Fortune Minerals announces improved NICO economics
5/8/2008 8:36:49 AM - Canada NewsWire

LONDON, ON, May 8, 2008 (Canada NewsWire via COMTEX News Network) --

Enhanced economics from updated pilot plant results, metal prices and

currency exchange rates

Issued Capital: 50,100,107

LONDON, ON, May 8 /CNW/ - Fortune Minerals Limited (TSX-FT) is pleased to announce improved economics for its 100% owned NICO cobalt-gold-bismuth deposit in the Northwest Territories pursuant to a report prepared by Micon International Limited (Micon) that provides an update to their 2007 full feasibility study (see Fortune News Release, dated January 16, 2007). Fortune retained Micon to prepare the updated report to reflect the improved flotation metallurgical recoveries achieved in the Company's $4.3 million pilot plant that is still in progress at SGS Lakefield Research (SGS Lakefield) (see News Release, dated February 5, 2008) and more recent metal prices and currency exchange rate sensitivities.

Micon's 2008 updated report indicates a base case, using predicted long-term metal prices, pre-tax internal rate of return (IRR) of 32.3% and an 8% discounted net present value (NPV) of C$360.7 million for the NICO deposit development, and a 97.2% pre-tax IRR and 8% discounted NPV of C$1.5 billion at recent metal prices. These updated economics are based on the operating and capital cost estimates from the 2007 feasibility study and have not been adjusted for inflation or recent cost escalations prevalent in the industry. The operating and capital costs will be re-assessed after completion of the hydrometallurgical part of the pilot plant nearing completion at SGS Lakefield, and the front-end engineering work for the development currently being conducted by Aker Metals, a division of Aker Solutions Canada Inc. (Aker Solutions).

    <<
          2008 Updated NICO Base Case economics using new flotation
          metallurgical recoveries, US$20/lb cobalt, US$750/oz gold
                   and US$10/lb bismuth and C$0.97/US$1.00

                                      ---------------------------------------
                                                    Update 2008
                                      ---------------------------------------
    Total Metal Recovery      Unit       Yrs 1-2      Yrs 3-15      LOM Ave.
    Gold (Au)                    %         67.90         56.41         59.54
    Cobalt (Co)                  %         84.58         85.50         85.37
    Bismuth (Bi)                 %         69.60         69.66         69.65
    Annual Production                    Yrs 1-2      Yrs 3-15      LOM Ave.
    Gold                       ozs        70,280        24,074        30,258
    Cobalt                     lbs     3,622,069     3,434,539     3,459,637
    Bismuth                    lbs     3,383,777     3,627,101     3,594,535
    Cash Operating Costs                                            LOM Ave.
    Cobalt Cash Cost
     (gross)             US$/lb Co                                     16.17
    Au, Bi credits       US$/lb Co                                    (14.76)
    Cobalt Cash Cost
     (net)               US$/lb Co                                      1.41
    Annual Revenue        C$ 000's       156,379       118,434       123,493
    Annual Operating
     Costs                C$ 000's        79,782        53,811        57,274
    Annual Operating
     Cash Flow
     (Pre-Tax)*         C$ 000's        71,815        63,723        64,802
    Annual Operating
     Cash Flow
     (After Tax)          C$ 000's        71,427        46,096        49,474
    Net Present Value     C$ 000's      Discount       Pre-Tax     After Tax
                                              5%       475,696       322,559
                                              8%       360,702       238,217
                                             10%       299,833       193,478
    Internal Rate of Return                              32.3%         26.7%
                                      ---------------------------------------

        LOM = Life of Mine; Ave. = average
    * Operating Cash Flow = Revenue - Operating Costs - Capital
        Costs


         2008 updated Net Present Value and Internal Rate of Return
         sensitivities for select metal price and currency exchange
                               rate scenarios

    -------------------------------------------------------------------------
    Sensitivity   FX rate  Au Price  Co Price  Bi Price   Pre-Tax 8%  Pre-Tax
    Scenario       US$/C$   US$/oz    US$/lb    US$/lb      NPV C$      IRR
    -------------------------------------------------------------------------
    2007
     Feasibility
     Base Case      0.84    525.00     16.50    4.50    143.7 million  18.3%
    -------------------------------------------------------------------------
    Low Metal
     Prices         0.97    750.00     12.00    8.00     57.2 million  12.6%
    -------------------------------------------------------------------------
    Low Co Price    0.97    750.00     16.50   10.00    253.4 million  25.8%
    -------------------------------------------------------------------------
    2008 Updated
     Base Case      0.97    750.00     20.00   10.00    360.7 million  32.3%
    -------------------------------------------------------------------------
    Moderate Co
     Price          0.97    750.00     25.00   10.00    514.0 million  41.2%
    -------------------------------------------------------------------------
    High Co Price   0.97    750.00     30.00   10.00    667.3 million  49.9%
    -------------------------------------------------------------------------
    High Co Price,
     Higher (15%
     Op. Costs /
     $50 million
     Cap.)          0.97    750.00     30.00   10.00    535.6 million  35.7%
    -------------------------------------------------------------------------
    Recent Metal
     Prices         0.97    900.00     50.00   16.00  1,499.7 million  97.2%
    -------------------------------------------------------------------------

