill.
Company Highlights
Fortune Minerals is building a reliable, vertically integrated North American critical minerals project to produce cobalt chemicals for the rapidly expanding lithium-ion battery industry.The NICO project is one of a few advanced-stage cobalt projects outside of the Democratic Republic of the Congo, with an average annual production of approximately 1,800 tonnes of cobalt units in the first 14 years of the 20-year mine life.Fortune Minerals has the option to acquire the Alberta Refinery Site to process concentrates from the NICO mine. As a vertically integrated asset, it will be independent of China’s dominant refining position.The company’s flagship asset’s primary cobalt production is independent of nickel and copper mining and contains more than 1 million ounces (Moz) of in-situ co-product gold.Fortune Minerals has received environmental assessment approval for the mine, concentrator and access road in the Northwest Territories.The company has developed strong relationships with Indigenous and local communities and governments, which paved the way for federal, Northwest Territories and Tlicho Governments’ approval of the project and financial support for local infrastructure, including the $400 million Tlicho all-season highway project to Whati that recently opened to the public.Potential for additional business at the refinery from toll processing of concentrates from other mines, diversification into the metals recycling businessAn experienced management team leads Fortune Minerals towards fully developing and capitalizing on its assets.
Key Project
NICO Cobalt Project and Reserves
The NICO cobalt-gold-bismuth-copper deposit is an IOCG or Olympic Dam-type mineral deposit situated on 5,140 hectares of mining leases, located 160 kilometers northwest of the City of Yellowknife and 50 kilometers north of Whati in Canada’s Northwest Territories.
Fortune Minerals has expended more than C$135 million preparing technical, environmental and social studies to support the development of the NICO cobalt-gold-bismuth-copper project. Environmental assessment approval and the major mine permits have been received for the planned facilities in the Northwest Territories. The project is expected to be a reliable North American producer of critical minerals with supply chain transparency and custody control of ethically produced metals from ores through to the production of value-added metals and chemicals.
Project Highlights:
Excellent Infrastructure in Place and Under Development: There is all-season road access to Whati via Highway 9, a $400-million design/build/operate/maintain private-public partnership between the Government of the Northwest Territories and North Star Infrastructure. The federal government contributed up to $53 million of the project’s capital costs through the Canadian Infrastructure Fund. Fortune Minerals has received environmental assessment approval to build a 50-kilometer spur road from Whati to the mine site, which is included in the mine site capital costs. With the construction of the road, Fortune will be able to transport metal concentrates from the mine to the railway at Enterprise or Hay River and deliver them by rail to the company’s planned refinery in Alberta. The NICO leases are located 25 kilometers west of the Snare hydro complex and electrical grid servicing Yellowknife.Large, Well-defined Polymetallic Deposit: NICO and the company’s satellite Sue-Dianne Copper-Silver-Gold deposit are classified as iron oxide-copper-gold (IOCG)-type deposits with world-class global analogs, including Olympic Dam in South Australia, the Salobo and Sossego deposits in Brazil, and the Candelaria district deposits in Chile. They occur in clusters of multiple deposits, commonly aggregating more than a billion tonnes in similar tectonic and geological environments.Encouraging Results from 2021 Exploratory Drilling: The company’s exploratory drilling program consisted of 13 drill holes totaling 2,482 meters. Promising results from the campaign include:3.17 meters, averaging 0.42 percent cobalt, 0.55 g/t gold, and 0.37 percent bismuth at a depth of 28.7 meters, including 1.05 meters, grading 0.99 percent cobalt, 0.25 g/t gold, and 0.56 percent bismuth;4.8 meters, averaging 0.12 percent cobalt and 0.50 g/t gold at a depth of 8 meters, including 1.98 meters, averaging 0.26 percent cobalt and 1.13 g/t gold;2.31 meters, averaging 0.11 percent cobalt and 0.87 g/t gold at a depth of 139.6 meters, including 1.16 meters, grading 0.20 percent cobalt and 1.63 g/t gold.
Management Team
Mahendra Naik – Chairman and Director
Mahendra Naik is a chartered accountant and was one of the founding directors and key executives who started IAMGOLD Corporation, a TSX and NYSE-listed gold mining company. As chief financial officer from 1990 to 1999, he was involved in the negotiations of the Sadiola and Yatela mine joint ventures with Anglo American, and the US$ 400 million project debt financing for the development of the mines. In addition, he was involved in more than $150 million in equity financings including the IPO for IAMGOLD. Naik is currently the chief executive officer of FinSec Services Inc., a private business advisory company and a director and member of the audit and compensation committees for IAMGOLD. In addition, Naik is a director and member of audit, compensation and risk/control committees of FirstGlobalData Limited, Goldmoney Network Limited and Jameson Bank.
Robin E. Goad – President and CEO
Robin Goad is a professional geologist with 30 years of experience in the mining and exploration industries. Prior to founding Fortune in 1988, Goad worked for large companies, including Noranda and Teck, as a consultant in the resource industry. Goad is a director of the NWT and Nunavut Chamber of Mines and has served as president and director of other TSX-listed mineral exploration and development companies.
Patricia Penney – Interim CFO
Patricia Penney is a chartered accountant with 20 years of accounting and audit experience. Prior to Fortune, she was a senior manager with Caceis Canada Ltd., an alternative fund administrator.
Richard Schryer – Vice-president of Regulatory and Environmental Affairs
Richard Schryer is an aquatic scientist with more than 25 years of experience in mine permitting, environmental assessments, environmental studies and monitoring. Prior to Fortune, he worked with Golder Associates.
David Knight – Corporate Secretary
David Knight is a partner with WeirFoulds LLP. David is widely recognized for his more than 30 years of experience. He specializes in securities law, including public and private financings, mergers and acquisitions, stock exchange listings and regulatory compliance and acts for investment dealers and issuers. Knight is a member of the Law Society of Upper Canada.
Troy D. Nazarewicz – Investor Relations Manager
Troy D. Nazarewicz has 30 years of experience in the capital markets as a portfolio manager with MacDougall, MacDougall & MacTier Inc. and in his investor relations role at Fortune. He also worked as a business development manager with a design and marketing firm.
