New plan for NWT critical metals project
Fortune eyes more higher grade gold earlier in the mine life
Last updated 5/15/2020 at 4:46am
Fortune Minerals Ltd. May 7 announced that it continues to make progress on a new mine plan for its Nico cobalt-gold-bismuth-copper project in Northwest Territories during the coronavirus pandemic.
The company said it is complying with government COVID-19 protocols, including temporary closure of its head office in Ontario, prohibiting non-essential travel and social distancing. Working from home, Fortune employees, with some assistance from engineering consultants, continue to advance the Nico project.
A 2014 feasibility study for Nico detailed plans for a 4,650-metric-ton-per-day operation that would produce an average of 1,615 metric tons of battery-grade cobalt; 41,300 ounces of gold; 1,750 metric tons of bismuth; and 265 metric tons of copper annually over a 20-year mine life.
This feasibility study is based on 33.1 million metric tons of reserves averaging 0.11% cobalt, 0.14% bismuth, 0.04% copper and 1.03 grams per metric ton gold.
Fortune investigated the potential of expanding the mill throughput to 6,000 metric tons per day, as well as several process improvements. After assessing this 30% expansion in 2019, however, the company opted to refocus the development strategy using a plan similar to the one outlined in the 2014 study.
New Nico plan
The new plan is expected to be based on a new resource model with higher grades and gold content, as well as reduced waste rock stripping during early years of the mine life.
The objective of this plan is to focus on gaining early access to higher grade material using a combination of open pit and underground mining methods similar to the approach used in the 2014 feasibility study. Open pit material will be augmented with higher-grade, gold-rich material sourced from deeper parts of the deposit in stopes designed close to the existing underground access ramp system.
Fortune expects to have this new mine plan completed by the end of May, laying the groundwork to determine the concentrate specifications required to predict feed criteria for a refinery the company also plans to build in Canada.
Several locales in southern Canada are being evaluated for the proposed Nico refinery, including a site in Saskatchewan where Fortune already holds an option to purchase the lands. The company is also considering other potential sites, including three serviced brownfield locations with permitted process equipment that could materially reduce the capital costs for the vertically integrated development.
Some improvements for the refinery were identified while studying the potential of expanding the size of the Nico mine. Fortune said these potential upgrades will be carried forward as considerations in the new plan being considered for the operation.
A key to the success of a mine at Nico is road access to deliver concentrates to a refinery, whether that is a facility built by Fortune or owned by a third party. Territorial and federal governments are currently building the 97-kilometer (60 miles) Tlicho Road from Highway 3 to Whati, a Northwest Territories community about 50 kilometers (30 miles) south of Fortune's proposed Nico mine.
While construction of this road is ahead of schedule, work is currently on-hold to help prevent the spread of COVID-19.
Late last year, Fortune signed an agreement with the Tlicho First Nation for building a road that connects the NICO to Whati, which would complete the link between the mine and Canada's contiguous road and rail infrastructure.
The nearest rail terminal is at Hay River, which would be a roughly 400-kilometer (250 miles) trip once the roads are completed. From Hay River, Nico concentrates could be delivered to a refinery by rail.
Compelling metals mix
Another key to Nico's success is its mix of critical, base and precious metals.
Nico hosts significant quantities of two metals that have been deemed critical to the United States – cobalt and bismuth.
Currently, China supplies roughly 79% of the world's refined cobalt sulfate, primarily from feedstocks shipped from mines in Africa. This means that the cobalt going into a battery powering an EV made in North America has traveled more than halfway around the world.
Benchmark Mineral Intelligence, a leading lithium-ion battery to EV supply chain analyst, forecasts that demand for the cobalt used in the batteries that power EVs will rocket from the roughly 20,000 metric tons in 2019 to more than 730,000 metric tons per year by 2040.
Bismuth is most widely used for stomach remedies such as Pepto-Bismol but is becoming an increasingly important ingredient as substitute for lead in non-toxic alloys, especially piping for potable water, and in semiconductors for power generation and refrigeration.
Bismuth, however, is one of the least abundant elements on Earth and is rarely found in economically recoverable concentrations.
In fact, Fortune estimates that Nico accounts for 12% of the world's bismuth reserves – which are deposits where it has been shown economic feasibility for recovering the metal.
Canada and the U.S. recently entered into a joint action plan on critical mineral collaboration to advance both countries interest in securing supply chains for the critical minerals important to the technology, aerospace, defense, and clean technology sectors.
Fortune said it has been in discussions with both governments regarding financial support for Nico, including a joint proposal with an existing refinery to Canada, and a proposal to the U.S. to support of an updated technical report that would help enable project financing.
In addition to critical minerals, Nico would produce copper, which is becoming increasingly needed in an electric-centric world, and gold, which is expected to bolster the overall economics of the mine.
Fortune said it is also continuing its discussions with various private sector sources of capital, including potential strategic partners in the gold and base metals mining industry; battery materials and electric-vehicle sectors; and private equity.
"While interest is strong from some of these companies, discussions have not advanced materially during the current COVID-19 pandemic," the company penned in its May 7 Nico update.
In the meantime, Fortune is reducing costs to preserve cash until confidence returns to the capital markets.