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Fortune Minerals - Investor Presentation - January 2014

- The document is an investor presentation for a Canadian mineral development company that owns two late-stage projects, a metallurgical coal project and a gold-cobalt project. - The met coal project, called Arctos Anthracite, has completed a positive feasibility study and environmental assessment work is underway. It aims to produce high quality ultra-low volatile PCI coal. - The company has a strategic partnership with POSCO, one of the world's largest steel companies, for the Arctos project which validates the project and will aid in its development.

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Investor Presentation January 2014
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 mineral resources, progress in development of mineral properties, timing and cost for placing the Company’s mineral projects into production, costs of production, amount and quality of metal products recoverable from the Company’s mineral resources, demand and market outlook for metals and coal and future metal and coal prices. Forward-looking information is based on the opinions and estimates of management at the date the information is given, and is subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking information. These factors include the inherent risks involved in the exploration and development of mineral properties, uncertainties with respect to the receipt or timing of required permits and regulatory approvals, the uncertainties involved in interpreting drilling results and other geological data, fluctuating metal and coal prices, the possibility of project cost overruns or unanticipated costs and expenses, uncertainties relating to the availability and costs of financing needed in the future, uncertainties related to metal recoveries and other factors. Mineral resources that are not mineral reserves do not have demonstrated economic viability. Inferred mineral resources are considered too speculative geologically to have economic considerations applied to them that would enable them to be categorized as mineral reserves. There is no certainty that mineral resources will be converted into mineral reserves. Readers are cautioned to not place undue reliance on forward-looking information because it is possible that predictions, forecasts, projections and other forms of forward-looking information will not be achieved by the Company. The forward-looking information contained herein is made as of the date hereof and the Company assumes no responsibility to update them or revise it to reflect new events or circumstances, except as required by law. 2
Corporate Information OTC QX (USA): Daily Volume Closing Price $0.70 FT FTMDF $0.60 Share Price $0.45 Shares Out – Basic 150.5 Shares Out – Fully Diluted 157.5 Market Cap – Basic $67.7 Working Capital (Q3 2013) $14.7 Total Assets (Q3 2013) $159.3 All amounts in M or CAD$M except per share amounts. 4,500 4,000 $0.50 3,500 3,000 $0.40 2,500 $0.30 2,000 1,500 $0.20 1,000 $0.10 500 $0.00 - Jan-13 Mar-13 May-13 Analyst Coverage Dealer 5,000 Share Volume (M) TSX (Canada): Share Price (C$) Listings: Share Performance Jul-13 Sep-13 Nov-13 Ownership Date Rating Target Killian Charles Industrial Alliance Securities June 28, 2013 Spec Buy $3.30 David Davidson Paradigm Capital July 24, 2013 Spec Buy $1.00 Michael Fowler Loewen Ondaatje McCutcheon July 22, 2013 Spec Buy $2.65 As of January 15, 2014 Procon Resources Inc. 19% China Mining Resources Group Ltd. 10% Insiders 37% 3
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  Positive Feasibility Study  In BC Environmental Assessment process  NICO Gold-Cobalt-Bismuth-Copper Project, Northwest Territories & Saskatchewan:  Positive Feasibility & FEED Studies  Completing Permitting Process 4
One of the world’s premier, late stage met coal projects – poised to make final steps to production        Joint venture with POSCO, a committed partner & leading steel player The most advanced major met coal project in Western Canada Over $100 million of work completed over 30+ years Updated Feasibility Study with robust economics completed October 2012 Well advanced logistics plan – rail to Port of Prince Rupert – allows for scalable expansion BC Environmental Assessment in process & advanced community plan New corporate partnership with CAMCE/Procon will aid development certainty 5
 Validation of Arctos with strategic partnership with POSCO – one of the world’s largest steel companies  Among top 200 global companies - US$ 58 billon revenue - US$ 25 billion market capitalization  Lead innovator in global steel industry  Raw materials investment for vertical integration  POSCO Canada acquired 20% joint venture interest based on template of similar investments in resource projects  $30 million paid to Fortune, $20 million contributed directly to the JV to advance permitting  20% of total development & capital costs – $158 million under current estimates  20% of operating costs for 20% of production in-kind for their own use  Management Committee comprised of Fortune & POSCO representatives overseeing development  Fortune is Project Operator - compensated for providing support over life of mine POSCO Gwanyang steel plant 6
      Feasibility Study completed October 2012, rail to port & custom power solution 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 PCI product Life of mine average Free On Board (FOB) vessel cash cost C$127.61/tonne (US$121.22/tonne) Recent optimizations include connection to BC electrical grid - forecast to save C$7/tonne NPV - Pre-tax at 8% BASE CASE Ultra-Low Volatile PCI US$175/tonne (C$1 = US$0.95) $3.8 $4.0 $3.5 $3.0 NPV (8%) Capital (Years 1-3) AFTER TAX 17.0% 14.7% C$615.9 million C$405.8 million C$788.6 million (includes railway capital) The 2012 Feasibility Study was prepared by Golder-Marston in compliance with NI 43-101. Mr. Edward (Ted) Minnes, P.E. is the Qualified Person responsible for the study. $2.5 $2.5 C$B PRE-TAX IRR $3.2 $1.9 $2.0 $1.2 $1.5 $1.0 $0.6 $0.5 $$175/t $200/t $225/t $250/t $275/t $300/t FOB Price (US$/t) 7
   M&I at 230mt - Small fraction of total global resource Lost Fox deposit remains open for possible expansion - additional coal seams Historical Resources include 2bn + tonnes in the Speculative class (1) Historical Arctos Global Resources (million tonnes) (1) Area Measured Indicated M&I Inferred 107.9 109.5 217.4 91.5 13.5 13.5 258.4 Lost Fox Hobbit-Broatch Summit 9.6 Lost Fox Extension Total 107.9 123.0 230.9 359.5 Lost Fox Metallurgical Coal Reserves and Resources (million tonnes) (2) Coal Resources Run-of-Mine Coal Reserves 10% Ash Product Reserves Measured Indicated Inferred Proven Probable Total Proven Probable 172.4 20.4 12.1 115.0 9.9 124.9 64.4 4.8 Total Product 69.2 (1) The Arctos Mineral Resource & Mineral Reserve estimates were prepared in 2002, 2005, & 2007, respectively, by Marston & Marston Inc. in compliance with NI 43-101. Richard Marston, P.E. is the Qualified Person responsible for the estimates. Historical Resources include 2.2 billion tonnes in the Speculative class. The historical resource estimate was developed by Gulf in 1988 and updated in 2002 by Marston-Golder to reflect changes in the estimation of Inferred Resources under Paper GSC 88-21. The Speculative portion of the resources is not compliant with current reporting standards. A qualified person has not done the work necessary to classify the historical estimate of Speculative resources as current mineral resources under NI 43-101 and the estimate should not be relied upon. Speculative Resources were developed based on estimated average coal thickness applied to the projected aerial extent of the coal. Further information regarding the Arctos Coal Resource & Reserve estimates is available from the Company’s disclosures under the Company’s profile on the SEDAR website at www.sedar.com (2) The 2012 DFS utilized updated Resource & Reserve estimates for the Lost Fox Deposit, which Edward Minnes, P.E. is the Qualified Person. 8
June 2013 to October 2013 – Summer season work undertaken     2013 summer field season completed & advancement on EA process Multiple agreements negotiated with CN Rail Schedule, costs & milestones established with BC government Aboriginal engagement plan completed & under review by government & First Nations June 2013 – EA Program initiated  Commencement of summer field program to permit mine & rail  CEAA granted substitution of the Arctos EA to BCEAO April 2013 – Update on environmental assessment process   Section 10 Order issued by BCEAO Request submitted to the Environmental Assessment Agency ("CEAA") to streamline EA process October 2012 – Updated positive Feasibility Study 9
