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VIEWS: 143 PAGES: 14

                                                                                                                                 M INERALS LIM ITED

                                                                                                                                 Annual Management Report
Corporate Information:                                                                                                                  2008
AUDITORS:                 Ernst & Young LLP
                          London, Ontario

TRANSFER AGENT:           Computershare Trust Company of Canada
                          Toronto, Ontario

BANK:                     Canadian Imperial Bank of Commerce (CIBC)
                          London, Ontario

CAPITALIZATION:           Authorized: Unlimited
                          Common Shares Issued (April 1, 2009): 55,550,107
                          Warrants Issued:
                          5,448,000, exercisable at $3.75 before July 26, 2009
                          100,000, exercisable at $3.00 before August 8, 2012
                          1,875,000, execrable at $0.80 before September 2, 2012

STOCK EXCHANGE LISTING:   The Toronto Stock Exchange,
                          Trading Symbols:
                          Common Shares – “FT”
                          Warrants – “FT.WT”

LEGAL COUNSEL:            Macleod Dixon LLP Barristers & Solicitors
                          Toronto, Ontario

Annual Meeting:
The Annual and Special Meeting of Shareholders will be held at The Fairmont Royal
                                                                                    M INERALS LIM ITED
York Hotel, Saskatchewan Room (Mezzanine Level), 100 Front Street West, Toronto,
Ontario, M5J 1E3 on the 20th day of May, 2009 at 4:30 pm.                                  140 Fullarton Street, Suite 1902
                                                                                              London, Ontario N6A 5P2
For those persons unable to attend, a second informal meeting for informational     TEL:   519-858-8188    FAX:   518-858-8155
purposes will be held at The London Club, 177 Queens Avenue, London, Ontario,          EMAIL:
N6A 1J1 on the 21st day of May, 2009 at 4:30 pm.                                      WEBSITE:
2                                                                                                                                                                                                                                                                                                                                                                                            3

                            Corporate Profile: Fortune Minerals Limited (TSX: FT) is                                                                                        focused on the development of high quality mineral resource projects in
                                                 Canada with the potential to generate strong returns for its                                                               shareholders. Fortune has three wholly-owned, advanced stage projects, including the NICO gold-cobalt-
                                bismuth-copper deposit and the Sue-Dianne copper-silver-gold deposit in the Northwest Territories,                                          and the Mount Klappan anthracite coal project in British Columbia. NICO and Mount Klappan have both been
                                assessed in positive definitive feasibility studies, have been test mined and pilot plant processed, and                                    are both in permitting for commercial production. The Company’s board and management team have diverse
                                skills and proven records in resource development and mine operations to accomplish our goal of                                             becoming a leading Canadian mining company.

