Eastport Critical Metals Corp. press release

Fortune Minerals Announces Preliminary Economic Assessment Report for the Revenue Silver Mine in Colorado

2014-07-24

TSXV - TSX Venture Exchange · Canada

Issued Capital: 190,244,847

First concentrate delivered to Teck's Trail Smelter in British Columbiafor processing while mine & mill commissioning progress toward 400 ton per day ramp up

As a result of a review by staff of the Ontario Securities Commission, we are issuing the following news release regarding our disclosure on the Revenue Silver Mine property.

LONDON, ON, July 24, 2014/CNW/ - Fortune Minerals Limited (TSX: FT) (OTCQX: FTMDF) ("Fortune" or the "Company") (www.fortuneminerals.com) announces the results of a Preliminary Economic Assessment ("PEA") report for the Revenue Silver Mine in southwest Colorado, U.S.A.The PEA prepared by SRK Consulting ("SRK") demonstrates an attractive 73.2% After Tax Internal Rate of Return ("IRR") and US$ 58.8 million6% discounted After Tax Net Present Value ("NPV") for the project. A Technical Report with respect to the PEA ('the SRK Technical Report") will be filed on the SEDAR website (www.sedar.com) and the Company's website today. Fortune can acquire a 100% interest in the Revenue Silver Mine pursuant to an agreement with staged acquisition terms. The Company has already completed the purchase of a minimum 12% interest and is Operator of the mine. The purchase of the Revenue Silver Mine accomplishes Fortune's goal to become a producer, while also positioning the Company for further growth in the prolific Sneffels Silver Mining District of Colorado.

Highlights of the PEA:

Fully permitted and constructed mine, mill and surface facilities in the commissioning for a ramp up to 400 tons per day Pre Tax IRR of 76.4% and After Tax IRR of 73.2% Pre Tax 6% discounted NPV of US$ 69.6 millionand After Tax NPV of US$ 58.8 million Resources of 215,300 tons classified as Measured, 586,300 tons as Indicated and 684,200 tons as Inferred, containing 16.3 million ounces of silver in the Measured and Indicated Resources and 10.1 million ounces of silver in the Inferred Resources Mine Plan Resource of 888,283 tons(diluted) with an average grade of 14.6 ounces of silver per ton, 0.02 ounces of gold per ton, 2.26 percent lead, and 0.90 percent zinc used as a basis for the economic analysis Life of mine ("LOM") average annual mined production of 1.86 million ounces of silver Cash cost of US$ 6.62per ounce of silver net of by-product credits, excluding freight, treatment and refining charges ("TC/RC"), and US$ 10.28per ounce C1 cash cost including TC/RC charges 8-year mine life based only on the Mine Plan Resource including ramp up and ramp down Upside from potential expansion of the Mine Plan Resource where widespread drilling indicates continuity of the mineralization, extension of the 2 main veins systems beyond the current Mineral Resource Estimate, identification of resources in the 6 other mineralized veins intersected by the main access tunnel, and expansion of production to other mines in an historic silver mining district

Introduction:

The Revenue Silver Mine is a fully constructed and permitted, high-grade, underground silver mine that is in commissioning. The mine is situated on 147 patented and unpatented mining claims, totaling approximately 1,079.9 acres in southwest Colorado, 11 km southwest of the town of Ourayand 490 km southwest of Denver. The Revenue Silver Mine is an historic producer in the late 1800's and early 1900's operated by Caroline Mining Co. and had production estimated at up to 15 million ounces of silver before the mill burned in 1912 and the mine closed. The underground workings have been rehabilitated and new surface facilities and an underground mill have been constructed. The mine is ramping up to a 400 ton per day production rate, and delivered its first shipment of concentrate to Teck Resources' Trail Smelter in British Columbialast week for treatment further to an off-take agreement to generate the mine's first revenues.

The Revenue Silver Mine is currently in commissioning. The Company advises that when the mine enters commercial production, that decision will not be based on a feasibility study of Mineral Reserves demonstrating economic and technical viability. As a result, there may be increased uncertainty of achieving any particular level of production or the cost of such production. Historically, such projects have a much higher risk of economic and technical failure.