Ridley Coal Terminal a world-class coal & bulk materials handling facility  Port currently has ~5 Mtpa capacity available  Ice-free, deep water port 30 hours closer to Asia than Port of Vancouver to reduce ocean freight  Capable of handling full Capesize vessels up to 250,000 dwt  16 Mtpa design capacity under expansion to 25 Mtpa – permitting future expansion up to 60 Mtpa  Opportunities for shared cargos & blending of coals with other metallurgical coal producers  Companies with committed capacity have contacted JV to sell their allocations 10
     Railway road bed largely constructed to mine site by BC Government Project economics supports 150 km brownfield extension from Minaret Environmental Assessment on railway extension underway as part of mine development MOU in negotiation with CN to operate railway Other parties interested in the rail– dramatic cost of railway and project economics Existing railway right-of-way & road bed 11
What’s new:  Railway permit approval requirements established with BC & federal governments  Permits will be completed in parallel with mine permits – similar to a resource road  New section of rail is included in the project’s environmental assessment  BC Government officials will authorize rail bed for Arctos’ private use  Advancing discussions for third party financial support  Government agrees to provision for cost recovery from third party users  Potential third party users identified and in discussions on cost sharing  Rail expertise retained 12
Formal agreement with CN being proposed  Fortune has held numerous discussions with CN regarding rail development  Multiple agreements completed with CN & additional agreements will include all aspects of rail development & operations  In cooperation with CN, AECOM engaged to complete engineering work  Train capacities, rail standards & other operating criteria are currently being assessed 13
What’s new:  Federal & BC Governments harmonized Environmental Assessment substitution process  Schedule, costs & milestones established with BC government to better understand permitting completion timeframe  Ongoing dialogue with BC government to communicate strategies  Rail approval requirements established with federal & provincial governments  Agreement reached with the government on rail cost recovery from third party users Discussions progressing with the Government  Establishment of BC Major Investment Office – Arctos identified as major project  Pacific Gateway Policy of expanding trade with Asia  BC Government revenue sharing with Aboriginal groups  Cassiar Iskut-Stikine Land Resource Management Plan approved & implemented by BC Government & Tahltan Joint Council in 2000 identifies Klappan area for coal mining 14
Gitxsan Nation Supportive  Continued excellent relationship with Gitxsan  MOU & Access Agreements signed with Gitxsan Chiefs  Annual presentations at Gitxsan Summit  Gitxsan Community Liaisons hired  Traditional Use & Knowledge hired Tahltan Nation – Government Leading  Fortune supporting the BC Govt process to resolve Klappan open issues  Clear understanding of community dynamics achieved – communication good  Tahltan elders have agreed to present project materials to influential elders  EA Process Funding, Traditional Knowledge Agreement & PEM Data Shipping Agreement 15
What’s New:  Environmental assessment process continues to advance  2013 summer field season undertaken  Additional drilling (17 holes) (+2 partial) to collect necessary samples  Field work ongoing in support of environmental assessment for power line, rail & mine site  Mine plan adjusted for first 25 years of production to restrict mining activities to single watershed  Environmental working group formed with Fortune, BC government, Tahltan and Gitxsan participants Scheduled to move forward:  Targeting AIR approval in Q2 2014  Preparation for application for Environmental Assessment Certificate (EAC) in Q1 2015 16
 Next steps include:  Complete permitting activities  Continue Tahltan, Gitxsan & stakeholder engagement  Advance rail engineering & permitting, & establish agreements with rail operator  Secure port capacity  Secure low cost power for the site with extension of electrical grid  Conduct additional drilling for expansion of reserves  Second stage strategic partner(s) and project financing  Deloitte engaged to advise on project financing & development options including: • Equity investment • Off-take relationship • Commitment to arrange debt financing for construction 17
PFS FS Mine Operation MINE Arctos 6 – 7 Years 3 – 6 Years 0.5 – 2 Years Closure and Reclamation PEA Construction Target Testing Mineral Reserve Early Exploration Mineral Resource Exploration Concept Initial Production Engineering & Economic Studies 5 – 25 Years Arctos Milestones to Production Baseline Field Work & EAC Prep Filing of EAC Docs EAO Review Process Ministerial Decision Process Mine Permitting Construction Commissioning & Commercial Production 18
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 Reductants / charge carbon  Ultra-Low Vol. PCI  Sinter  Other products:  Filter media  Blend coal with coking coal for making metallurgical coke  Direct coke replacement  Urea fertilizers, synthetic fuels & plastics  Heating & cooking briquettes  Pelletizing  Premium thermal coal  Cement 19
Arctos will produce ultra low volatile PCI that will demand price premium – optimization with other products Properties (adb) Charge Carbon Product PCI Product Sinter / Thermal Product 84.8 82.6 77.5 8 10 15 Volatiles (%) 6.4 6.5 6.2 Sulphur (%) 0.5 0.5 0.5 Residual Moisture (%) 0.9 0.9 1.1 Total Moisture (%) 1.2 5.0 6.0 HGI 42 40-45 40-45 Energy (Kcal/Kg) 7639 7,423 6,830 Energy (GJ/t) 32.4 31.1 - 13,741 13,352 12,285 6-35 0-50 0-50 Fixed Carbon (%) Ash (%) Energy (Btu/lb) Size (mm) 20
 Steelmakers expanding Pulverized Coal Injection (PCI) use to reduce costs, improve margins   Seaborne PCI market expected to grow at 8% CAGR to 2018  Low-vol PCI typically priced at 70% to 80% of high quality hard coking coal   PCI reduces the amount of coke in blast furnace (made from coking coal) Arctos PCI will achieve a higher price due to higher carbon & ultra-low volatile content Arctos coal will also have diverse usage in other metallurgical processes  Sinter feed  Can replace 15% - 30% of blast furnace coke with anthracite  New steel technologies (Cokonyx / HiSmelt)  Growth of electric arc steel manufacturing  Ferroalloys & other metal processing Source: Macarthur Coal, Peabody 21
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 mining friendly jurisdictions Supply of Anthracite - 2011 600 500 Production Production Export Export Mt 400 300 200 100 0 China China Export / Production Vietnam Vietnam North Korea* North Korea* Ukraine Ukraine Russia Russia Other 0.8% 43.1% 13.2% 27.1% 48.5% 8.5% Source: Company research, corporate presentations, Wood Mackenzie & U.S. Energy Information Administration *Production statistics from 2010 data. “Other” includes Spain, South Africa, South Korea, Germany, USA, and United Kingdom. 22
China became a net coal importer of anthracite in 2004, coking coal in 2007, all coals in 2009 Coal & Anthracite Net Imports by China 450 $350 Coal Net Imports (Mt) $300 Anthracite Net Imports (Mt) $291 $300 Hard Coking Coal Price (US$/t) $250 $215 $209 $200 Net Imports (Mt) 250 $129 $125 $150 $115 $98 $100 150 $47 $45 $58 $50 50 $0 Hard Coking Coal Price (US$/t) 350 -$50 -50 -$100 -$150 -150 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Source: China Coal Resource Website, Bloomberg 23
China will remain a key consumer, with growing demand from other emerging market   China’s demand for metallurgical coal is expected to grow by 83% percent over 2012/18e, comprising 24% of total seaborne met coal demand in 2018e. Urbanization projected in India, Africa & other emerging markets from 2015 to 2045 could provide a boost, similar to China’s from 1985 through 2015. Increased requirements for higher quality coke at lower costs & other technological improvements will be demanded. Seaborne met coal imports from 2005 to 2018e 350 300 Annual Import (Mt)  250 200 150 100 50 0 2005 2006 2007 2008 Japan 2009 China 2010 India 2011 South Korea Source: Wood Mackenzie, Morgan Stanley Research, SNL-MEG, Deloitte 2012 Brazil 2013e Europe 2014e 2015e 2016e 2017e 2018e Others 24
