Fortune Minerals' Cobalt Mine could Feed Tesla Battery Demand; $25 Million Financing Completed to Acquire Producing Silver Mine
Vancouver, BC / October 9, 2014 / The electric car company Tesla (TSLA-NASDAQ) gained about $2 billion in market capitalization after Elon Musk's October 1 tweet that it "was time to unveil the D and something else."
Automobile industry pundits are speculating that Tesla may reveal a new driverless technology for the Model S on Thursday evening. Musk recently told CNN that he anticipated Tesla being "90% autonomous" in 2015.
Tesla's $5-billion lithium-ion battery Gigafactory in Nevada - is expected to increase global cobalt demand significantly directly benefiting Fortune Minerals (FT-TSX) (FTMDF- OTCQX) which has a North American reserve of 82 million pounds of cobalt, 102 million pounds of bismuth and 1.1 million ounces of gold at its vertically integrated NICO project.
"NICO is a shovel ready project strategically positioned to meet the rising demand for cobalt from leading innovators like Tesla," confirmed Fortune Minerals President Robin Goad in an exclusive interview with Financial Press, "We have Environmental Assessment Approvals for the mine and mill in the Northwest Territories, and also for the refinery in Saskatoon."
A bulk concentrate will be produced at the mine for shipment to the refinery the Company plans to construct in Saskatchewan where it will be further processed to battery grade cobalt sulphate, bismuth metal and chemicals and gold. Cobalt and Bismuth are both critical metals required to service a growing world economy, and particularly for new technologies.
Currently 61% of global cobalt mine supply comes from the politically unstable Congo, and 42% of refinery production comes from China. About 80% of bismuth supply is also from China and there are concerns about supply from policy risk.
"Up to 60% of a lithium-ion battery is cobalt by weight," stated Goad, "Generally, the more cobalt, the better the battery. Cell phones, laptops, iPads - all of these devices require batteries containing cobalt cathodes. Tesla's Model S uses the Nickel Cobalt Aluminum cathode chemistry for its batteries containing approximately 10% cobalt.
Tesla's first Gigafactory is expected to produce more lithium-ion batteries than the entire world did in 2013. In fact, NICO would only be able to service a portion of Tesla's total anticipated demand at the currently projected production rate."
Under NAFTA, Fortune's cobalt project also has significant cost advantages over Chinese refinery production. Unlike China, the company is exempt from import duties and transportation costs to the North American market will be lower. Tesla has stated publically that it is looking to secure a North American supply chain for its Gigafactory.
The NICO project contains about 12% of the global reserves of bismuth - a critical ingredient in the automotive, electronics and plumbing sectors.
"Bismuth is replacing lead in solders and brasses, used in the electronics and the plumbing industries," stated Goad, "But the largest use is in automobiles. It is one of the very few metals that expands when it cools, and it is therefore used in anti-corrosion coatings, castings, pearlescent paints and windshield frit - the little black dots that surround your windshield to protect the seal from changing temperatures and sunlight."
Fortune plans to do the preliminary processing (crushing, grinding, bulk floatation) in the Northwest Territories, and then ship the concentrate via truck and the Canadian National Railway to Saskatchewan for processing - where the cost of electricity is 5.7 cents per kilowatt/hour, versus 25 cents per kilowatt/hour in the Northwest Territories, and close to reagent sources and a skilled pool of engineers and metallurgists.
Notably, Fortune is already a producing mining company after raising US$25 million financing from a production prepay facility on October 1, 2014 to complete the purchase of the Revenue Silver Mine in southwest Colorado, U.S.A.. A second tranche of US$10 million is expected to close on October 16, 2014.
"The Revenue Silver Mine is a high-grade narrow vein deposit," confirmed Goad "In fact, it's one of the highest grade silver deposits in North America. Approximately 80% of mine revenue is derived from silver, the rest is from gold, lead and zinc."
The Revenue Silver Mine is located near Ouray, about 490 kilometres southwest of Denver. Underground narrow vein mines require a specialized skill-set which Fortune has access to in the local community. The mine operated between 1876 and 1912, producing approximately 15 million ounces of silver. Because of the high grade deposit, and the stable labour environment, the mine can operate profitably in the current weak metal markets.
"We have an innovative financing structure," stated Goad, "The Lascaux Resource Capital Fund is advancing a total of US$35 million which will be paid back with interest from the mine's metal production. This structure has minimized share dilution in an otherwise weak capital market."
In order to keep the mine footprint small, the mill has been constructed in an underground excavation. Fortune is investing additional capital in the mine to improve safety and operational efficiencies as it ramps up to the 400 short ton per day production rate.
If the Revenue Silver Mine is the Fortune's present, the vertically integrated NICO gold-cobalt-bismuth-copper project, and the Company's 80% owned Arctos anthracite metallurgical coal project in B.C. are the future organic development projects to grow the business.
Fortune Minerals is currently trading at. 22 with a market capitalisation of $41.85 million.
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Contact:
Fortune Minerals Ltd
148 Fullarton Street
Suite 1600
London, ON N6A 5P3
Robin Goad, President, or Troy Nazarewicz, Investor Relations Manager
Phone: 519-858-8188
Fax: 519-858-8155
Website: http://www.fortuneminerals.com
SOURCE: Fortune Minerals Ltd.