Fortune, through its wholly-owned subsidiary, Fortune Revenue Silver Mines Inc. ("Fortune Revenue") entered into an agreement to acquire the Revenue Silver Mine and related assets from Silver Star Resources LLC, Star Mine Operations LLC and Revenue-Virginius Mines Corporation (collectively, "the Vendors"). Fortune Revenue has purchased a 12% participating interest in the mine and can purchase a 100% interest by paying the Vendors an additional US$ 14 millionand by issuing a promissory note to pay US$ 34.5 to US$ 36.8 millionin deferred quarterly installments over 3.5 to 5.75 years commencing in August, 2015. The amount of the quarterly payments and rate under which the promissory note is paid are determined by revenue targets for each respective quarter. Two deferred payments totaling US$ 4.5 millionand a 2% net smelter return royalty - capped at US$ 9 million, are also payable to former owners of the mine. The acquisition of the remaining interest in the mine is subject to Fortune arranging financing.

Preliminary Economic Assessment:

Fortune and the Vendors contracted SRK to update the resources for the Revenue Silver Mine, which was completed in April, 2014, and disclosed in a news release, dated May 9, 2014. This release also announced the agreement under which Fortune Revenue can purchase the mine. Following the release, the mandate for the SRK Technical Report was changed to include a PEA so that Fortune could publicly disclose economic information for the mine. The SRK Technical Report will be filed on the SEDAR website (www.sedar.com) today and was authored by Dorinda Bair, BSc Geology, CPG, Principal Consultant (Geology), James M. Beck, Bsc Mining Engineering, PE, SRK Associate Consultant (Environmental), Mark K Jorgensen, BSc Chemical Engineering, SRK Associate Consultant (Metallurgy), and Joanna Poeck, BEng Mining, Senior Consultant (Mining Engineer) who are Qualified Persons for the purposes of National Instrument 43-101. The report was also subject to peer review as part of SRK's own internal process by Bret Swanson, BEng Mining, Principal Consultant (Mining Engineer).

The PEA is preliminary in nature and includes inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves. There is no certainty that the preliminary economic assessment will be realized.

Economic Results:

The economics for the Revenue Silver Mine were determined on a "Project Basis" using a 6% discounted cash flow model that was considered appropriate for a precious metal mine in commissioning. The financial model does not include financing costs or the capital that was previously spent on mine development. Ongoing capital improvements and sustaining capital totaling US$ 26.144 millionLOM are included in the financial model and are summarized in the table below:

Capital Cost Summary

| Area | LOM Capital (US$000s) | | Mine Development | 20,656 | | Mine Equipment | 1,679 | | Plant Expansion | 912 | | Environmental | 2,897 | | Total | $26,144 |

The project economics are based on Mine Plan Resources that are a smaller subset of the larger Mineral Resource Estimate prepared by SRK. The Mine Plan Resources are the resources that fall within the current Mine Plan developed collectively by Fortune, SRK and the Revenue Silver Mine operations team. The Company expects to mine additional resources that are outside the current Mine Plan and are captured in the larger SRK Mineral Resource Estimate, but are in areas with insufficient drill hole density to define continuous Mine Plan resource blocks even though wide spaced drilling indicates there is continuity of the mineralization. The Mine Plan Resources were determined using a US$ 130per ton net smelter return ("NSR") cut-off grade and the mining criteria required for the 400 tons per day mill rate that the project is ramping up to. The US$ 130NSR per ton cut off for the project was estimated from operating costs that were previously estimated from the mine, metal recoveries from metallurgical test work, and the contracts that are in place with Teck Resources for purchase of the concentrates. A summary of the subsequently calculated LOM Operating Costs for the mine that are used in the economic analysis are presented in the table below:

Operating Cost Summary

| Description | LOM (US$000s) | LOM (US$/t-Mineralized Material) | | Surface | 25,813 | 21.18 | | Underground Mining* | 57,272 | 46.98 | | Process | 25,407 | 20.84 | | Environmental | 5,128 | 5.77 | | G&A | 30,479 | 25.00 | | Total Operating | $144,099 | $119.77 |

