Successful NICO Pilot Tests

LONDON, ON - Fortune Minerals Limited reported successful results for mini-pilot plant, gravity, and confirmatory flotation tests conducted at SGS Lakefield Research Limited on samples of ores from the Company's 100% owned NICO gold-cobalt-bismuth-copper deposit in the Northwest Territories ("NWT").
The Company concluded that the addition of gravity, regrind and secondary flotation facilities at the Company's proposed NICO concentrator increases metal recovery during flotation and eliminates the need to construct cyanide leaching and smelting facilities in the NWT. This mitigates the duplication of similar unit operations that are planned to be constructed at the Company's proposed Saskatchewan Metals Processing Plant ("SMPP") near Saskatoon where bulk concentrates from the proposed mine will be processed to high value metal products. Elimination of cyanide use at the concentrator will also reduce the potential for environmental impacts in the NWT related to tailings storage and effluent treatment, and the change is in keeping with the wishes of the Tlicho people who own the lands surrounding the Company's mining leases and are stakeholders for the proposed development.
The test work at SGS Lakefield consisted of investigations to maximize the incremental recovery of gold to the bulk concentrate that is planned to be shipped from the concentrator in the NWT to the SMPP for processing to high value metal products. Prior to the Company's decision to move the downstream hydrometallurgical processing facilities to Saskatoon, all of the processing was planned to be conducted at the NICO site, including cyanide leaching to recover gold from the cleaner flotation tailings, autoclave residues, and bismuth leach residues.  Following the 2007 flotation pilot plant, the data was analyzed by the Company's consultants, and approximately 6% of the overall recoverable gold contained in NICO ores reported to the cleaner flotation tailings, and this material represents 8% of the concentrator ore feed and would be cost prohibitive to ship to Saskatchewan for processing.  As a result, recovery of the gold that reports to the cleaner flotation tailings necessitated duplication of the cyanide recovery circuit and smelting components in the NWT at additional capital cost.  To maintain planned gold recovery, it was necessary to undertake testing of alternate recovery routes to incrementally increase the gold recovery to the bulk concentrate without significantly increasing the volume.
First, SGS Lakefield completed Gravity Recoverable Gold ("GRG") testing on two sub-composite ore samples mined during the Company's 2007 underground bulk sampling program representing medium gold grade cobalt-associated and bismuth-associated gold. GRG testing is an industry accepted approach for predicting the available amount of gold that can be recovered in a gravity centrifuge and the results indicated GRG recoveries of 11% and 18% from the cobalt- and bismuth-associated composites, respectively. These results were then utilised by a third party gravity centrifugal concentrator supplier to model the predicted benefit of gravity recovery within the NICO grinding circuit upstream of flotation by benchmarking the proposed NICO circuit against the response of existing circuits with similar known GRG profiles.  Because some of the gold would have otherwise been recovered during flotation, the modelling predicted that the recovery benefit would be approximately 1-4% depending on the mineralization and grade. Fortune Minerals is using a conservative 2% increase in incremental gold recovery using gravity for future reserve and resource modelling for the deposit and its financial model.
Second, using composite samples created for the 2007 pilot test, SGS Lakefield completed standardized kinetic flotation testing and modelling to optimize the bulk rougher and cleaner circuit in an effort to minimize the amount of gold that reported to the cleaner tailings.  These SGS Lakefield proprietary programs are referred to as "MinnovEx" flotation tests for kinetics and the "Flotation Economic Evaluation Tool" for simulation.  The kinetic parameters were utilized to evaluate different flotation configurations through the simulation using the proposed NICO flow sheet and equipment sizing. The model confirmed that continued use of the primary grinding targets, followed by flotation in the base case primary circuit, was optimum to maintain overall recovery of cobalt to the bulk concentrate for shipment to the SMPP because cobalt recovery decreases with over-grinding. However, additional incremental gold recovery would be possible by the addition of a re-grind circuit treating the smaller cleaner flotation tailings stream, followed by secondary rougher and cleaner flotation, using the same flotation reagents used in the primary circuit. This secondary regrind-flotation circuit configuration was tested by locked cycle tests using a new 50 tonne composite sample prepared from ore mined during the 2007 NICO underground bulk sampling program. Results of this testing confirmed base case recovery assumption in the primary circuit, as well as the incremental increase in recovery of gold through the secondary-regrind circuit to the bulk concentrate. Further pilot testing at 400 kg per hour confirmed that the regrind-secondary flotation circuit could conservatively achieve additional gold recovery of 2% with only an additional 0.3 to 0.7% increase in the volume of the bulk concentrate for shipment south. In addition to the increase in gold recovery, the pilot test also indicated a minor recovery increase of approximately 1% for cobalt, bismuth, and copper to the concentrate.
The Company believes that an additional advantage to recovering this gold in the bulk concentrate is that it will be subjected to pressure oxidation during downstream processing at the SMPP, which allows for an improvement in the recovery of gold during leaching. The downstream metallurgical recovery of gold, cobalt, bismuth, and copper from the increased mass pull to the bulk concentrate demonstrated by this program has not been proven, but is strongly supported by results of previous hydrometallurgical pilot testing.  Fortune Minerals therefore concluded that with the addition of a gravity circuit, regrind circuit, and secondary flotation for the cleaner flotation tailings, the need to construct standalone cyanide leaching and smelting facilities in the NWT is eliminated.
SGS Lakefield also conducted confirmatory flotation tests at different head grades on NICO ore sub-composite samples to determine the impact of cobalt and bismuth recovery from ores with very low cobalt or bismuth grades, which is predicted to occur in the mine plan infrequently. Sub-composites were tested at 0.02% feed grade for cobalt and bismuth, and bismuth recovery was not significantly affected by processing lower grade ore. The recovery of cobalt to the bulk concentrate from a sub-composite at a feed grade of 0.02% cobalt was approximately 5% less than the global recovery utilised to generate the 2007 reserve calculation that resulted in a life of mine average of 0.12% cobalt. Gold recovery was not impacted in either case based on locked-cycle tests.
Fortune Minerals had been waiting for the results of the aforesaid test work in order to use the updated recovery estimates together with the results of the 37 new drill holes completed at NICO in the 2010 drill program to prepare an updated Mineral Reserve estimate. P&E Mining Consultants Inc. is preparing the new Mineral Reserve estimate which is expected to be completed by mid-April. Based on existing data, NICO contains Mineral Reserves of 31 million tonnes, averaging 0.91 g/t gold, 0.12% cobalt, 0.16% bismuth and 0.04% copper, containing 907,000 ounces of gold, 82 million pounds of cobalt, 109 million pounds of bismuth, and 27 million pounds of copper.
The company's address is 140 Fullarton St., Suite 1902, London, ON N6A 5P2, (519) 858-8188, fax: (519) 858-8155.