Name of the Project
NICO gold/cobalt/bismuth/copper mine project.

Location
The proposed NICO mine is located 50 km north of the Tlicho community of Whati and 160 km north-west of Yellowknife, in Canada’s Northwest Territories.

Project Owner/s
Fortune Minerals.

Project Description
The NICO project is a development-stage primary cobalt asset consisting of a planned mine, mill and concentrator in the Northwest Territories, and a hydrometallurgical refinery in Saskatchewan to process concentrates from the mine into cobalt sulphate, gold, bismuth ingot and oxide, and a copper precipitate.

The NICO deposit contains openpit and underground proven and probable mineral reserves totalling 33.1-million tonnes containing 1 085 000 oz of gold, 82.3-million pounds of cobalt, 102.1-million pounds of bismuth and 27.2-million pounds of copper.

According to the project’s 2014 feasibility study, at the planned mill throughput rate of 4 650 t/d of ore, the mineral reserves will sustain operations for 21 years.

Openpit methods will be used, with underground ores contributing 22% of the mill feed during the second year of operations. The openpit part of the mine will be a conventional truck-and-shovel/loader operation, accomplished in four phases at an average waste-to-ore strip ratio of 3.0:1.

The underground portion of the mine will be mined by a contractor using retreat blasthole open stoping, providing access for gold-rich, higher-grade ores.

The ore will be processed in two stages at the NICO site and Saskatchewan metals processing plant. At the NICO site, an average of 4 650 t/d of ore will be processed in a crushing, grinding and flotation concentrator to produce about 180 t/d of wet bulk concentrate.

Construction of the NICO mine and concentrator is planned using the existing winter ice road, but all-season road access is required for mine operations. The Tlicho road will be a permanent 97 km highway, extending north from Highway 3 to Whatı in the Northwest Territories. Fortune has received environmental assessment approval to construct a spur road from Whatı to the mine site.

Potential Job Creation
Fortune's proposed hydrometallurgical plant will provide employment for 80 to 90 full-time employees with a payroll of about $9-million a year. Using a typical employment multiplier, this will result in two additional indirect jobs for every employee, creating another 170 jobs in the region.

Further, the contracting opportunities during construction are estimated at $76-million, with operational expenditure of about $25-million a year, totalling about $525-million over the current life-of-mine estimate.

Net Present Value/Internal Rate of Return
According to the 2014 feasibility study, the project has a levered pretax net present value, at a 7% discount rate, of $254-million in the base case, and an internal rate of return of 15.6%.

Capital Expenditure
The 2014 feasibility estimated capital expenditure at C$589-million plus working capital.

Planned Start /End Date
Construction of the mine facilities could begin in 2019 and is expected to take about two years, depending on ice-road logistics. The refinery requires about 18 months for construction unless it is deferred. This construction timeline would allow for the NICO project to be in commercial production in the early 2020s as the global automotive industry intensifies electric vehicle production.

Latest Developments
Fortune Minerals has cut back plans for the NICO cobalt/gold/bismuth/copper project, reporting that the current cobalt price environment does not justify the expanded throughput rate that it has considered.

Work on the 6 000 t/d project has been suspended to allow for an updated technical report based on a smaller, higher-grade project.

An updated study by Hatch, P&E Mining Consultants and Micon International considered an expanded mill throughput rate of 6 000 t/d and a number of process improvements for the vertically integrated development.

However, Fortune has said that the study concluded that the additional capital required to construct a larger project would not deliver a commensurate increase in cash flows to justify the expansion from 4 650 t/d at prevailing cobalt and bismuth prices.

“An environment that has seen curtailment from the world’s largest cobalt mines is not conducive for an expanded, capital intensive project at this time,” Fortune president and CEO Robin Goad has said.

 “Fortune is optimising its NICO development to be more robust at various cobalt prices and position the company to support the transformation of the auto industry.”

The company is considering various options for the project, including the alignment of the development schedule with an expected deficit in cobalt supply in 2022/23 when demand for batteries in electric vehicles is expected to outstrip production from existing mines and known development projects.

Key Contracts and Suppliers
Hatch, P&E Mining Consultants and Micon International (updated technical report on 2014 feasibility study).

On Budget and on Time?
Not stated.

Contact Details for Project Information
Fortune Minerals, tel +1 519 858 8188, fax +1 519 858 8155 or email info@fortuneminerals.com.