*A portion of the mine development has been capitalized

The Revenue Silver Mine has attractive project economics on both a Pre Tax and After Tax basis. After Tax economics reflect a total tax burden of 40.88% of the taxable income and includes Federal Income Tax at 34%, State Tax at 4.63%, and Colorado State Tax at 2.25%, collectively impacting 12.42% of the project's income. Indicative Economic Results for the Project on both a Pre Tax and After Tax basis are shown in the table below:

Project Indicative Economic Results (Dry Basis)

| Description | Value | Units | | | Market Prices | | | | | | Gold | 1,350 | US$/oz | | | Silver | 22.00 | US$/oz | | | Lead | 1.00 | US$/lb | | | Zinc | 1.00 | US$/lb | | Estimate of Cash Flow (all values in US$000s) | | | | | | Concentrate Net Return | | US$/oz-Ag | | | Gold Sales | 24,250 | 2.02 | | | Silver Sales | 257,000 | 21.37 | | | Lead Sales | 31,729 | 2.64 | | | Zinc Sales | 3,324 | 0.28 | | | Total Revenue | $316,304 | $26.30 | | | Treatment Charges | (12,287) | (1.02) | | | Smelting & Refining Charges | (23,007) | (1.91) | | | Freight, Impurities & Third Parties | (8,665) | (0.72) | | | Gross Revenue | $272,346 | $22.64 | | | Royalties | (5,447) | (0.45) | | | Concurrent Reclamation | (5,128) | (0.43) | | | Net Revenue | $261,771 | $21.76 | | | Operating Costs | | | | | Surface Costs | (25,813) | (2.15) | | | Underground Mining | (57,272) | (4.76) | | | Process | (25,407) | (2.11) | | | G&A | (30,479) | (2.53) | | | Total Operating | ($138,971) | ($11.55) | | | Operating Margin (EBITDA) | $122,800 | | | | LOM Sustaining Capital | (26,144) | | | | Income Tax | (15,246) | | | | Pre Tax Free Cash Flow | $96,656 | | | | Pre Tax NPV @: 6% | $69,632 | | | | Pre Tax IRR | 76.4% | | | | After Tax Free Cash Flow | $81,410 | | | | After Tax NPV @: 6% | $58,848 | | | | After Tax IRR | 73.2% | |

The economics for the Revenue Silver Mine were also assessed on a cash cost basis using a number of metrics, including cash cost per ton and cash cost per unit of metal produced for both the mine prior to treatment and refining charges and after and are presented in the Projected Cash Costs table below:

Project Cash Costs

| Cash Costs | US$000's | | | Direct Cash Cost | | | | | Surface Costs | 25,813 | | | Underground Mining Cost | 57,272 | | | Process Cost | 25,407 | | | Site G&A Cost | 30,479 | | | By-Product Credits | (59,304) | | | Cash Costs Before Freight and TC-RC | 79,668 | | | $/t-ROM | 65.35 | | | $/Ag-oz | 6.62 | | | Treatment Charges | 12,287 | | | Smelting & Refining Charges | 23,007 | | | Freight | 8,665 | | | C1 Direct Cash Costs | 123,626 | | | $/t-ROM | 101.41 | | | $/Ag-oz | 10.28 | | Indirect Cash Cost | | | | | Royalties | 5,447 | | | Concurrent Reclamation | 5,128 | | | Indirect Cash Costs | 10,574 | | | US$/t-ROM | 8.67 | | | US$/Ag-oz | 0.88 | | | Total Cash Costs | $134,201 | | | US$/t-ROM | $110.09 | | | US$/Ag-oz | $11.16 |

Run of Mine ("ROM")

Sensitivity analysis was also prepared for the Revenue Silver Mine project for percentage changes in recovery, capital, and operating costs and are presented in the NPV Sensitivity table below:

