Sale provides additional liquidity for Fortune
while preserving its rights to develop the project
Issued Capital: 222,077,580
LONDON, ON, May 5, 2015 /PRNewswire/ - Fortune Minerals
Limited (TSX: FT) (OTCQX: FTMDF) ("Fortune" or the
"Company") (www.fortuneminerals.com) and POSCO Canada Limited
("POSCAN") are pleased to announce the completion of an agreement
with the British Columbia Government with respect to their coal
licenses located in the Klappan area of northwest British Columbia, Canada (the "Arctos
Project"). Fortune, through wholly-owned Fortune Coal Limited
("Fortune Coal"), and POSCAN, through wholly-owned POSCO Klappan
Coal Ltd. ("POSCO Klappan"), are partners in the Arctos Anthracite
Joint Venture ("AAJV"). Pursuant to the agreement with Her Majesty
the Queen in Right of the Province of British Columbia (the "Province"), and British
Columbia Railway Company ("BC Rail"), the AAJV has sold its
interests in 61 contiguous coal licenses in the Klappan, totaling
16,411 hectares, to BC Rail for $18,308,000. The AAJV partners maintain the
exclusive right to purchase back the coal licenses at the same
price for a 10-year option period. If both partners do not wish to
exercise the repurchase option, each of them may do so
individually. Fortune and POSCAN have also entered into an amending
agreement to restructure the AAJV and share the proceeds from the
sale of the Arctos coal licenses on an equal basis after purchasing
the royalty held by the previous owner of the property for
$308,000. Fortune will use its
$9 million share of the funds from
this transaction for working capital and to repay debt.
Like our news? Click-to-Tweet.
"This is a good outcome for Fortune Minerals in the context of
the current market" commented Robin
Goad, President and CEO of the Company. "Fortune and POSCAN
invested significant funds and effort to try to resolve the complex
First Nations issues associated with the proposed development of
the Arctos Project. Mining is a cyclical industry, and considering
the weak metallurgical coal prices at the present time, it was
considered prudent to step back from Arctos and focus our efforts
on our near-term production assets. The back-in option allows for
the repurchase the coal licenses should conditions improve and make
development an attractive path forward for the joint venture."
Fortune and POSCAN are selling their respective interests in the
Arctos Project to BC Rail in order to allow the Province and
Tahltan First Nation to continue their dialogue on a shared vision
for responsible resource management in the Klappan. By maintaining
the coal licenses in BC Rail, the Province is preserving the value
of the coal deposits while it continues its discussions with the
Tahltan. Fortune and POSCAN can repurchase the licenses should this
dialogue be successful in determining that development can occur in
the area under a framework of mutual respect and cooperation. The
companies will each receive $9
million in exchange for amounts already expended on the
Arctos Project and supporting the Province in providing the time it
needs to continue its dialogue with the Tahltan.
Pursuant to the agreement, the Province will also perform, at
its expense, any reclamation required on the road to Lost Ridge
that was constructed to support previous test mining activities at
the site under the existing mine permits. This road is being
maintained in the interim period because it is used by members of
the Tahltan First Nation and may also be required for any future
mining at the site should development of the project occur in the
future.
Under the amending agreement between Fortune and POSCAN, the
interests of both companies have been restructured such that each
company now owns 50% of the AAJV, and Fortune continues to be the
Operator. The realignment of interests in the joint venture was
done to allow both companies to share equally in the cash proceeds
of the agreement with the Province. It also eliminates certain
funding schedule obligations of the partners contemplated under the
original joint venture agreement. Previously, Fortune would have
been required to fund the next $80
million of work on the Arctos project and would have
received the first $80 million of
revenues from the development. POSCAN also previously held an
option, which if exercised, would have required Fortune to pay
$16 million to POSCAN if Fortune was
unable to finance the next $80
million of work. Under the amending agreement, both
companies will be responsible for their respective 50% pro-rata
shares of future expenditures on the project. Additionally under
the amending agreement, Fortune will assume the responsibility for
reclaiming the Arctos site from the joint venture's previous work
on the property, but will also be entitled to receive the funds
currently held in trust as security for this work.
Fortune and POSCAN are also pleased to report the purchase of
the royalty that was held by the previous owner of the property for
$308,000. This royalty of
$1 per tonne of product sold from the
project will be reinstated should the back-in option to repurchase
the licenses be exercised by Fortune and/or POSCAN over the 10-year
option period.
About the Arctos Anthracite Joint Venture:
The AAJV was established as an international collaboration
between Fortune and South Korea's
POSCO – one of the world's largest steel producers, in order to
develop the significant anthracite metallurgical coal deposits in
the Klappan area of northwest British
Columbia. The Arctos coal licenses are located 330 km
northeast of the Port of Prince
Rupert and straddle the existing BC Rail right-of-way and
largely completed road bed. The AAJV had intended to complete the
railway to the site in order to provide rail access to the Ridley
Coal Terminal in Prince Rupert for
export of metallurgical coal products to the overseas steel and
metal processing industries.
About Fortune Minerals:
Fortune is a diversified North American mining and development
company that owns and operates the Revenue Silver Mine in
Colorado, U.S.A. The Company is
developing the vertically integrated NICO
Gold-Cobalt-Bismuth-Copper Project that is comprised of a proposed
mine and mill in Canada's
Northwest Territories ("NT") that
will produce a bulk concentrate for shipment to a refinery the
Company plans to construct in Saskatchewan for processing to high value
metal and chemical products. Fortune also owns the Sue-Dianne
Copper-Silver-Gold Deposit and other exploration projects in the
NT. Fortune is focused on outstanding performance and growth of
shareholder value through assembly and development of high quality
mineral resource projects.
Follow Fortune Minerals:
Click here to subscribe to Fortune's email list.
Click here to follow Fortune on LinkedIn.
This press release contains forward-looking information and
forward-looking statements within the meaning of applicable
securities legislation. This forward-looking information includes
statements with respect to, among other things, the proposed
development of the Revenue Silver Mine ("RSM") and the NICO
project. Forward-looking information is based on the opinions and
estimates of management as well as certain assumptions at the date
the information is given (including, in respect of the
forward-looking information contained in this press release,
assumptions regarding the Company's financial and technical
abilities to complete the development of the RSM and the NICO
project). However, such forward-looking information 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, the risk that the Company may not be able to
achieve commercial production at the RSM or complete the NICO
project; the risk that the Company may not be able to arrange
the necessary funding to complete the development of its projects;
the risk that operating and/or capital costs may be
materially higher than anticipated; the risk of decreases in the
prices of relevant commodities; potential loss of key personnel;
potential discrepancies between actual and estimated production;
potential discrepancies between actual and estimated mineral
resources or between actual and estimated metallurgical recoveries;
potential labour shortages; the risk of mining accidents; the
risk of changes in applicable laws or regulations; uncertainties
with respect to the timing and receipt of all necessary permits;
and other factors. In addition, the risk factors described or
referred to in Fortune's Annual Information Form for the year ended
December 31, 2014 which is available
on the SEDAR website, should be reviewed in conjunction with the
information contained in this news release. Readers are cautioned
to not place undue reliance on forward-looking information because
it is possible that predictions, forecasts, projections and other
forms of forward-looking information will not be achieved by the
Company. The forward-looking information contained herein is made
as of the date hereof and the Company assumes no responsibility to
update or revise it to reflect new events or circumstances, except
as required by law.
SOURCE Fortune Minerals Limited