           2008 and Recent Corporate Highlights:                                                                                                                                 Property Interests:
                                                                                                                                                                                                                                                                                                                                        1               4
           NICO Gold-Cobalt-Bismuth-Copper Project Accomplishments                       Corporate Accomplishments                                                               1.        Mount Klappan Anthracite Coal Deposit                                                                                                                             2
                                                                                                                                                                                           British Columbia                                                                                                                                                       7
           •   Began environmental assessment to permit mine and process plant           •   Added new operational strength with appointment of Jim Currie to                                                                                                                                                                                                5
                                                                                                                                                                                 2.        NICO Gold-Cobalt-Bismuth-Copper Deposit
           •   Updated definitive feasibility study and improved project economics           board of directors, Tom Rinaldi as Vice President Operations, and Ed
                                                                                                                                                                                           Northwest Territories
           •   Completed $5 million pilot plant proving process flow sheet from ore to       Farrell as Hemlo Site Superintendent
                                                                                                                                                                                 3.        Hemlo Plant, Ontario
               high-value metal products and improving metal recoveries                  •   Raised $8 million in equity financings to offset $22.3 million of plant,
                                                                                                                                                                                 4.        Sue-Dianne Copper-Silver-Gold Deposit
           •   Completed 80% of dismantling and demolition of Golden Giant Mine              equipment and development expenditures
                                                                                                                                                                                           Northwest Territories
               buildings and equipment for relocation and reuse at NICO, and             •   At year-end, had $9 million in cash and total assets of $99 million with
                                                                                                                                                                                 5.        Salkeld Lake Copper-Zinc-Lead-Gold-Silver Project
               negotiated extension with Newmont Canada for removal from                     only 55.6 million issued shares                                                               Northwest Territories                                                                                                                                                      3
               Hemlo, Ontario                                                                                                                                                    6.        Camsell River Silver Project, Northwest Territories
           •   Generated cash from sale of surplus equipment and scrap metals from       Corporate Objectives for 2009                                                           7.        Great Slave Copper-Gold-Silver Project
               Golden Giant Mine assets                                                  NICO Project                                                                                      Northwest Territories                                                                                                                                                          8
           •   Completed 75% of Front-End Engineering and Design (FEED) for NICO         •   Arrange credit facility for project financing                                       8.        Head Office, London, Ontario
           •   Re-engineered Golden Giant Mine grinding mills for 16% increase in        •   Complete FEED and downstream process plant location studies, and
               NICO production rate to 4,650 tonnes / day at same operating cost             select site for downstream hydro-metallurgical facilities                                Property                                                                      Commodity Sought1                                     Hectares                           Fortune Interest
           •   Continued public consultation, environmental and social studies for       •   Complete NICO environmental assessment and mine permitting
                                                                                                                                                                                      Mount Klappan                                                                        Anthracite Coal                                   15,866                                           100%2
               permitting                                                                •   Complete dismantling of Golden Giant Mine facilities except buildings
                                                                                                                                                                                      NICO                                                                                   Co, Au, Bi, Cu                                    5,140                                          100%
           •   Rising demand and constrained supply drove prices for cobalt, bismuth,        used for storage of equipment
                                                                                                                                                                                      Sue-Dianne                                                                                  Cu, Ag, Au                                      451                                         100%2
               gold and copper to record levels, most which remain at elevated levels    •   Negotiate Access and Impacts and Benefits agreements with Tlicho
                                                                                         •   Negotiate private-public partnership for completion of access road                       Salkeld Lake                                                                     Cu, Zn, Pb, Au, Ag                                         116                                         100%2
           Mount Klappan Anthracite Coal Project Accomplishments                         •   Appoint a construction contractor                                                        Camsell River                                                                                           Ag                                    78                                        100%2
           •   Updated definitive feasibility study demonstrating attractive economics                                                                                                Great Slave                                                                                 Cu, Au, Ag                                   2,069                                          100%
               at current coal prices, and very robust economics at 2008 prices          Mount Klappan Project
           •   Conducted further environmental baseline and engineering studies to       •   Continue reviewing strategic options, including ongoing discussions
                                                                                                                                                                                          Au = gold, Co = cobalt, Bi = bismuth, Cu = copper, Ag = silver, Zn = zinc, Pb = lead.
                                                                                                                                                                                          Subject to third party royalties.
               support environmental assessment and permitting processes                     with potential joint-venture and investment partners
                                                                                                                                                                                                                                                         This document contains certain forward-looking information. This forward-looking information includes, or may be based
           •   Entered into environmental assessment cooperation agreement with          •   Subject to identifying financing partner, file final application to complete                                                                                upon, estimates, forecasts, and statements as to management’s expectations with respect to, among other things, the