Insufficient supply of metallurgical coals to meet forecast global demand    Increasing demand for anthracite due to new steel technologies & lower emissions Emerging economies are driving forces for future metallurgical coal demand Steel production in China, India, Brazil & other emerging economies growing rapidly China’s GDP growth perspective  10-14% growth was equivalent to ~$300B of GDP per year  Current forecasted growth of 78% is equivalent to ~$550B of GDP per year  Marginal cost of production US$160180/t 1,600 1,440 1,400 1,185 1,200 1,000 Mt  Global Met Coal Demand 920 800 600 400 200 2010 2015 2020 Source: Peabody Global Energy Analytics, Deloitte 25
 Positive Front End Engineering & Design Study (FEED) in 2012 based on a vertically integrated mine & mill in the Northwest Territories & refinery in Saskatchewan  FEED - ~20% of detailed engineering complete for procurement  Attractive economics – FS generates NPV of $309 million* – 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 prices & negative US$1.07/lb at recent prices  High-grade deposit of combined gold, cobalt, and bismuth coproducts plus by-product copper  Positioned to be one of the largest & lowest cost suppliers of cobalt sulphate to the rapidly expanding battery sector  Very advanced project with $110 million already invested – including pilot plants, test mining & extensive permitting work – resulting in planned production in 2016  Strong management & board with experience in mine permitting, development & operations Test mining 2006/2007 *Base case: pre-tax, 7% discount rate 26
Historical & Forecast Gold Price  $1,800 $1,669 $1,574 $1,504 $1,600 Gold price increased consistently in the past decade  While mine supply remains relatively flat, future demand continues to grow: $1,400 $1,211 $1,200 $1,000  Growing investment demand based on currency protection & safe haven status $873 $873 $800 $697 $604 $600 $400  Growing physical demand from Asia & central banks $310 $363  Provides a flexible financing opportunity $410 $445 NICO contains 1.1 million ounces of gold $200 – provides significant counter-cyclical hedge $- Source: Bloomberg; Energy & Metals Consensus Forecasts December 2012 27
    Wide chemical & metallurgical market applications in batteries, high strength alloys, cutting tools, catalysts, etc. Wide Application of Industrial Usage Cobalt sulphate used in lithium ion & nickel metal hydride batteries for electronic devices & hybrid/electric vehicles High purity cobalt used in aerospace applications Cobalt demand expected to grow at ~7% per year next five years  Over past decade, increase in demand resulted mostly from increase in chemical applications, particularly rechargeable batteries & catalysts  5% Batteries (27%) 4% Superalloy (19%) 6% 27% Hard Materials (13%) 7% Colours (10%) Catalysts (9%) 9% Magnets (7%) Hardfacing & Other Alloys (6%) 10% 19% Tyre Adhesives, Soaps, Driers (5%) Chemical applications accounted for ~55% of worldwide cobalt demand in 2011 & expected to dominate future cobalt consumption 13% Feedstuffs (4%) 28
 Cobalt critical for manufacturing batteries used in electric vehicles*, computers, cell phones & other electronic devices  Nickel metal hydride car batteries contain approximately 4 kg of cobalt  Lithium-ion car batteries contain 2 to 6 kg of cobalt  Cobalt usage in batteries is expected to grow from 25% of demand in 2011 to 45% in 2018 & projections as high as 100,000 tonnes in battery applications alone by 2020 Global Electric Vehicle Battery Sales 6 Millions of Units 5 Approx. 20% compound annual growth forecast from 2011 to 2020 4 3 2 1 0 2008 2010f 2012f 2014f 2016f * Electric vehicles include hybrid electric vehicles (HEV), plug-in hybrid electric vehicles (PHEV) & pure electric vehicles (EV) Source: Roskill 2018f 2020f 29
 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  China has the largest refining capacity (~40%) but limited mine supply  Chemical production is in deficit whereas metals in surplus  LME initiated futures market trading for cobalt in 2010, resulting in greater liquidity  NICO will be a reliable North American producer Proportion of World Cobalt Production (%) 60% 51% 50% 40% 30% 20% 12% 7% 10% 0% Congo Zambia China 7% 5% 5% Russia Other Countries Australia 4% Cuba 3% 2% Canada New Caledonia 2% 2% Brazil Morocco Source: USGS Industry Survey 30
 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, hot dip galvanizing & paint pigments  Global framework to eliminate lead expected to drive increased bismuth consumption  European legislation to eliminate lead in electronics Growing Number of Applications Source: USGS Industry Survey 31
 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 & exports reduced due to restrictions  NICO contains over 48 Kt of bismuth, equivalent to 15% of world reserves & the world’s largest deposit World Bismuth Reserves 300,000 250,000 240,000 Tonnes 200,000 NICO is the world’s largest deposit of bismuth 150,000 100,000 39,000 50,000 11,000 - China 10,000 10,000 5,000 5,000 Peru Bolivia Mexico Canada * Kazakhstan 48,661 *Excluding NICO Source: USGS Industry Survey 2010 Other Countries NICO 32
NICO Project  Large scale gold-cobalt-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 or third-party lower cost processor Saskatchewan Metals Processing Plant (SMPP)  Hydrometallurgical plant to process bulk concentrate from NICO  Plant will produce gold doré, cobalt sulphate &/or cobalt cathode, bismuth ingot & copper metal precipitate  Low cost power (5.7 cents kWh), skilled labour pool & 5 year tax holiday 33
 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 of concentrates to SMPP  160 km from City of Yellowknife  50 km from Town of Whati  22 km from Snare Hydro – potential lower cost power supply  Settled land claims with Tlicho Government 34
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 Co (%) Bi (%) Cu (%) Open Pit Mineral Reserves Tonnes Au (g/t) Proven 20,513,000 0.94 0.11 0.15 0.04 Probable 12,099,000 1.05 0.11 0.13 0.04 Total 32,612,000 0.98 0.11 0.14 0.04 Co (%) Bi (%) Cu (%) Combined Mineral Reserves Tonnes Au (g/t) Proven 20,795,000 0.99 0.11 0.15 0.04 Probable 12,193,000 1.09 0.11 0.13 0.04 Total 32,988,000 1.02 0.11 0.14 0.04 Contained Metal 1,085,000 ounces 82,268,000 pounds 102,053,000 pounds 27,179,000 pounds Note: Sums of the combined mineral reserves may not exactly equal sums of the underground and open pit reserves due to rounding. Reserve estimate by P&E Mining Consultants Inc., Eugene Puritch, P.Eng. & Fred Brown, CPG PrSciNat, Qualified Persons as defined by NI-43-101 35
Risk mitigation  Test mining completed to confirm deposit geometry & grades  ~$20 million pre-production development completed by Procon for with 2 km of decline ramp, 2 mine levels & ventilation raise to surface  Large samples collected for pilot plant testing  Piloting completed to confirm process flowsheets, recoveries & product quality  Front-End Engineering & Design (“FEED”) completed with ~20% of detailed engineering for mine concentrator & SMPP  Execution plan in place for project delivery  3rd party due-diligence completed on all aspects of project 36
 Continuous flotation tests to produce separate cobalt & bismuth concentrates  Recovery improvements for all metals  Proved process flow sheet, production of high value products  Cobalt pressure oxidation, precipitation & electrowinning to demonstrate production of 99.8% cobalt cathode or solvent extraction & crystallization to 20.9% cobalt sulphate  Bismuth ferric chloride leaching, production of 99.5% bismuth cathode as powder - Flux & smelt to >99.9% bismuth ingot  Cyanidation for recovery of gold  Ability to produce thickened tailings from bulk tailings Cobalt Sulphate (heptahydrate) Co 20.9% Cobalt Cathode Metal Co >99.95% Gold Doré Bismuth Ingot Bi >99.99% 37
Positive FEED Study demonstrating very low costs & strong economics  Vertically integrated project consisting of open pit & underground mine, mill & hydrometallurgical refinery FEED Study Highlights – Base Case, Cobalt Sulphate Mine type Open pit with underground in 2nd year Mining method Open pit: conventional truck & loader Underground: blasthole open stoping  Low capital costs of $441 million Strip Ratio Waste to ore 3.0 : 1  Negative cash cost net of credits Processing rate 4,650 tonnes of ore/day  Significant detailed engineering, reducing project risk Mine life 19.8 years (potential for additional 3.2)  Golden Giant Mine (Hemlo) equipment purchased & dismantled for relocation Processing Processed to high value metal products Pre-tax NPV (7%) $308.5 million Pre-tax IRR 14.0%  Gold recovery ranges from 56 to 85%, with an average of 73.7% Capital costs $440.5 million  Cobalt recovery of 84% LOM average revenue/yr $194 million LOM average operating cost/yr $97 million Cobalt operating cost (net of credits) Negative US$0.81/lb at Base Case Negative US$1.07/lb at Current Price Case  Metal recoveries verified from pilot plants;  Bismuth recovery of 72%  Copper recovery of 41%  Optimizations being examined to improve project economics 38
