Interview with Robin Goad, President & CEO of Fortune Minerals (TSX: FT).

Fortune Minerals Limited is a TSX-listed Canadian mineral development company. It is currently focussed on advancing the NICO Cobalt-Gold-Bismuth-Copper development.

Fortune Minerals started the year with a share price of CA$0.10. They finished the year at CA$0.08. This is down from peaks of CA$6.00 in 2005. Fortune Minerals has invested CA$130M to date. Fortune Minerals has a market cap of CA$28M today.

Goad founded the company in 1989. Fortune Minerals has spent 24 years on this project.

Goad is quick to point to the quality of Fortune's flagship asset, an IOCG deposit in a 'prolific' region. The deposit was discovered in 1996, and Goad states it has "world-class mineral potential." However, Fortune Minerals have poured CAD$130M into this project and has a market cap of CAD$30M. Current and long-serving investors' are well under water. The company has $2M cash and will need to raise money Q2/Q3 in the region of $5M just to keep the lights on. Goad explains to us why investors should trust Fortune Minerals to deliver returns in a reasonable timeframe. Are you persuaded by what you hear? Goad states the numerous delays and huge expenditures have been caused by 7yrs stuck in an EIA phase, decades of drilling and engineering, and now Fortune Minerals is waiting for the construction of a government-sponsored road at NICO. Goad alo states that getting in to mines takes longer these days than it did previously, and says with the scarcity of some of the commodities in their portfolio they will get funded. 

Fortune Minerals is still at the development stage. After several decades and a vast amount of investment, it is still some way off entering production. While Goad explains the differing commodities at the asset have caused complications, in addition to the mineralogical structure, investors need to ask themselves whether they think this is an appropriate justification. NICO's pit, mill, and campsite have still not been constructed, and that's before taking a look at the permitting situation. Goad states the company have a 2014 PFS on NICO, but this is now out of date, and the AISC quoted in the study is uneconomic. Goad lays blame at the door of the raw material procurement industry as a whole, citing increased regulatory environments and increased permitting times, but investors won't be interested in this; what is he doing right now to make them money?

There is no doubt the Cobalt price crash has put many cobalt companies underwater, but the scale of Fortune Minerals' losses may lead investors to think there is more to it. Goad does admit to some errors of judgment. Fortune Minerals recently spent a lot of time and money trying to expand the NICO project up to "6,000t per day". Production capacity figures also disrupted potential arrangements with strategic battery-related cobalt partners, like LG, which wanted to see a significantly higher production of Cobalt than Fortune Minerals could offer.

The NICO project will be mainly open-pit, with some underground mining. Goad is currently on the hunt for a strategic partner to push NICO into production. Goad says conversations are happening, but companies have conversations with each other all the time. Relying on the decisions and timings of a potential partner as the centre of your business plan is a process investors may question. A promising arrangement that nearly came to fruition in 2014 isn't going to matter to investors in the here and now.

Fortune Minerals also has the leverage to Gold exposure to offer investors, but is this just another layer of complexity to an already over-complicated story that investors don't seem to understand? Is the Gold resource economically viable in a reasonable timeframe?

Interview highlights:

  • Company Overview
  • Backstory of Fortune Minerals
  • 24 Years and $130M Later: Where did the Money Go? Could They Have Done Anything Differently?
  • The Story: Who are They Talking to? What are People not Understanding?
  • Gold: What do They Have and Can They Make Money?

Company page: https://www.fortuneminerals.com/

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