               Tahltan First Nation
               Examined infrastructure enhancements to improve project economics         •
                                                                                             environmental assessment and mine permitting
                                                                                             Advance negotiations with Tahltan and other First Nations for Impacts
                                                                                                                                                                                      Contents:                                                          size and quality of the Company’s mineral resources, progress in development of mineral properties, timing and cost for
                                                                                                                                                                                                                                                         placing the Company’s mineral projects into production, costs of production, amount and quality of metal products
                                                                                                                                                                                                                                                         recoverable from the Company’s mineral resources, demand and market outlook for metals and coal and future metal and
           •   Retained CIBC World Markets as financial advisor to examine strategic         and Benefits agreements                                                                                                                                     coal prices. Forward-looking information is based on the opinions and estimates of management at the date the informa-
                                                                                                                                                                                      Letter to Shareholders                                 4           tion is given, and is subject to a variety of risks and uncertainties and other factors that could cause actual events or results
               alternatives for joint venture development                                                                                                                                                                                                to differ materially from those projected in the forward-looking information. These factors include the inherent risks
                                                                                                                                                                                      NICO Gold-Cobalt-Bismuth-Copper Project                6           involved in the exploration and development of mineral properties, uncertainties with respect to the receipt or timing of
           •   Rising demand and constrained supply drove coal prices to record          General Corporate
                                                                                                                                                                                                                                                         required permits and regulatory approvals, the uncertainties involved in interpreting drilling results and other geological
                                                                                                                                                                                      Sue-Dianne Copper-Silver-Gold Project                 16
               levels, and they remain strong today relative to historic prices          •   Continue building management roster for construction, management                                                                                            data, fluctuating metal and coal prices, the possibility of project cost overruns or unanticipated costs and expenses, uncer-
                                                                                                                                                                                      Mount Klappan Anthracite Coal Project                 18           tainties relating to the availability and costs of financing needed in the future, uncertainties related to metal recoveries and
                                                                                             and mine operations
                                                                                                                                                                                                                                                         other factors. Readers are cautioned to not place undue reliance on forward-looking information because it is possible that
           Sue-Dianne Copper-Silver-Gold Project Accomplishments                         •   Continue building relationships with financial institutions to upgrade the               Board of Directors                                    26           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 responsi-
           •   Completed NI 43-101 compliant Mineral Resource estimate                       Company’s profile and improve market performance                                         Officers and Managers                                 27           bility to update or revise it to reflect new events or circumstances, except as required by law.

FORTUNE MINERALS LIMITED                                                                                                                                                                                                                                                                                                                                                      ANNUAL REPORT 2008
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                    Letter to Shareholders: The board and management                            of Fortune Minerals have focused on
                                growing a company of substance with world class assets to build long-term shareholder value and
                           respond to the increasing consumption of metals and energy. The past 18 months has been a period of extraordinary volatility
                           for the world economy, severely affecting both the commodities sector and capital markets upon which                                            Fortune Minerals is dependent. We were not immune to
                           the widespread decline in investor confidence that eroded market capitalization and reduced our share                                           price to levels not seen in years. However, the fundamental
                           value of our Company continues to be supported by high quality assets that show robust economics, even                                          at today’s commodity prices.