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 (gold) & Recent Price (black) 100 90 $89 80 C$M 70 $69 $67 $61 60 50 $43 $43 40 30 20 10 $1 $2 0 Cobalt Sulphate Annual Production Gold Bismuth Copper 3,473,600 lbs 40,000 oz 3,681,800 lbs 559,400 lbs Base Case Price assumptions are US$1,450/troy ounce (“oz”) for gold, US$20/pound (“lb”) for cobalt, US$11/lb for bismuth and US$3.50/lb for copper at an exchange rate of US$ 0.95 = C$ 1. Recent Price assumptions are US$1,650 /oz for gold, US$15/lb for cobalt, US$11/lb for bismuth and US$3.50/lb for copper at an exchange rate of US$ 0.95 = C$ 1. 39
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 Gold Cobalt Base Case Base Case Current Price Cash Cost Net of By-Products ($US/oz) Cash Cost Net of By-Products ($US/lb) Current Price Base Case $0 $0.00 -$0.20 -$0.40 -$0.60 -$0.80 -$0.81 -$1.00 -$148.42 -$200 -$300 -$400 -$500 -$600 -$2 -$4 -$6 -$8 -$7.99 -$10 -$12 -$700 -$800 Current Price $0 -$100 -$1.07 -$1.20 Bismuth Cash Cost Net of By-Products ($US/lb)  -$738.75 -$14 -$12.78 Note: Based on cobalt sulphate option. Base Case Price assumptions are US$1,450/troy ounce (“oz”) for gold, US$20/pound (“lb”) for cobalt, US$11/lb for bismuth and US$3.50/lb for copper at an exchange rate of US$ 0.95 = C$ 1. . The Current Price Case uses prices as at May 31, 2012 and are US$1,558.00/oz for gold, US$15.23/lb for cobalt, US$10.55/lb for bismuth and US$3.40/lb for copper and an exchange rate of US$ 0.97 = C$ 1. Mr. Alexander Duggan, P.Eng. and Mr. Graham Peter Holmes, P.Eng. of Jacobs are the Qualified Persons for Jacobs and Mr. Eugene Puritch, P.Eng. is the Qualified Person responsible for the work by P&E under NI 43-101. 40
Significant opportunity existing to further strengthen project economics  Custom processing of concentrates to defer SMPP  Extend mine life for 3+ years with stockpiled subeconomic material  Alternative power supply to mine to lower costs  Move forward gold production via additional underground mining to access high grade material  Generate additional returns from SMPP    Custom processing of concentrates sourced from other mines globally Expansion potential already designed Significant commodity prices upside  Cobalt supply disruptions in DRC & less than expected production from laterites  Gold forward sales & political uncertainty  Bismuth supply decreases in China due to export quotas & increased environmental restrictions 41
Progressing through final stages of permitting process  Environmental Assessments well advanced for mine & SMPP permitting  Mine & mill approved by Federal Minister & Tlicho Government  For SMPP, addendum to Environmental Impact Statement submitted for review & public comment, after which government approval will be pending Advanced relationships with Aboriginal groups  Signed Co-operative Relationship Agreement with Tlicho Government  Initiated Tlicho Participation Agreement (PA) Negotiations Project Financing & Development Options  Deloitte engaged to advise on project financing & development options, targeting a project level joint venture, potentially including:  Minority equity investment  Off-take relationship  Commitment to arrange debt financing for construction 42
Proposed Development Timeline – Assumes access to full financing 2013 Q1 2014 Q2 Q3 Q4 Q1 2015 Q2 Q3 Q4 Q1 2016 Q2 Q3 Q4 Q1 Q2 Q3 Q4 SMPP EA SMPP fully permitted NICO Minister’s approval NICO fully permitted Financing Engineering & procurement Construction Commissioning Commercial operations 43
June 27, 2013 - Strategic (19.4%) investment of C$11.7million by Procon Resources Inc.  CAMCE via its controlled subsidiary, Procon, acquired its interest in Fortune as first stage investment for a proposed equity & debt project financing transaction for NICO  Long-term strategic & financial partner – collectively advance NICO project  Secured financing in challenging market – validates Fortune as a company with high growth potential  Financing overview:  CAMCE is anticipated to contribute the required capital in equity & debt guarantee with a Chinese Bank  Right to conduct mining contracting & construction services to project on commercially competitive terms  Procon/CAMCE’s - one seat on Fortune’s board of directors
 Two advanced Canadian development assets  One of the world’s premier metallurgical coal developments, significant gold, cobalt & 15% of global bismuth reserves  $210 million combined expenditures  Positive Feasibility Studies, test mined, pilot plant processed & in permitting  Low cost production  Combined NPV’s approaching $1 billion  Experienced board & management team  Deloitte Corporate Finance engaged to secure strategic partners to finance both projects with minimal equity dilution 45
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 yrs mining & exploration experience David Knight, BA, LLB Secretary, Director Partner, Norton Rose Fulbright specializing in securities & mining law James Excell, BASc Director Metallurgical Engineer – 35 yrs mining experience BHP-Billiton William Breukelman, BASc, MBA, PEng Director Chemical Engineer – Chairman, Gedex James Currie, BSc (Hons), PEng Director Mining Engineer – COO, Elgin Mining The Honorable Carl L. Clouter Director Commercial pilot - former owner of charter airline in NWT Shou Wu (Grant) Chen, MSc, MBA Director Geologist – Deputy Chairman & CEO, China Mining Resources Group Ed Yurkowski Director CEO Procon Mining & Tunneling Adam Jean, HBA, CPA, CA VP Finance & CFO Chartered Accountant previously with Ernst & Young Mike Romaniuk, BASc, PEng VP Operations & COO Geologist & Process Engineer – 25+ yrs engineering, mining & construction experience primarily with Xstrata Nickel & Falconbridge Bill Shepard Logistics Manager 15 yrs experience in procurement & logistics Richard Schryer, PhD Director Regulatory & Environmental Affairs Aquatic Scientist –20+ yrs experience in mine permitting & environmental assessments Mike Middaugh Project Controls Manager 20 yrs major construction & project management Keith Lee, BSc Senior Process Engineer 25 yrs operations, engineering & mineral processing experience Carl Kottmeier, BASc, MBA, PEng Project Manager Mining Engineer – 25 yrs engineering & operations experience Seok Joon Kim, MASc, PEng Senior Mining Engineer Mining Engineer – 10+ years operations & engineering experience Dianna Stoopnikoff Environmental Relations Manager 15 yrs environmental & health and safety experience Management 46
Cobalt Metal Option Metal Price & Exchange Rate Case Base Case Prices IRR % Pre-Tax $M $M NPV NPV (5%) (7%) IRR % Cobalt Sulphate Option After Tax $M NPV (7%) $M NPV (5%) IRR % Pre-Tax $M NPV (7%) $M NPV (5%) IRR % After Tax $M NPV (7%) $M NPV (5%) 10.8 164.5 293.2 9.6 101.0 207.1 14.0 308.5 466.0 12.4 212.6 338.7 3-yr Trailing Average Prices 7.4 17.1 114.6 6.6 (15.3) 69.0 10.5 146.8 270.0 9.3 86.7 188.4 Current Prices 7.1 2.1 99.7 6.2 (30.6) 53.4 9.6 109.5 228.2 8.5 57.6 156.8 Escalated Prices 13.9 315.2 477.8 12.3 214.9 344.7 17.1 467.1 660.1 15.2 332.4 483.7 Optimistic Prices 18.3 539.5 749.8 16.3 387.5 551.3 21.6 707.0 951.1 19.3 514.5 702.3 Base Case Price assumptions are US$1,450/troy ounce (“oz”) for gold, US$20/pound (“lb”) for cobalt, US$11/lb for bismuth and US$3.50/lb for copper at an exchange rate of US$ 0.95 = C$ 1. The 3-year Trailing Average Prices Case are as at May 31, 2012 and are US$1,359.94/oz for gold, US$18.53/lb for cobalt, US$9.83/lb for bismuth and US$3.51/lb for copper and an exchange rate of US$ 0.98 = C$ 1. The Current Price Case uses prices as at May 31, 2012 and are US$1,558.00/oz for gold, US$15.23/lb for cobalt, US$10.55/lb for bismuth and US$3.40/lb for copper and an exchange rate of US$ 0.97 = C$ 1. The Escalated Price Case uses metal price assumptions of US$1,800.00/oz for gold, US$22.50/lb for cobalt, US$12.50/lb for bismuth and US$4.00/lb for copper and an exchange rate of US$ 1 = C$ 1. For the Optimistic Price Case uses US$2,000.00/oz for gold, US$25.00/lb for cobalt, US$15.00/lb for bismuth and US$4.50/lb for copper at an exchange rate of US$ 1 = C$ 1. Mr. Alexander Duggan, P.Eng. and Mr. Graham Peter Holmes, P.Eng. of Jacobs are the Qualified Persons for Jacobs and Mr. Eugene Puritch, P.Eng. is the Qualified Person responsible for the work by P&E under NI 43-101. 47
Fortune Minerals - Investor Presentation - January 2014

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Fortune Minerals - Investor Presentation - January 2014

  • 1.
  • 2.
