Fortune resumes exploration near Nico

More than six years after turning its attention to advancing to production the world-class mineral reserves of its Nico project in Northwest Territories, Fortune Minerals Ltd. is again putting boots on the ground in search of new mineralization near the Nico deposit located 160 kilometers (99 miles) northwest of Yellowknife.

The tenacious junior reported Sept. 2 that an exploration program planned for the 2020 field season is underway, despite restraints imposed by the coronavirus pandemic sweeping the globe. Bolstered by a C$144,000 mining incentives grant from the Northwest Territories government; Fortune is searching for an eastern extension of the mineral-rich Nico deposit that may have been offset by faults.

After intense study of various alternatives, the company, meanwhile, is moving closer to discerning a cost-effective path to developing its proposed cobalt-gold-bismuth-copper mine and mill at Nico, along with a companion refinery in southern Canada.

Mineral-rich deposit

The Nico project comprises a proposed mine, mill and concentrator in the Northwest Territories and a related hydrometallurgical process refinery to be located in southern Canada.

Fortune aims to become a vertically integrated producer of cobalt chemicals for the lithium-ion battery industry as well as gold, and bismuth. The junior believes Nico will stand out as a North American primary cobalt producer, strategically important as a source of the critical metal independent of Republic of the Congo and China and for its by-product production of copper and other minerals.

A feasibility study completed in 2014 estimated that roughly C$600 million would be required to construct the vertically integrated NICO Project. Fortune is currently evaluating a number of opportunities to improve project economics, including aligning development with availability of the 97-kilometer (50 miles) Tlicho All-Season Road now under construction, an improved mine plan and process flow sheet; flexibility of producing gold and mineral concentrates for sale directly from the mine to defer refinery capital; potential collaboration on refinery and brownfield sites to reduce capital; and pursuing exploration opportunities.

Fortune said the Tlicho Road, together with a planned 50-kilometer spur road to the mine site, are key enablers for the Nico project that will allow trucking of metal concentrates to the railway at Hay River for delivery to the refinery in southern Canada for processing to value-added products.

The Nico deposit hosts 33.1 million metric tons of proven and probable mineral reserves to be accessed via underground and open pit mining that average 1.03 grams per metric ton (1.1 million ounces) gold, 0.11% cobalt (82.3 million pounds) , 0.14% (102.1 million lb) bismuth and 0.04% (27.2 million lb) copper.

During the past six years, the junior has prepared a number of high-level financial and operating models assessing the NICO project's economics using different pit sizes and various production rate sensitivities. Fortune concluded that the 4,650 metric-ton-per-day mill rate used in the 2014 feasibility study was likely optimal to produce the best balance between economies of scale and capital costs, while focusing on a smaller open pit with higher cobalt and gold grades. The analyses also determined that a combined open pit and underground approach to the mine plan in the early years of the mine life, which was contemplated in the 2014 study, would also produce a more attractive indicative rate of return for the development by enabling earlier access to deeper gold-rich ores in the deposit.

Further study will assess other optimizations, including a new mineral resource. The company is preparing a new mine plan and schedule based on the new mineral resource estimate, a re-optimized open pit and selective underground mining of gold-rich ores located close to an existing decline ramp developed for bulk sampling in 2007 and 2008.

Strategic project

Fortune is also assessing a number of potential refinery sites in southern Canada, including several brownfield options with existing facilities that could materially reduce capital costs for the development.

"In light of the foregoing, the company believes that the development schedule for the Nico project can be aligned with the expected deficit in cobalt supply in 2022-2023 when demand for batteries in electric vehicles is anticipated to outstrip production from existing mines and development projects," the company observed on its website.

It noted that the Canadian and United States governments have signed a Joint Action Plan on Critical Mineral Collaboration to enable more North American production of certain minerals identified by the U. S. Government as critical to economic and national security.

Minerals considered critical for this purpose have essential use in important industrial and defense applications, cannot be easily substituted by other minerals, and their supply chain is threatened by geographic concentration of production and/or geopolitical risks. Cobalt and bismuth are both identified as critical minerals on both the U.S. and European Union critical minerals lists.

Fortune said it has been in discussions with both the Canadian and U. S. governments about potential financial support for the Nico project development, including submission of a White Paper proposal to the U. S. Department of Defense, for which a decision is pending.

Fortune is also continuing to work with a number of private sector companies and potential strategic partners interested in the critical minerals and/or gold contained in the project.

Once the Nico deposit is developed, Fortune envisions becoming an important new producer of battery-grade cobalt products to the rapidly expanding lithium-ion rechargeable battery industry, and their use in portable electronic devices, electric vehicles, and stationary storage cells to make electricity use more efficient and allow greater use of renewable energy such as solar and wind. The mine also would produce environmentally friendly bismuth metals and oxide used in the automotive and pharmaceutical industries and as a non-toxic and environmentally safe replacement for lead.

Further, Nico would be a significant producer of gold and minor amounts of by-product metals, including copper.

New exploration

This year, Fortune also set out to better delineate a number of anomalies previously discovered on the Nico project property that may indicate the presence of a larger underlying iron oxide copper gold- (IOCG) style deposit. That effort led to carrying out a new exploration program this fall.

The junior hired Yellowknife-based Aurora Geosciences Ltd. to conduct induced polarization and ground magnetometer surveys over known geophysical anomalies along the east strike projection of the Nico deposit.

The objective of this work is to delineate targets for follow-up drilling where the company believes the deposit has been displaced by faults.

Aurora is conducting the surveys over five priority targets identified in earlier airborne and ground geophysical surveys completed for Fortune and the Geological Survey of Canada. All five targets have coincident magnetic and gravity high anomalies with corresponding low resistivity indicative of a magnetic, dense and conductive source. The primary target is the 1,200-meter-wide Peanut Lake Anomaly, where the GSC also identified a coincident magnetotelluric anomaly.

The Peanut Lake Anomaly is centered 1,000 meters southeast of the Nico deposit and the underlying geology is largely covered by overburden and wetlands. Fortune wants to identify concentrations of conductive sulfides within the broader magnetic anomaly beneath this overburden that may represent the east strike extension of the Nico deposit.

The area's significance was recently upgraded after road construction uncovered bedrock and boulders with mineralization that is similar to the Nico deposit. Compilation of previous drilling in this area also identified five holes with gold values greater than 1 g/t and 0.355% cobalt.

The mineralization unearthed by road construction and intersected in drill core confirm the continuation of gold and cobalt values east of the known Nico deposit where the geology has been displaced by faults.

Fortune said this year's IP geophysics is being applied to identify near-surface concentrations of disseminated sulfide minerals that typically host the ores in IOCG-type deposits, including Nico and the Sue-Dianne satellite deposit.