140 Fullarton Street,Suite 1902,
London, Ontario, Canada
N6A 5P2
Tel.
519-858-8188 ~ Fax 519-858-8155
September 22, 2009
Issued Capital:
68,240,857
NEWS
RELEASE
FORTUNE
MINERALS APPLAUDS GOVERNMENT INVESTMENT IN NORTHWEST BC POWER TRANSMISSION LINE
Positive impacts on
Company’s Mount Klappan Anthracite Coal Project
Fortune Minerals Limited (TSX - FT) ("Fortune Minerals" or the "Company") is pleased to comment on the important announcements
made last week by the Governments of British Columbia (“B.C.”) and Canada to
fund and construct the Northwest Power Transmission Line near the Company’s
Mount Klappan anthracite coal project in northwest B.C. A connection to the B.C.
electrical grid
would reduce Mount Klappan’s dependence on expensive diesel generated power and
materially lower operating costs for the Company’s proposed coal development.
The Minister for Energy, Mines and Petroleum
Resources for B.C.
announced that it would proceed with the $400 million, 287 –
kilovolt power transmission line along Highway 37 after the Government of
Canada agreed to contribute $130 million through its Green Infrastructure
Fund. This upgrade and extension to the B.C.
electrical grid will bring power to within 100 km of the Mount Klappan project and
at sufficient voltage to supply the Company’s proposed development as well as
other new projects in the area. Construction
of the power line could take place as early as next year for service in 2012.
Mount Klappan
is one of the world’s largest undeveloped deposits of high rank anthracite coal
with Proven and Probable 10% ash
Product Reserves of 60.8 million tonnes within a larger global Mineral Resource
including, Measured Resources of 107.9 million tonnes, Indicated resources of
123 million tonnes, plus 2.572 billion tonnes in the Inferred and Speculative
classes (see News Releases, dated June 22, 2004, and August 7, 2008). The deposits straddle the B.C.
Railway Dease
Lake Line right-of-way, 150 km northeast of the port of Stewart and 330 km
northeast of the port of Prince Rupert.
The rail bed provides road access to the site from Highway 37 and the
Canadian National Railway Company operates on the portion of the railway between
Prince George and Minaret, 150 km south of the proposed mine.
Mount Klappan has already been assessed in a
positive definitive feasibility study for a mine and wash plant producing 3
million tonnes of metallurgical coal products per year from an initial open pit
in the Lost Fox deposit, one of the four deposit areas currently identified on
the property.
The 2008 feasibility study
was conducted by Marston Canada Ltd.
(Marston), a subsidiary of St.
Louis-based
Marston & Marston Inc., and updates their earlier 2005 feasibility study
(see Fortune Minerals news release, dated August 7, 2008). This updated study shows an attractive rate
of return for the development producing a premium ultra-low volatile pulverized
coal injection (“PCI”) product that would be trucked to the port of Stewart for
export to overseas steel customers. The
plant would also be able to produce other premium anthracite coal products.
Mount Klappan Base
Case Economic Results
|
Pre-Tax IRR
|
Pre-Tax (8%) NPV
|
Capital Costs
|
C$1=US$0.97
|
28.9%
|
$702 million
|
$617 Million
|
C$1=US$0.83
|
40.9%
|
$1.28 billion
|
$656 Million
|
The Mount Klappan feasibility studies, and
reserve and resource estimates were prepared by Marston Canada Ltd. Richard Marston, P.E.
is the Qualified Person
for these studies and estimates in accordance with NI-43-101. For further information on the details of
these studies and estimates, please refer to the Company’s August 7, 2008 news
release and disclosures on the Sedar website at www.sedar.com.
The Marston feasibility study addresses the
following impacts on the Mount Klappan project in the event of the extension of
the B.C electrical grid and the Company establishing a connection at Highway 37
with a spur running along the Company’s proposed short-cut haul road to the proposed
mine:
-
The Company would be able to purchase significantly
lower cost grid power and eliminate the need for expensive on-site diesel power
generation resulting in a material savings in power costs;
·
The capital cost of the power line to Highway
37 would be partially offset by elimination of the diesel power plant;
·
Transportation costs for the haulage of diesel
to the mine and its storage at the site would be reduced;
In addition to the impacts addressed in the
feasibility study, a connection to the B.C.
grid would also provide the
following benefits to the Mount Klappan project:
·
The Company could use more efficient
electric-cable shovels and trolly-assisted pit trucks instead of the diesel
hydraulic equipment currently specified;
·
Uncertainties associated with the fluctuation
and escalation in the price of diesel would be reduced;
·
The feasibility of using a high speed conveyor
to transport coal from the mine to a trans-load facility at Highway 37 is
enhanced due
to the availability of the 25 MW required to power it;
·
Carbon and greenhouse gas emissions from the
mine would be reduced.
Fortune Minerals is pleased that B.C.
and Canadian
Governments will proactively invest in infrastructure to sustain and grow the
mineral resource industry in British Columbia and help preserve Canada’s
preeminent position as a leader in this sector.
Fortune Minerals is actively seeking a partner
to help develop the Mount Klappan anthracite coal project while the Company
develops its NICO gold-cobalt-bismuth-copper project in the Northwest
Territories independently. The process for
securing a development partner for Mount Klappan was suspended earlier this
year because of the financial crisis.
However, with resurgence in the global demand for metallurgical coal and
the recovering commodities sector, the Company has renewed discussions with
companies interested in the project.
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 gold-cobalt-bismuth-copper
deposit, the Sue-Dianne copper-silver deposit and other base and precious
metals exploration projects in the Northwest Territories. Fortune Minerals owns the buildings and
equipment from the Golden Giant Mine at Hemlo, Ontario, which have been
dismantled for relocation to NICO.
Fortune Minerals is focused on outstanding performance and growth of
shareholder value through assembly and development of high quality mineral
resource projects.