    This document containscertain 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 mineral resources, progress in development of mineral properties, timing and cost for placing the Company’s mineral projects into production, costs of production, amount and quality of metal products recoverable from the Company’s mineral resources, demand and market outlook for metals and coal and future metal and coal prices. Forward-looking information is based on the opinions and estimates of management at the date the information is given, and is subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking information. These factors include the inherent risks involved in the exploration and development of mineral properties, uncertainties with respect to the receipt or timing of required permits and regulatory approvals, the uncertainties involved in interpreting drilling results and other geological data, fluctuating metal and coal prices, the possibility of project cost overruns or unanticipated costs and expenses, uncertainties relating to the availability and costs of financing needed in the future, uncertainties related to metal recoveries and other factors. Mineral resources that are not mineral reserves do not have demonstrated economic viability. Inferred mineral resources are considered too speculative geologically to have economic considerations applied to them that would enable them to be categorized as mineral reserves. There is no certainty that mineral resources will be converted into mineral reserves. Readers are cautioned to not place undue reliance on forward-looking information because it is possible that predictions, forecasts, projections and other forms of forward-looking information will not be achieved by the Company. The forward-looking information contained herein is made as of the date hereof and the Company assumes no responsibility to update them or revise it to reflect new events or circumstances, except as required by law. 2
  • 3.
    Corporate Information OTC QX(USA): Daily Volume Closing Price $0.70 FT FTMDF $0.60 Share Price $0.45 Shares Out – Basic 150.5 Shares Out – Fully Diluted 157.5 Market Cap – Basic $67.7 Working Capital (Q3 2013) $14.7 Total Assets (Q3 2013) $159.3 All amounts in M or CAD$M except per share amounts. 4,500 4,000 $0.50 3,500 3,000 $0.40 2,500 $0.30 2,000 1,500 $0.20 1,000 $0.10 500 $0.00 - Jan-13 Mar-13 May-13 Analyst Coverage Dealer 5,000 Share Volume (M) TSX (Canada): Share Price (C$) Listings: Share Performance Jul-13 Sep-13 Nov-13 Ownership Date Rating Target Killian Charles Industrial Alliance Securities June 28, 2013 Spec Buy $3.30 David Davidson Paradigm Capital July 24, 2013 Spec Buy $1.00 Michael Fowler Loewen Ondaatje McCutcheon July 22, 2013 Spec Buy $2.65 As of January 15, 2014 Procon Resources Inc. 19% China Mining Resources Group Ltd. 10% Insiders 37% 3
  • 4.
    Fortune Minerals Limited  Canadianmineral development company  Headquartered in London, Ontario, Canada  Canada Focus - operating in mining friendly jurisdictions Two late-stage projects  Arctos Anthracite Project, BC  Positive Feasibility Study  In BC Environmental Assessment process  NICO Gold-Cobalt-Bismuth-Copper Project, Northwest Territories & Saskatchewan:  Positive Feasibility & FEED Studies  Completing Permitting Process 4
  • 5.
    One of theworld’s premier, late stage met coal projects – poised to make final steps to production        Joint venture with POSCO, a committed partner & leading steel player The most advanced major met coal project in Western Canada Over $100 million of work completed over 30+ years Updated Feasibility Study with robust economics completed October 2012 Well advanced logistics plan – rail to Port of Prince Rupert – allows for scalable expansion BC Environmental Assessment in process & advanced community plan New corporate partnership with CAMCE/Procon will aid development certainty 5
  • 6.
     Validation of Arctoswith strategic partnership with POSCO – one of the world’s largest steel companies  Among top 200 global companies - US$ 58 billon revenue - US$ 25 billion market capitalization  Lead innovator in global steel industry  Raw materials investment for vertical integration  POSCO Canada acquired 20% joint venture interest based on template of similar investments in resource projects  $30 million paid to Fortune, $20 million contributed directly to the JV to advance permitting  20% of total development & capital costs – $158 million under current estimates  20% of operating costs for 20% of production in-kind for their own use  Management Committee comprised of Fortune & POSCO representatives overseeing development  Fortune is Project Operator - compensated for providing support over life of mine POSCO Gwanyang steel plant 6
  • 7.
          Feasibility Study completedOctober 2012, rail to port & custom power solution 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 PCI product Life of mine average Free On Board (FOB) vessel cash cost C$127.61/tonne (US$121.22/tonne) Recent optimizations include connection to BC electrical grid - forecast to save C$7/tonne NPV - Pre-tax at 8% BASE CASE Ultra-Low Volatile PCI US$175/tonne (C$1 = US$0.95) $3.8 $4.0 $3.5 $3.0 NPV (8%) Capital (Years 1-3) AFTER TAX 17.0% 14.7% C$615.9 million C$405.8 million C$788.6 million (includes railway capital) The 2012 Feasibility Study was prepared by Golder-Marston in compliance with NI 43-101. Mr. Edward (Ted) Minnes, P.E. is the Qualified Person responsible for the study. $2.5 $2.5 C$B PRE-TAX IRR $3.2 $1.9 $2.0 $1.2 $1.5 $1.0 $0.6 $0.5 $$175/t $200/t $225/t $250/t $275/t $300/t FOB Price (US$/t) 7
  • 8.
       M&I at 230mt- Small fraction of total global resource Lost Fox deposit remains open for possible expansion - additional coal seams Historical Resources include 2bn + tonnes in the Speculative class (1) Historical Arctos Global Resources (million tonnes) (1) Area Measured Indicated M&I Inferred 107.9 109.5 217.4 91.5 13.5 13.5 258.4 Lost Fox Hobbit-Broatch Summit 9.6 Lost Fox Extension Total 107.9 123.0 230.9 359.5 Lost Fox Metallurgical Coal Reserves and Resources (million tonnes) (2) Coal Resources Run-of-Mine Coal Reserves 10% Ash Product Reserves Measured Indicated Inferred Proven Probable Total Proven Probable 172.4 20.4 12.1 115.0 9.9 124.9 64.4 4.8 Total Product 69.2 (1) The Arctos Mineral Resource & Mineral Reserve estimates were prepared in 2002, 2005, & 2007, respectively, by Marston & Marston Inc. in compliance with NI 43-101. Richard Marston, P.E. is the Qualified Person responsible for the estimates. Historical Resources include 2.2 billion tonnes in the Speculative class. The historical resource estimate was developed by Gulf in 1988 and updated in 2002 by Marston-Golder to reflect changes in the estimation of Inferred Resources under Paper GSC 88-21. The Speculative portion of the resources is not compliant with current reporting standards. A qualified person has not done the work necessary to classify the historical estimate of Speculative resources as current mineral resources under NI 43-101 and the estimate should not be relied upon. Speculative Resources were developed based on estimated average coal thickness applied to the projected aerial extent of the coal. Further information regarding the Arctos Coal Resource & Reserve estimates is available from the Company’s disclosures under the Company’s profile on the SEDAR website at www.sedar.com (2) The 2012 DFS utilized updated Resource & Reserve estimates for the Lost Fox Deposit, which Edward Minnes, P.E. is the Qualified Person. 8
  • 9.
    June 2013 toOctober 2013 – Summer season work undertaken     2013 summer field season completed & advancement on EA process Multiple agreements negotiated with CN Rail Schedule, costs & milestones established with BC government Aboriginal engagement plan completed & under review by government & First Nations June 2013 – EA Program initiated  Commencement of summer field program to permit mine & rail  CEAA granted substitution of the Arctos EA to BCEAO April 2013 – Update on environmental assessment process   Section 10 Order issued by BCEAO Request submitted to the Environmental Assessment Agency ("CEAA") to streamline EA process October 2012 – Updated positive Feasibility Study 9
  • 10.
    Ridley Coal Terminala world-class coal & bulk materials handling facility  Port currently has ~5 Mtpa capacity available  Ice-free, deep water port 30 hours closer to Asia than Port of Vancouver to reduce ocean freight  Capable of handling full Capesize vessels up to 250,000 dwt  16 Mtpa design capacity under expansion to 25 Mtpa – permitting future expansion up to 60 Mtpa  Opportunities for shared cargos & blending of coals with other metallurgical coal producers  Companies with committed capacity have contacted JV to sell their allocations 10
  • 11.
         Railway road bedlargely constructed to mine site by BC Government Project economics supports 150 km brownfield extension from Minaret Environmental Assessment on railway extension underway as part of mine development MOU in negotiation with CN to operate railway Other parties interested in the rail– dramatic cost of railway and project economics Existing railway right-of-way & road bed 11
  • 12.
    What’s new:  Railwaypermit approval requirements established with BC & federal governments  Permits will be completed in parallel with mine permits – similar to a resource road  New section of rail is included in the project’s environmental assessment  BC Government officials will authorize rail bed for Arctos’ private use  Advancing discussions for third party financial support  Government agrees to provision for cost recovery from third party users  Potential third party users identified and in discussions on cost sharing  Rail expertise retained 12
  • 13.