                    We remain confident that we are in a sustained “super-cycle” of strong resource markets underpinned by long-term economic growth, combined                  During the year, Micon and P&E Mining Consultants prepared a new National Instrument 43-101 compliant resource estimate for the Company’s 100%-owned
                    with limited near-term supply. The commodity sector, in our view, has already started to improve and will strengthen with recovery of the global            Sue-Dianne copper-silver-gold deposit in the Northwest Territories. Located only 25 kilometres north of NICO, Sue-Dianne represents a future source of mill
                    economy and supply restrictions and commodity price increases exacerbated by the difficulty developing projects in some jurisdictions and recent            feed to extend the life of the NICO concentrator.
                    failure of weaker producers. Indeed, the future will belong to those companies that emerge from this financial crisis with their long-life resources
                    intact. Fortune Minerals is such a company as a result of careful management of its finances, as we advance our two key development projects,               Fortune Minerals is pursuing a strategy of joint venture development for its world class Mount Klappan anthracite coal project in northwest British Columbia.
                    NICO and Mount Klappan, toward commercial production. Our Company remains focused and determined, confident in our exceptional assets, and                  With 2.8 billion tonnes of in-situ coal resources, Mount Klappan is the largest undeveloped resource of anthracite coal in North America, and one of the largest
                    committed to becoming a leading Canadian mining company.                                                                                                    in the world. Consumption of premium anthracite coal is growing as a result of new efficient steel manufacturing methods and metallurgical processing, while
                                                                                                                                                                                supply is constrained from reductions in exports from China and Vietnam. The Mount Klappan deposits straddle the BC Railway right-of-way, only 150
                    Our wholly-owned NICO gold-cobalt-bismuth-copper project in the Northwest Territories is in the environmental assessment process to permit a                kilometres northeast of the port of Stewart and 330 kilometres from Prince Rupert and are strategically located to service the export market.
                    combined open pit and underground mine and process plant. Discussions are ongoing with a major financial institution to provide a senior debt
                    facility to finance the development. Fortune is targeting production from NICO in late 2011 or early 2012 to be a significant low-cost, Canadian            In 2008, Fortune Minerals conducted additional engineering and environmental studies, primarily on the transportation access corridors for the mine. Marston
                    producer of gold and cobalt, as well as the largest producer of bismuth in the world. New markets, many arising out of environmental concerns, are          & Marston also prepared an updated definitive feasibility study, which determined that the project would generate an attractive rate of return at today’s
                    driving growth in the consumption of both cobalt and bismuth, while the significant gold content at NICO provides a precious metal hedge during             metallurgical coal prices, and extremely robust economics at the historically high prices achieved in early 2008. With this study in hand, Fortune retained CIBC
                    volatile markets.                                                                                                                                           World Markets as its financial advisor to examine strategic alternatives for Mount Klappan, including marketing the project for joint venture development.
                                                                                                                                                                                Although this engagement has now expired, Fortune Minerals is in discussions with several companies interested in the project resulting from the engagement.
                    Management has delivered a number of significant improvements to NICO that will reduce projected capital and operating costs for the project and            At the same time, the Company has continued to build a stronger relationship with the Tahltan Nation by signing an environmental assessment cooperation
                    mitigate risk. Successful test mining has verified the mining conditions, geometry and grade of the deposit, and also reduced future capital costs          agreement in early 2009. In short, Mount Klappan is a long-life source of premium anthracite coal whose strategic importance is growing from the global
                    by completing most of the underground pre-production development. A $5 million pilot plant test at SGS Lakefield Research confirmed the process             shortage of good quality metallurgical coals.
                    flow sheet from ore to the production of high value gold doré, cobalt and bismuth cathodes, and copper and nickel by-products. Actual metal recov-
                    eries exceeded those used in the 2007 Micon definitive feasibility study for NICO, and the 2008 update indicates significantly improved project             In 2008, the board of directors of Fortune Minerals was strengthened with the addition of Jim Currie, who is the Chief Operating Officer of New Gold Inc. and
                    economics. The pilot plant results have been incorporated into the Front-End Engineering and Design nearing completion by Aker Solutions in prepa-          has extensive experience in mine development and operations. We were also pleased to welcome Tom Rinaldi as Vice President Operations and will benefit
                    ration for equipment procurement. Engineering improvements also included a 16% increase in the planned production rate to 4,650 tonnes per day              from his significant previous experience in gold leach and copper solvent extraction mining operations. Fortune Minerals raised $8 million of new capital
                    at essentially the same operating cost by reconfiguring the Golden Giant Mine grinding equipment purchased from Newmont.                                    during 2008 to offset plant, equipment and development expenditures of $22.3 million during the year. The Company continues to minimize its administrative
                                                                                                                                                                                expenses, while maintaining positive cash balances ($8.9 million of cash at year-end) invested in low risk, liquid instruments. At year-end, Fortune Minerals
                    Previous work from NICO is now being evaluated against the potential capital and operating cost savings from relocating some of the down-                   had total assets of $99 million, a measure of our investment in our projects that is much greater than the current market capitalization for the Company.
                    stream processing facilities to southern Canada where skilled labour and lower cost power are available. While we investigate southern sites
                    for the refinery, the Company is keeping both the mine-site and off-site processing options available in the permitting process. Fortune                    Although we have little control over the broader financial markets in which we currently operate, Fortune Minerals has proactively adjusted to its impacts. We
                    Minerals continues to work cooperatively with the Tlicho, Northwest Territories and federal governments, not only for development of NICO,                  remain confident in the demand trends for our products and the long-term future of the resource sector. Our board of directors, executive management and
                    but also nearby infrastructure initiatives.                                                                                                                  operations team is pleased with the Company’s accomplishments in 2008 as we move steadily closer to our goal of becoming a successful metals and
                                                                                                                                                                                 coal producer operating in mining friendly jurisdictions in Canada.
                    Dismantling of the equipment and buildings purchased from Newmont’s Golden Giant Mine at Hemlo, Ontario is largely complete. Some of these
                    assets will be relocated to NICO to materially reduce capital costs for its development. Newmont has also agreed to extend the deadline for
                    removal of this equipment from Hemlo until April 2011 in order to allow additional time for storage. Fortune Minerals is reducing the net cost
                    of dismantling its Golden Giant Mine assets by several million dollars from the sale of surplus equipment, scrap metals, and precious metals
                    recovered from the equipment.                                                                                                                                                                                                      Robin E. Goad, President and C.E.O.                  George M. Doumet, Chairman