    Op. Costs = Operating Costs, Cap. = Initial Capital


         2008 Updated Net Present Value sensitivities by unit change

    -------------------------------------------------------------------------
                                                                      NPV
    Sensitivity                             Unit        Change     impact C$
    -------------------------------------------------------------------------
    Gold price                            US$/oz         25.00     5,407,000
    Cobalt price                          $US/lb          1.00    21,827,000
    Bismuth price                         $US/lb          1.00    20,611,000
    Exchange Rate                       US cents          1.00     7,666,000
    Initial Capital Cost             US$ million            25    16,969,000
    Operating Cost                             %           10%    36,785,000
    -------------------------------------------------------------------------
    >>

The 2007 Micon feasibility study established mineral reserves for the NICO deposit of 21.8 million tonnes within a larger mineral resource. These reserves, which support a minimum 15-year mine life at a production rate of 4,000 tonnes per day, include underground Proven and Probable Mineral Reserves of 1,204,000 tonnes, grading 5.07 g/t gold, 0.14% cobalt and 0.19% bismuth and open pit Proven and Probable Mineral Reserves of 20,613,000 tonnes, grading 0.85 g/t gold, 0.13% cobalt and 0.16% bismuth. Mr. B. Terrence Hennessey, P.Geo. of Micon and Mr. Eugene Puritch, P.Eng. of P&E Mining Consultants Inc. are the qualified persons responsible for the mineral reserve estimate in accordance with National Instrument 43-101. Further information regarding the NICO mineral reserves can be found in the Company's AIF and other documents filed on the SEDAR website (www.sedar.com). The principal qualified person for the 2008 economic update for NICO as well as the 2007 full feasibility study is Ian Ward, P.Eng. of Micon.

The NICO cobalt-gold-bismuth deposit is located 160 km northwest of the City of Yellowknife, 22 km west of the Snare hydro complex and 80 km north of the Tlicho community of Behchoko and the highway to Edmonton. NICO has been engineered primarily as an open pit mine, although higher grade underground ores sourced from deeper parts of the deposit will supplement mine production during the first two years of the mine's life. A plant will be constructed at the site to produce cobalt cathode, gold dore and bismuth cement or metal using hydrometallurgical process technologies that have been verified from metallurgical test work and two pilot plant tests at SGS Lakefield. Fortune has already purchased the Golden Giant Mine buildings, equipment and spare parts inventory that is being dismantled for relocation to NICO (see News Releases, dated November 5, 2007 and August 31, 2006). Fortune has submitted its "land use" and "water license" applications to the Wek' �ezhi' Land and Water Board to permit the proposed mine and is also continuing to consult with local communities and the Tlicho Government to secure their support for the development and enter into impacts and benefits agreements.

"While the previous report showed the excellent value inherent in this unique NICO deposit, Micon's updated analysis clearly demonstrates the even greater economics generated by our improved recoveries and stronger commodity markets," said Robin Goad, Fortune's President and CEO. "This represents another extremely important milestone on our road to bringing NICO into production to the benefit of all of the project's stakeholders."

About Fortune Minerals

Fortune Minerals is a diversified natural resource company with several mineral deposits and a number of exploration projects, all located in Canada. They include the Mount Klappan anthracite coal deposits in British Columbia, and the NICO cobalt-gold-bismuth deposit, the Sue-Dianne copper-silver deposit and other base and precious metals exploration projects in the Northwest Territories. Fortune Minerals is focussed on outstanding performance and growth of shareholder value through assembly and development of high quality mineral resource projects.

This press release contains 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, demand and market outlook for metals and future metal 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 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 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. The forward-looking information contained herein is given as of the date hereof and the Company assumes no responsibility to update or revise such information to reflect new events or circumstances, except as required by law.

SOURCE: Fortune Minerals Limited

Fortune Minerals Limited, Robin Goad, President, Tel.: (519) 858-8188, Fax: (519) 858-8155, info@fortuneminerals.com, www.fortuneminerals.com; Greg Taylor, Investor & Public Relations, Tel: (905) 337-7673, Cell: (416) 605-5120, Fax: (905) 844-6532, gtaylor@fortuneminerals.com

Copyright (C) 2008 CNW Group. All rights reserved.