    Formal agreement withCN being proposed  Fortune has held numerous discussions with CN regarding rail development  Multiple agreements completed with CN & additional agreements will include all aspects of rail development & operations  In cooperation with CN, AECOM engaged to complete engineering work  Train capacities, rail standards & other operating criteria are currently being assessed 13
  • 14.
    What’s new:  Federal& BC Governments harmonized Environmental Assessment substitution process  Schedule, costs & milestones established with BC government to better understand permitting completion timeframe  Ongoing dialogue with BC government to communicate strategies  Rail approval requirements established with federal & provincial governments  Agreement reached with the government on rail cost recovery from third party users Discussions progressing with the Government  Establishment of BC Major Investment Office – Arctos identified as major project  Pacific Gateway Policy of expanding trade with Asia  BC Government revenue sharing with Aboriginal groups  Cassiar Iskut-Stikine Land Resource Management Plan approved & implemented by BC Government & Tahltan Joint Council in 2000 identifies Klappan area for coal mining 14
  • 15.
    Gitxsan Nation Supportive Continued excellent relationship with Gitxsan  MOU & Access Agreements signed with Gitxsan Chiefs  Annual presentations at Gitxsan Summit  Gitxsan Community Liaisons hired  Traditional Use & Knowledge hired Tahltan Nation – Government Leading  Fortune supporting the BC Govt process to resolve Klappan open issues  Clear understanding of community dynamics achieved – communication good  Tahltan elders have agreed to present project materials to influential elders  EA Process Funding, Traditional Knowledge Agreement & PEM Data Shipping Agreement 15
  • 16.
    What’s New:  Environmentalassessment process continues to advance  2013 summer field season undertaken  Additional drilling (17 holes) (+2 partial) to collect necessary samples  Field work ongoing in support of environmental assessment for power line, rail & mine site  Mine plan adjusted for first 25 years of production to restrict mining activities to single watershed  Environmental working group formed with Fortune, BC government, Tahltan and Gitxsan participants Scheduled to move forward:  Targeting AIR approval in Q2 2014  Preparation for application for Environmental Assessment Certificate (EAC) in Q1 2015 16
  • 17.
     Next steps include: Complete permitting activities  Continue Tahltan, Gitxsan & stakeholder engagement  Advance rail engineering & permitting, & establish agreements with rail operator  Secure port capacity  Secure low cost power for the site with extension of electrical grid  Conduct additional drilling for expansion of reserves  Second stage strategic partner(s) and project financing  Deloitte engaged to advise on project financing & development options including: • Equity investment • Off-take relationship • Commitment to arrange debt financing for construction 17
  • 18.
    PFS FS Mine Operation MINE Arctos 6 – 7Years 3 – 6 Years 0.5 – 2 Years Closure and Reclamation PEA Construction Target Testing Mineral Reserve Early Exploration Mineral Resource Exploration Concept Initial Production Engineering & Economic Studies 5 – 25 Years Arctos Milestones to Production Baseline Field Work & EAC Prep Filing of EAC Docs EAO Review Process Ministerial Decision Process Mine Permitting Construction Commissioning & Commercial Production 18
  • 19.
    Arctos is thelargest & 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 Reductants / charge carbon  Ultra-Low Vol. PCI  Sinter  Other products:  Filter media  Blend coal with coking coal for making metallurgical coke  Direct coke replacement  Urea fertilizers, synthetic fuels & plastics  Heating & cooking briquettes  Pelletizing  Premium thermal coal  Cement 19
  • 20.
    Arctos will produceultra low volatile PCI that will demand price premium – optimization with other products Properties (adb) Charge Carbon Product PCI Product Sinter / Thermal Product 84.8 82.6 77.5 8 10 15 Volatiles (%) 6.4 6.5 6.2 Sulphur (%) 0.5 0.5 0.5 Residual Moisture (%) 0.9 0.9 1.1 Total Moisture (%) 1.2 5.0 6.0 HGI 42 40-45 40-45 Energy (Kcal/Kg) 7639 7,423 6,830 Energy (GJ/t) 32.4 31.1 - 13,741 13,352 12,285 6-35 0-50 0-50 Fixed Carbon (%) Ash (%) Energy (Btu/lb) Size (mm) 20
  • 21.
     Steelmakers expanding PulverizedCoal Injection (PCI) use to reduce costs, improve margins   Seaborne PCI market expected to grow at 8% CAGR to 2018  Low-vol PCI typically priced at 70% to 80% of high quality hard coking coal   PCI reduces the amount of coke in blast furnace (made from coking coal) Arctos PCI will achieve a higher price due to higher carbon & ultra-low volatile content Arctos coal will also have diverse usage in other metallurgical processes  Sinter feed  Can replace 15% - 30% of blast furnace coke with anthracite  New steel technologies (Cokonyx / HiSmelt)  Growth of electric arc steel manufacturing  Ferroalloys & other metal processing Source: Macarthur Coal, Peabody 21
  • 22.
    Supply constraints dueto 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 mining friendly jurisdictions Supply of Anthracite - 2011 600 500 Production Production Export Export Mt 400 300 200 100 0 China China Export / Production Vietnam Vietnam North Korea* North Korea* Ukraine Ukraine Russia Russia Other 0.8% 43.1% 13.2% 27.1% 48.5% 8.5% Source: Company research, corporate presentations, Wood Mackenzie & U.S. Energy Information Administration *Production statistics from 2010 data. “Other” includes Spain, South Africa, South Korea, Germany, USA, and United Kingdom. 22
  • 23.
    China became anet coal importer of anthracite in 2004, coking coal in 2007, all coals in 2009 Coal & Anthracite Net Imports by China 450 $350 Coal Net Imports (Mt) $300 Anthracite Net Imports (Mt) $291 $300 Hard Coking Coal Price (US$/t) $250 $215 $209 $200 Net Imports (Mt) 250 $129 $125 $150 $115 $98 $100 150 $47 $45 $58 $50 50 $0 Hard Coking Coal Price (US$/t) 350 -$50 -50 -$100 -$150 -150 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Source: China Coal Resource Website, Bloomberg 23
  • 24.
    China will remaina key consumer, with growing demand from other emerging market   China’s demand for metallurgical coal is expected to grow by 83% percent over 2012/18e, comprising 24% of total seaborne met coal demand in 2018e. Urbanization projected in India, Africa & other emerging markets from 2015 to 2045 could provide a boost, similar to China’s from 1985 through 2015. Increased requirements for higher quality coke at lower costs & other technological improvements will be demanded. Seaborne met coal imports from 2005 to 2018e 350 300 Annual Import (Mt)  250 200 150 100 50 0 2005 2006 2007 2008 Japan 2009 China 2010 India 2011 South Korea Source: Wood Mackenzie, Morgan Stanley Research, SNL-MEG, Deloitte 2012 Brazil 2013e Europe 2014e 2015e 2016e 2017e 2018e Others 24
  • 25.
    Insufficient supply ofmetallurgical coals to meet forecast global demand    Increasing demand for anthracite due to new steel technologies & lower emissions Emerging economies are driving forces for future metallurgical coal demand Steel production in China, India, Brazil & other emerging economies growing rapidly China’s GDP growth perspective  10-14% growth was equivalent to ~$300B of GDP per year  Current forecasted growth of 78% is equivalent to ~$550B of GDP per year  Marginal cost of production US$160180/t 1,600 1,440 1,400 1,185 1,200 1,000 Mt  Global Met Coal Demand 920 800 600 400 200 2010 2015 2020 Source: Peabody Global Energy Analytics, Deloitte 25
  • 26.
     Positive Front EndEngineering & Design Study (FEED) in 2012 based on a vertically integrated mine & mill in the Northwest Territories & refinery in Saskatchewan  FEED - ~20% of detailed engineering complete for procurement  Attractive economics – FS generates NPV of $309 million* – 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 prices & negative US$1.07/lb at recent prices  High-grade deposit of combined gold, cobalt, and bismuth coproducts plus by-product copper  Positioned to be one of the largest & lowest cost suppliers of cobalt sulphate to the rapidly expanding battery sector  Very advanced project with $110 million already invested – including pilot plants, test mining & extensive permitting work – resulting in planned production in 2016  Strong management & board with experience in mine permitting, development & operations Test mining 2006/2007 *Base case: pre-tax, 7% discount rate 26
  • 27.
