Fortune says it still has future
Manager says recent default means NICO still goes ahead
Karen K. Ho
Northern News Services
Monday, July 13, 2015
LONDON, ONT
Fortune Minerals Limited's NICO project near Whati still has a future following the company's notice of default.
Investor relations manager Troy Nazarewicz told News/North that the company's settlement agreement with capital financing firm Lascaux means that it will be debt-free and can focus on its NICO gold-cobalt-bismuth-copper project in the territory as well as its other Canadian assets. However, it will no longer own its Revenue Silver Mine in Colorado.
"Essentially, the news is saying we did not succeed at Revenue Silver and we were losing that asset," Nazarewicz explained. "But we continue to move NICO forward."
Fortune had already received the land-use permit and water licences in the NWT as well as the environmental assessment approval for the processing facility in Saskatchewan.
"As far as the work needed at NICO, it's very minimal prior to the point of construction," Nazarewicz said. "What we need to do is secure financing to allow that to happen."
Fortune is now working on an agreement that would help secure a purchaser for NICO's lesser-known commodities of bismuth and copper.
Nazarewicz said this would add greater certainty to the project compared to the known metals.
The NICO deposit has 82.3 million pounds of proven and probable reserves of cobalt and 102.1 million pounds of bismuth, as well as 1.11 million ounces of proven and probable gold and 27.2 million pounds proven and probable copper.
The NICO mine also has a projected 20-year life.
Approximately 300 people would be needed during mine construction, and 150 to 200 employees would be needed to work the mine for its productive life.
But another key component the company is waiting for is an announcement from the government on the all-weather road planned for Whati.
By July 2014, Fortune had spent more than $110 million on developing NICO. But the company still needs approximately $600 million for the mine and mill in the territory as well as the refinery in Saskatchewan.
"That's what we're working on securing," Nazarewicz
said.
The method will likely be through private financing, rather than issuing shares through the public market or using debt to raise funds.
Nazarewicz said the commodities in the project position Fortune favourably for the future because while bismuth and cobalt are lesser known, demand has grown due to the use of the latter metal in lithium-ion batteries.
"That's everything from your iPhone, laptop, up to electric vehicles," he said.
If Tesla Motors builds the $5 billion "gigafactory" in Nevada to produce batteries for electric cars, as was recently announced, cobalt demand could double.
Nazarewicz said the NICO project also represents an alternative source of cobalt, specifically a reliable source in North America, compared to the Congo, where 60 per cent of the world's supply currently comes from.
Still, NWT and Nunavut Chamber of Mines executive director, Tom Hoefer, said it was disappointing to see another project in the territory suffer from the current financing environment.
"The marketplace for juniors (exploration companies) is just tremendously difficult," he said. "Companies are trying to survive through all this."
Hoefer described NICO as well-beyond the advance stage and also pointed to the importance of the GNWT's plans to build the all-weather road into Whati.
"That project won't go ahead without it," he said.
Fortune also isn't the only notable project in the territory that has recently experienced difficulty or significant challenges. Avalon Rare Metals' Nechalacho and Tyhee Gold's Yellowknife Gold Project also ran into issues due to financing and depressed prices in commodity markets.
"We're now starting to see the fallout of the complicated global marketplace affecting these projects too," Hoefer said.
-With files
from Walter Strong