Project NPV Sensitivity (US$ Millions)

| NPV @ 6% | -25% | -20% | -15% | -10% | -5% | Base | 5% | 10% | 15% | 20% | 25% | | Recovery | 8 | 20 | 32 | 41 | 50 | 59 | 67 | 75 | 83 | 92 | 100 | | Capital Costs | 63 | 62 | 61 | 60 | 60 | 59 | 58 | 57 | 56 | 56 | 55 | | Operating Costs | 79 | 75 | 71 | 67 | 63 | 59 | 54 | 50 | 45 | 40 | 35 |

Previous Work:

The Revenue Silver Mine operated in the late 1800's and early 1900's before the mill burned in 1912 and the mine closed. The previous workings from this mining activity are known and there is production figures available for the latter part of the mine life. Ranchers Exploration and Development Corp. ("Ranchers"), Camp Bird Mine (Federal Resources) and Sunshine Mining also conducted significant exploration and mine rehabilitation work on the property during the 1960's, 1980's and 1990's. Ranchers also conducted test mining to verify grades and mining conditions and carried out metallurgical testwork based on the contiguous Camp Bird Mine flowsheet that has similar mineralization. The Vendors acquired the property in 2011 and conducted additional exploration and development work to validate the deposit and rehabilitate the mine for production. This allowed for the compilation of significant sample data to prepare a geological and resource block model in Vulcansoftware. A summary of this sampling work that was carried out on the Virginius and Yellow Rose Veins as well as surface stockpiles between 1966 and 2013 is presented in the table below:

Exploration Work Virginius and Yellow Rose Veins 1966 - 2013

Geology:

The Revenue Silver Mine is a typical epithermal system hosted in andesitic volcanic caldera features. Mineralization consists of narrow, high-grade quartz-carbonate veins containing freibergite and tetrahedrite (silver), native gold, galena (lead), sphalerite (zinc), chalcopyrite (copper) and pyrite. Historical mining, plus extensive drilling and channel sampling has confirmed continuity of mineralization in the Virginius and Yellow Rose Veins and the known resources are contained in these veins. They dip steeply and can be traced for up to 4.8 km along strike, more than 900 metres at depth, and range in width between 0.15 and 2.74 metres. There is also good potential to identify additional resources along the projection of strike and dip from the known resources and in six additional mineralized vein systems are intersected by the Revenue Tunnel. These, together with the mineral potential of being within a larger prolific historical silver mining district, indicate that there is good potential to expand the resource.

Mineral Resource Estimates:

A number of historical resource estimates were prepared for the Revenue Silver Mine by companies that previously conducted exploration of the mine. The Vendors also commissioned several resource estimates, which were prepared by SRK, including the Mineral Resource Estimate contained in the SRK Technical Report. Dorinda Bair, B.S. (Geology), CPG, is the Qualified Person responsible for the SRK resource estimates. The Mineral Resources for the Revenue Silver Mine are all contained in the Virginius and Yellow Rose Veins and have been classified as Measured, Indicated and Inferred based on standards as defined by the "CIM Definition Standards - For Mineral Resources and Mineral Reserves", prepared by the CIM Standing Committee on Reserve Definitions and adopted by CIM Council on December 17, 2010.

The raw assay data for all metals, consists of several thousand samples from drillhole intercepts and channel samples across the vein and were compiled to prepare computer geological and block models in Vulcansoftware. The sample data was also assessed by sample type for the presence of high-grade outlier values that could impact grade estimation. Capping was reviewed for both the Virginius and Yellow Rose Veins based on log probability plots, which resulted in caps being assigned for all metals as presented in the Assay Capping by Deposit table below:

Assay Capping by Deposit

| Metal | Yellow Rose | Virginius | | Au (oz/t) | 0.300 | 0.445 | | Ag (oz/t) | 109 | 318 | | Cu (%) | NA* | 3.75 | | Pb (%) | 12.6 | 37 | | Zn (%) | 10 | 10 |

*Cu was not estimated for Yellow Rose.

Source: SRK Consulting, 2014

The capped assay data was then composited to the minimum mining width of 3 feet and grade interpolation applied using inverse distance squared to determine resource blocks. The classification of the resources reflect the relative confidence of the grade estimates defined by the search radiuses determined for each classification and the number of composites and drill holes and/or channel samples required for each classification by vein. The classification criteria are intended to encompass zones of reasonably continuous mineralization.