    Historical & ForecastGold Price  $1,800 $1,669 $1,574 $1,504 $1,600 Gold price increased consistently in the past decade  While mine supply remains relatively flat, future demand continues to grow: $1,400 $1,211 $1,200 $1,000  Growing investment demand based on currency protection & safe haven status $873 $873 $800 $697 $604 $600 $400  Growing physical demand from Asia & central banks $310 $363  Provides a flexible financing opportunity $410 $445 NICO contains 1.1 million ounces of gold $200 – provides significant counter-cyclical hedge $- Source: Bloomberg; Energy & Metals Consensus Forecasts December 2012 27
  • 28.
        Wide chemical &metallurgical market applications in batteries, high strength alloys, cutting tools, catalysts, etc. Wide Application of Industrial Usage Cobalt sulphate used in lithium ion & nickel metal hydride batteries for electronic devices & hybrid/electric vehicles High purity cobalt used in aerospace applications Cobalt demand expected to grow at ~7% per year next five years  Over past decade, increase in demand resulted mostly from increase in chemical applications, particularly rechargeable batteries & catalysts  5% Batteries (27%) 4% Superalloy (19%) 6% 27% Hard Materials (13%) 7% Colours (10%) Catalysts (9%) 9% Magnets (7%) Hardfacing & Other Alloys (6%) 10% 19% Tyre Adhesives, Soaps, Driers (5%) Chemical applications accounted for ~55% of worldwide cobalt demand in 2011 & expected to dominate future cobalt consumption 13% Feedstuffs (4%) 28
  • 29.
     Cobalt critical formanufacturing batteries used in electric vehicles*, computers, cell phones & other electronic devices  Nickel metal hydride car batteries contain approximately 4 kg of cobalt  Lithium-ion car batteries contain 2 to 6 kg of cobalt  Cobalt usage in batteries is expected to grow from 25% of demand in 2011 to 45% in 2018 & projections as high as 100,000 tonnes in battery applications alone by 2020 Global Electric Vehicle Battery Sales 6 Millions of Units 5 Approx. 20% compound annual growth forecast from 2011 to 2020 4 3 2 1 0 2008 2010f 2012f 2014f 2016f * Electric vehicles include hybrid electric vehicles (HEV), plug-in hybrid electric vehicles (PHEV) & pure electric vehicles (EV) Source: Roskill 2018f 2020f 29
  • 30.
     World market ofrefined 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  China has the largest refining capacity (~40%) but limited mine supply  Chemical production is in deficit whereas metals in surplus  LME initiated futures market trading for cobalt in 2010, resulting in greater liquidity  NICO will be a reliable North American producer Proportion of World Cobalt Production (%) 60% 51% 50% 40% 30% 20% 12% 7% 10% 0% Congo Zambia China 7% 5% 5% Russia Other Countries Australia 4% Cuba 3% 2% Canada New Caledonia 2% 2% Brazil Morocco Source: USGS Industry Survey 30
  • 31.
     Traditionally used infusible 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, hot dip galvanizing & paint pigments  Global framework to eliminate lead expected to drive increased bismuth consumption  European legislation to eliminate lead in electronics Growing Number of Applications Source: USGS Industry Survey 31
  • 32.
     World market between15,000 & 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 & exports reduced due to restrictions  NICO contains over 48 Kt of bismuth, equivalent to 15% of world reserves & the world’s largest deposit World Bismuth Reserves 300,000 250,000 240,000 Tonnes 200,000 NICO is the world’s largest deposit of bismuth 150,000 100,000 39,000 50,000 11,000 - China 10,000 10,000 5,000 5,000 Peru Bolivia Mexico Canada * Kazakhstan 48,661 *Excluding NICO Source: USGS Industry Survey 2010 Other Countries NICO 32
  • 33.
    NICO Project  Large scalegold-cobalt-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 or third-party lower cost processor Saskatchewan Metals Processing Plant (SMPP)  Hydrometallurgical plant to process bulk concentrate from NICO  Plant will produce gold doré, cobalt sulphate &/or cobalt cathode, bismuth ingot & copper metal precipitate  Low cost power (5.7 cents kWh), skilled labour pool & 5 year tax holiday 33
  • 34.
     5,140 Ha leasein 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 of concentrates to SMPP  160 km from City of Yellowknife  50 km from Town of Whati  22 km from Snare Hydro – potential lower cost power supply  Settled land claims with Tlicho Government 34
  • 35.
    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 Co (%) Bi (%) Cu (%) Open Pit Mineral Reserves Tonnes Au (g/t) Proven 20,513,000 0.94 0.11 0.15 0.04 Probable 12,099,000 1.05 0.11 0.13 0.04 Total 32,612,000 0.98 0.11 0.14 0.04 Co (%) Bi (%) Cu (%) Combined Mineral Reserves Tonnes Au (g/t) Proven 20,795,000 0.99 0.11 0.15 0.04 Probable 12,193,000 1.09 0.11 0.13 0.04 Total 32,988,000 1.02 0.11 0.14 0.04 Contained Metal 1,085,000 ounces 82,268,000 pounds 102,053,000 pounds 27,179,000 pounds Note: Sums of the combined mineral reserves may not exactly equal sums of the underground and open pit reserves due to rounding. Reserve estimate by P&E Mining Consultants Inc., Eugene Puritch, P.Eng. & Fred Brown, CPG PrSciNat, Qualified Persons as defined by NI-43-101 35
  • 36.
    Risk mitigation  Test miningcompleted to confirm deposit geometry & grades  ~$20 million pre-production development completed by Procon for with 2 km of decline ramp, 2 mine levels & ventilation raise to surface  Large samples collected for pilot plant testing  Piloting completed to confirm process flowsheets, recoveries & product quality  Front-End Engineering & Design (“FEED”) completed with ~20% of detailed engineering for mine concentrator & SMPP  Execution plan in place for project delivery  3rd party due-diligence completed on all aspects of project 36
  • 37.
     Continuous flotationtests to produce separate cobalt & bismuth concentrates  Recovery improvements for all metals  Proved process flow sheet, production of high value products  Cobalt pressure oxidation, precipitation & electrowinning to demonstrate production of 99.8% cobalt cathode or solvent extraction & crystallization to 20.9% cobalt sulphate  Bismuth ferric chloride leaching, production of 99.5% bismuth cathode as powder - Flux & smelt to >99.9% bismuth ingot  Cyanidation for recovery of gold  Ability to produce thickened tailings from bulk tailings Cobalt Sulphate (heptahydrate) Co 20.9% Cobalt Cathode Metal Co >99.95% Gold Doré Bismuth Ingot Bi >99.99% 37
  • 38.
    Positive FEED Studydemonstrating very low costs & strong economics  Vertically integrated project consisting of open pit & underground mine, mill & hydrometallurgical refinery FEED Study Highlights – Base Case, Cobalt Sulphate Mine type Open pit with underground in 2nd year Mining method Open pit: conventional truck & loader Underground: blasthole open stoping  Low capital costs of $441 million Strip Ratio Waste to ore 3.0 : 1  Negative cash cost net of credits Processing rate 4,650 tonnes of ore/day  Significant detailed engineering, reducing project risk Mine life 19.8 years (potential for additional 3.2)  Golden Giant Mine (Hemlo) equipment purchased & dismantled for relocation Processing Processed to high value metal products Pre-tax NPV (7%) $308.5 million Pre-tax IRR 14.0%  Gold recovery ranges from 56 to 85%, with an average of 73.7% Capital costs $440.5 million  Cobalt recovery of 84% LOM average revenue/yr $194 million LOM average operating cost/yr $97 million Cobalt operating cost (net of credits) Negative US$0.81/lb at Base Case Negative US$1.07/lb at Current Price Case  Metal recoveries verified from pilot plants;  Bismuth recovery of 72%  Copper recovery of 41%  Optimizations being examined to improve project economics 38
  • 39.
    NICO will bea 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 (gold) & Recent Price (black) 100 90 $89 80 C$M 70 $69 $67 $61 60 50 $43 $43 40 30 20 10 $1 $2 0 Cobalt Sulphate Annual Production Gold Bismuth Copper 3,473,600 lbs 40,000 oz 3,681,800 lbs 559,400 lbs Base Case Price assumptions are US$1,450/troy ounce (“oz”) for gold, US$20/pound (“lb”) for cobalt, US$11/lb for bismuth and US$3.50/lb for copper at an exchange rate of US$ 0.95 = C$ 1. Recent Price assumptions are US$1,650 /oz for gold, US$15/lb for cobalt, US$11/lb for bismuth and US$3.50/lb for copper at an exchange rate of US$ 0.95 = C$ 1. 39
  • 40.
