Fortune advances Nico

Junior Fortune Minerals (FT-T) is encouraged by the results of a scoping study at its 80%-owned Nico cobalt-gold-bismuth deposit, 160 km northwest of Yellowknife, N.W.T.

Fortune retained Strathcona Mineral Services to review previous work, prepare new resource estimates, examine possible pit outlines, and evaluate the deposit’s economic potential. Additional metallurgical tests were carried out by Lakefield Research.

Based on 190 drill holes spaced, on average, 50 metres apart, Nico’s indicated in-pit resource is pegged at 5 million tonnes (diluted) averaging 0.2% cobalt and 0.26% bismuth, plus 0.7 gram gold per tonne, at a cobalt price of US$12.50 per lb. The stripping ratio is 8.6-to-1. At a cobalt price of US$17.50 per lb., the resource grows to 35.2 million tonnes grading 0.11% cobalt, 0.13% bismuth and 0.6 gram gold, while the stripping ratio changes to 2.5-to-1.

Fortune envisages an open-pit mine with hydrometallurgical processing carried out on site. Conventional crushing, grinding and flotation would be followed by cobalt extraction through pressure acid oxidation of a bulk concentrate. Cyanidation of the residue would recover the gold. (Bismuth extraction was excluded from the study; it would be technologically complex and result in lower overall recoveries for cobalt and gold.)

Nico would generate a positive operating cash flow at cobalt prices of between US$12 and US$13 per lb. In order for the company to repay capital and finance costs, higher prices are required. For example, at a cobalt price of US$20 per lb., an operating margin of 34% is achievable.

At a cobalt price of US$12.50 per lb. and a gold price of US$294 per oz., annual production would reach 800 tonnes cobalt and 5,600 oz. gold. At US$17.50 per lb., cobalt production would increase to 1,800 tonnes annually. Total operating costs are somewhere between US$12 and US$13 per lb. cobalt. The study estimates a mine life of 10-15 years.

Infill drilling is under way in an attempt to verify the continuity of grades in the high-grade core of the deposit. Eleven of 28 planned holes have been drilled to date.

Strathcona recommends an investigation into the marketability of the cobalt concentrate already produced from flotation test work; with a suitable market, there may be need to build a processing plant on-site.

Drill-testing at the updip extension of the deposit has expanded the near-surface resource and reduced the amount of waste rock stripping in the early phase of the pit model.