FORTUNE MINERALS LIMITED                                                                                                                                                                                                                                                                                                              ANNUAL REPORT 2008
6                                                                                                                                                                                                                                                                                      7

                    Introduction: Fortune’s 100%-owned NICO gold-cobalt-                                                            bismuth-copper deposit is the largest known IOCG (Olympic Dam-
                         type) deposit in Canada.                             Discovered by Fortune in 1996, NICO has had more      than $65 million of work carried out and is now in the environmental assessment process to permit a combined
                           open pit and underground mine and process plant. Notably, most of the pre-production development         for the underground part of the mine has already been completed as part of two $10 million test mining programs
                           conducted in 2006 and 2007. The mining conditions, geometry and grade of the deposit were verified       and a composite sample of ore collected for a $5 million pilot plant test that was recently completed at SGS
                           Lakefield Research Limited in Ontario. This pilot plant proved the process flow sheet and production     of high quality metal products, and also improved the recoveries for metals from earlier estimates that were used
                           in the Company’s definitive feasibility study prepared by Micon International Limited in 2007. Fortune   Minerals is in discussions with financial institutions for a senior debt facility to finance construction of the mine
                           and ancillary facilities.

                                                                                                                                         1.   Reinforcing the collar for the NICO mine                                                  #
                                                                                                                                              ventilation shaft.

                                                                                                                                         2.   NICO mine site with stockpiles of ore
                                                                                                                                              covered to prevent water infiltration.


                                                                                                                                                                                               NICO is located 160 kilometres northwest of the City of Yellowknife in the southern
                                                                                                                                                                                               part of the Northwest Territories. The project is only 22 kilometres west of the
                                                                                                                                                                                               Snare hydro complex, 50 kilometres north of the community of Whatì, and 85
                                                                                                                                                                                               kilometres north of Behchoko and the highway to Edmonton, Alberta. Although
                                                                                                                                                                                               currently accessible by winter road, the Canadian, Northwest Territories and
                                                                                                                                                                                               Tlicho governments, together with private industry, are re-aligning this road for
                                                                                                                                                                                               upgrade to an all-season gravel road.