    NICO has negativeoperating 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 Gold Cobalt Base Case Base Case Current Price Cash Cost Net of By-Products ($US/oz) Cash Cost Net of By-Products ($US/lb) Current Price Base Case $0 $0.00 -$0.20 -$0.40 -$0.60 -$0.80 -$0.81 -$1.00 -$148.42 -$200 -$300 -$400 -$500 -$600 -$2 -$4 -$6 -$8 -$7.99 -$10 -$12 -$700 -$800 Current Price $0 -$100 -$1.07 -$1.20 Bismuth Cash Cost Net of By-Products ($US/lb)  -$738.75 -$14 -$12.78 Note: Based on cobalt sulphate option. Base Case Price assumptions are US$1,450/troy ounce (“oz”) for gold, US$20/pound (“lb”) for cobalt, US$11/lb for bismuth and US$3.50/lb for copper at an exchange rate of US$ 0.95 = C$ 1. . The Current Price Case uses prices as at May 31, 2012 and are US$1,558.00/oz for gold, US$15.23/lb for cobalt, US$10.55/lb for bismuth and US$3.40/lb for copper and an exchange rate of US$ 0.97 = C$ 1. Mr. Alexander Duggan, P.Eng. and Mr. Graham Peter Holmes, P.Eng. of Jacobs are the Qualified Persons for Jacobs and Mr. Eugene Puritch, P.Eng. is the Qualified Person responsible for the work by P&E under NI 43-101. 40
  • 41.
    Significant opportunity existingto further strengthen project economics  Custom processing of concentrates to defer SMPP  Extend mine life for 3+ years with stockpiled subeconomic material  Alternative power supply to mine to lower costs  Move forward gold production via additional underground mining to access high grade material  Generate additional returns from SMPP    Custom processing of concentrates sourced from other mines globally Expansion potential already designed Significant commodity prices upside  Cobalt supply disruptions in DRC & less than expected production from laterites  Gold forward sales & political uncertainty  Bismuth supply decreases in China due to export quotas & increased environmental restrictions 41
  • 42.
    Progressing through finalstages of permitting process  Environmental Assessments well advanced for mine & SMPP permitting  Mine & mill approved by Federal Minister & Tlicho Government  For SMPP, addendum to Environmental Impact Statement submitted for review & public comment, after which government approval will be pending Advanced relationships with Aboriginal groups  Signed Co-operative Relationship Agreement with Tlicho Government  Initiated Tlicho Participation Agreement (PA) Negotiations Project Financing & Development Options  Deloitte engaged to advise on project financing & development options, targeting a project level joint venture, potentially including:  Minority equity investment  Off-take relationship  Commitment to arrange debt financing for construction 42
  • 43.
    Proposed Development Timeline– Assumes access to full financing 2013 Q1 2014 Q2 Q3 Q4 Q1 2015 Q2 Q3 Q4 Q1 2016 Q2 Q3 Q4 Q1 Q2 Q3 Q4 SMPP EA SMPP fully permitted NICO Minister’s approval NICO fully permitted Financing Engineering & procurement Construction Commissioning Commercial operations 43
  • 44.
    June 27, 2013- Strategic (19.4%) investment of C$11.7million by Procon Resources Inc.  CAMCE via its controlled subsidiary, Procon, acquired its interest in Fortune as first stage investment for a proposed equity & debt project financing transaction for NICO  Long-term strategic & financial partner – collectively advance NICO project  Secured financing in challenging market – validates Fortune as a company with high growth potential  Financing overview:  CAMCE is anticipated to contribute the required capital in equity & debt guarantee with a Chinese Bank  Right to conduct mining contracting & construction services to project on commercially competitive terms  Procon/CAMCE’s - one seat on Fortune’s board of directors
  • 45.
     Two advanced Canadiandevelopment assets  One of the world’s premier metallurgical coal developments, significant gold, cobalt & 15% of global bismuth reserves  $210 million combined expenditures  Positive Feasibility Studies, test mined, pilot plant processed & in permitting  Low cost production  Combined NPV’s approaching $1 billion  Experienced board & management team  Deloitte Corporate Finance engaged to secure strategic partners to finance both projects with minimal equity dilution 45
  • 46.
    Directors Mahendra Naik, BComm, 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 & exploration experience David Knight, BA, LLB Secretary, Director Partner, Norton Rose Fulbright specializing in securities & mining law James Excell, BASc Director Metallurgical Engineer – 35 yrs mining experience BHP-Billiton William Breukelman, BASc, MBA, PEng Director Chemical Engineer – Chairman, Gedex James Currie, BSc (Hons), PEng Director Mining Engineer – COO, Elgin Mining The Honorable Carl L. Clouter Director Commercial pilot - former owner of charter airline in NWT Shou Wu (Grant) Chen, MSc, MBA Director Geologist – Deputy Chairman & CEO, China Mining Resources Group Ed Yurkowski Director CEO Procon Mining & Tunneling Adam Jean, HBA, CPA, CA VP Finance & CFO Chartered Accountant previously with Ernst & Young Mike Romaniuk, BASc, PEng VP Operations & COO Geologist & Process Engineer – 25+ yrs engineering, mining & construction experience primarily with Xstrata Nickel & Falconbridge Bill Shepard Logistics Manager 15 yrs experience in procurement & logistics Richard Schryer, PhD Director Regulatory & Environmental Affairs Aquatic Scientist –20+ yrs experience in mine permitting & environmental assessments Mike Middaugh Project Controls Manager 20 yrs major construction & project management Keith Lee, BSc Senior Process Engineer 25 yrs operations, engineering & mineral processing experience Carl Kottmeier, BASc, MBA, PEng Project Manager Mining Engineer – 25 yrs engineering & operations experience Seok Joon Kim, MASc, PEng Senior Mining Engineer Mining Engineer – 10+ years operations & engineering experience Dianna Stoopnikoff Environmental Relations Manager 15 yrs environmental & health and safety experience Management 46
  • 47.
    Cobalt Metal Option MetalPrice & Exchange Rate Case Base Case Prices IRR % Pre-Tax $M $M NPV NPV (5%) (7%) IRR % Cobalt Sulphate Option After Tax $M NPV (7%) $M NPV (5%) IRR % Pre-Tax $M NPV (7%) $M NPV (5%) IRR % After Tax $M NPV (7%) $M NPV (5%) 10.8 164.5 293.2 9.6 101.0 207.1 14.0 308.5 466.0 12.4 212.6 338.7 3-yr Trailing Average Prices 7.4 17.1 114.6 6.6 (15.3) 69.0 10.5 146.8 270.0 9.3 86.7 188.4 Current Prices 7.1 2.1 99.7 6.2 (30.6) 53.4 9.6 109.5 228.2 8.5 57.6 156.8 Escalated Prices 13.9 315.2 477.8 12.3 214.9 344.7 17.1 467.1 660.1 15.2 332.4 483.7 Optimistic Prices 18.3 539.5 749.8 16.3 387.5 551.3 21.6 707.0 951.1 19.3 514.5 702.3 Base Case Price assumptions are US$1,450/troy ounce (“oz”) for gold, US$20/pound (“lb”) for cobalt, US$11/lb for bismuth and US$3.50/lb for copper at an exchange rate of US$ 0.95 = C$ 1. The 3-year Trailing Average Prices Case are as at May 31, 2012 and are US$1,359.94/oz for gold, US$18.53/lb for cobalt, US$9.83/lb for bismuth and US$3.51/lb for copper and an exchange rate of US$ 0.98 = C$ 1. The Current Price Case uses prices as at May 31, 2012 and are US$1,558.00/oz for gold, US$15.23/lb for cobalt, US$10.55/lb for bismuth and US$3.40/lb for copper and an exchange rate of US$ 0.97 = C$ 1. The Escalated Price Case uses metal price assumptions of US$1,800.00/oz for gold, US$22.50/lb for cobalt, US$12.50/lb for bismuth and US$4.00/lb for copper and an exchange rate of US$ 1 = C$ 1. For the Optimistic Price Case uses US$2,000.00/oz for gold, US$25.00/lb for cobalt, US$15.00/lb for bismuth and US$4.50/lb for copper at an exchange rate of US$ 1 = C$ 1. Mr. Alexander Duggan, P.Eng. and Mr. Graham Peter Holmes, P.Eng. of Jacobs are the Qualified Persons for Jacobs and Mr. Eugene Puritch, P.Eng. is the Qualified Person responsible for the work by P&E under NI 43-101. 47