Virginius Mineral Resource Estimate The Virginius Main and Footwall Veins were extensively sampled in workings and in stope development by Ranchers and Sunshine Mining but due to limited historic Quality Assurance / Quality Control measures being applied during this period, the classification of resources was limited by SRK to "Indicated". The Indicated Mineral Resources for the Virginius Main and Footwall Veins are those blocks having a minimum of three samples within an anisotropic search of 100 ft x 100 ft x 50 ft. Inferred Mineral Resources are those blocks having a minimum three samples within an anisotropic search of 200 ft x 200 ft x 50 ft. All results from channel samples and drilling at the project that are within the wireframes were used in the Mineral Resource Estimate. Note that tons are short imperial tons.

Mineral Resource at the Virginius at a Cut-off of US$150/t*as at April 18, 2014

(%) | Cu

(%) | Zn

(%) | Contained Metal | | | | | | Ag

(M oz) | Au

(oz) | Pb

(M lb) | Cu

(M lb) | Zn

(M lb) | | | | | | | | | | Virginius | Indicated | 485,600 | 26.95 | 0.044 | 4.30 | 0.25 | 1.37 | 13.1 | 21,000 | 41.80 | 2.4 | 13.3 | | Virginius | Inferred | 646,100 | 14.93 | 0.038 | 3.04 | 0.13 | 0.99 | 9.65 | 24,500 | 39.25 | 1.6 | 12.8 |

Mineral Resources are not Mineral Reserves and do not have demonstrated economic viability. There is no certainty that all or any part of the Mineral Resources estimated will be converted into Mineral Reserves. The Mineral Resource estimates include Inferred Mineral Resources that are normally considered too speculative geologically to have economic considerations applied to them that would enable them to be categorized as Mineral Reserves. There is also no certainty that Inferred Mineral Resources will be converted to Measured and Indicated categories through further drilling, or into Mineral Reserves, once economic considerations are applied. Mineral resource tonnage and contained metal have been rounded to reflect the accuracy of the estimate, and numbers may not add due to rounding. _*Cut-off is based on a minimum total recovered metal based on a mining and milling cost provided by Silver Star Resources LLC of $150/t and diluted to a minimum mining width of 3 feet._ Recovered block model metal value = (Ag oz/t • Ag recovery • US$/oz Ag) + (Au oz/t • Au recovery • US$/oz Au) + (2000 • Pb % / 100 • Pb recovery • US$/lb Pb) + (2000 • Zn % / 100 • Zn recovery • US$/lb Zn). The metal price and recovery assumptions include a silver ("Ag") price of US$20/oz and recovery of 95%; gold ("Au") price of US$1250/oz and recovery of 90%; a copper ("Cu") price of US$3.15/lb and recovery of 80%; a lead ("Pb") price of US$1/lb and recovery of 90%; and a zinc ("Zn") price of US$1/lb and recovery of 85%.

Yellow Rose Mineral Resource Estimate The Mineral Resources for the Yellow Rose Vein are classified as Measured Mineral Resources for those blocks having a minimum of three samples and three drillholes or channels which are within an anisotropic search of 125 ft x 125 ft x 50 ft within the vein. This classification takes into consideration that there has been sampling in workings around the Yellow Rose Main vein in addition to drilling. Indicated Mineral Resources are those blocks having a minimum of three samples and three drillholes or channels which are within an anisotropic search of 250 ft x 250 ft x 50 ft within the vein. Inferred Mineral Resources are those blocks having a minimum of three samples and three drillholes which are a maximum block-composite separation distance within an anisotropic search of 375 ft x 375 ft x 50 ft within the vein and related splays. All results from channel samples and drilling at the Project that are within the wireframes have been used in the Mineral Resource Estimate. Copper was not estimated at Yellow Rose due to validation concerns for the copper database. This data was hand entered from historical assay certificates and there were too many data entry errors for inclusion at this time. With additional, data review and data entry corrections, there is potential to add this data to the Mineral Resource Estimate. Note that tons are short imperial tons.