The $600 million question
NICO mine project receives land and water permits
Walter Strong
Northern News Services
Published Monday, July 7, 2014
WHATI/LAC LA MARTRE
Fortune Minerals Inc. (TSX:FT) has taken two significant steps forward with its proposed NICO mine, 50 kilometres north of Whati.
An aerial view of Fortune Minerals Ltd.'s NICO gold-cobalt-bismuth-copper project, located about 50 kilometres north of Whati. The project has cleared all major regulatory stages and is ready for construction. - photo courtesy Fortune Minerals Ltd. |
The $589-million gold-cobalt-bismuth-copper project includes a $347-million mine near Whati, and the construction of a $242-million metal processing facility in Saskatchewan.
On June 18, the project received its water and land use permits from the Wekeezhii Land and Water Board.
The formal permitting, following from last year's positive assessment by the Mackenzie Valley Review Board, means the mine is cleared to be built.
The only thing left to do is raise about $600 million.
On that front, Fortune Minerals purchased a production-ready silver mine near Ouray, Colorado.
Purchasing a revenue generating mine is a plus for the company, not only for the cash flow, but for how it changes Fortune's profile with investors.
The US$65 million purchase in partnership with Procon Resources Inc. moves the company from being a junior exploration company to a mid-sized production mine company in one fell swoop.
"It transitions our company into being an immediate (metal) producer," said Fortune Mineral CEO Robin Goad.
This could help Fortune raise money for its NICO project.
"The capital markets are very difficult right now," said Goad.
"Investors are selective. Generally speaking, the only companies that are getting attention in capital markets are those with producing (mine) operations."
Goad expects the purchase of the Colorado mine to expose Fortune Minerals and the NICO project to the deeper American market.
"It provides better access to capital markets, and it opens us up to a larger pool of investors," said Goad.
Goad said Fortune Minerals mobilized equipment to the NICO site over winter roads this past season, but he doesn't expect to do much work in the area until financing is settled.
But Goad is optimistic that financing can come together this year, largely because the NICO project is in a position to be the only North American source for growing cobalt and bismuth demand.
They will be a major supplier of cobalt chemicals needed to make high performance lithium ion and nickel metal hydrate batteries.
"The consumption and growth in that sector is about 20 per cent per year."
If Tesla Motors builds the $5 billion "gigafactory" to produce batteries for electric cars is built, as was recently announced, cobalt demand could double.
Bismuth is increasingly used as lead replacement, and may demand increase as uptake on lead-free plumbing and fixtures increases.
"We'll be the only North American supplier of bismuth products," said Goad.
In addition to 82.3 million pounds of proven and probable reserves of cobalt and 102.1 million pounds bismuth, the NICO deposit shows 1.11 million ounces of proven and probable gold, and 27.2 million pounds proven and probable copper.
The NICO mine 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 mind for its productive life.
To date, Fortune has spent more than $110 million on developing NICO.
Goad said the company is now in negotiations with prospective finance partners.
"We're ready to build a mine," Goad said.
"Once we get financing in place, we'll hopefully see convoys of trucks going up that road this winter."