                    GOLD-COBALT-BISMUTH-COPPER PROJECT                                                              2

FORTUNE MINERALS LIMITED                                                                                                                                                                                                                                                ANNUAL REPORT 2008
8                                                                                                                                                                                                                                                                                                                                                                      9

           Mineral Reserves and Resources: NICO contains Proven and Probable                                                                                                                                    Mine and Process Plant: The NICO reserves will support a minimum
                  Mineral Reserves of 21.8 million tonnes containing 760,000 ounces of gold,                                                                                                                           15-year mine life at 4,000 tonnes of ore/day (1,460,000 tonnes/year)
             61 million pounds of cobalt, and 77 million pounds of bismuth or, an equivalent 3.2                                                                                                                  production rate used in the 2007 Micon feasibility study. Recent engineering studies have
             million ounces of gold at the base case metal price assumptions used in the 2007                                                                                                                     determined that the grinding mills Fortune purchased from the Golden Giant Mine at Hemlo, Ontario can be re-configured to increase the
             Micon feasibility study. Copper and nickel by-products will also be produced as a result of processing the cobalt, but were not                                                                      production rate by 16% to 4,650 tonnes/day (1,696,000 tonnes/year) at essentially the same operating cost. Ores sourced from the pit will be

             quantified in the current Mineral Reserve estimates. The ore reserves are contained within a larger Mineral Resource inventory, which at lower Net Smelter                                           mined by conventional truck and shovel methods. Approximately 30% of the mill feed during the first two years of the mine-life will be sourced

             Return (NSR) cut-off value sensitivities, contains in excess of 57 million tonnes. A significant amount of these lower grade resources will be mined to access                                       from the underground part of the mine using open stoping methods, scoop trams, and underground haul trucks.

             the ore and can be processed during periods of higher metal prices.
                                                                                                                                                                                                                  Ores will be processed by conventional crushing, grinding and flotation to generate gold-bearing cobalt and bismuth concentrates. Significant
                                                                                                                                                                                                                  parts of the NICO mill and concentrator have already been purchased from the Golden Giant Mine. Cobalt will be processed by pressure acid
             OPEN PIT MINERAL RESERVES (Cut-off C$32.21/t NSR)
                                                                                                                                                                                                                  leach of the cobalt concentrate, followed by ion exchange and electro-winning to produce 99.8% cathode (equivalent to Umicore Grade A).
             Classification                                                                       Tonnes                          Au (g/t)                        Bi (%)                        Co (%)
                                                                                                                                                                                                                  Bismuth will be processed by acid leach of the bismuth concentrate, followed by electro-winning to produce 99.5% cathode. Gold is
             Proven Mineral Reserve                                                          7,058,000                              1.14                           0.16                            0.11
                                                                                                                                                                                                                  recovered by cyanidation of the cobalt and bismuth leach residues. Copper and nickel carbonate are also produced as a by-product of the
             Probable Mineral Reserve                                                       13,555,000                              0.70                           0.16                            0.13           cobalt circuit. Fortune has recognized an opportunity for significant capital and operating cost reductions by relocating the hydrometallurgical
             Total Open Pit Reserve                                                         20,613,000                              0.85                           0.16                            0.13           part of the process plant to a location in southern Canada with lower power and labour costs. The Company is actively looking at various sites
                                                                                                                                                                                                                  for this plant.
             UNDERGROUND MINERAL RESERVES (Cut-off C$77.13/t NSR)
             Classification                                                                       Tonnes                          Au (g/t)                        Bi (%)                        Co (%)
             Proven Mineral Reserve                                                             231,000                             5.32                           0.13                            0.13
             Probable Mineral Reserve                                                           973,000                             5.01                           0.20                            0.15
             Total Underground Reserve                                                       1,204,000                              5.07                           0.19                            0.14

             Classification                                                                       Tonnes                          Au (g/t)                        Bi (%)                        Co (%)
             Proven Mineral Reserve                                                          7,289,000                              1.27                           0.16                            0.12
             Probable Mineral Reserve                                                       14,528,000                              0.99                           0.16                            0.13
             Total Mineral Reserve                                                          21,817,000                              1.08                           0.16                            0.13

                                                                                                                                 Gold (oz)                    Bismuth (lbs)                Cobalt (lbs)
             Total                                                                                                               759,700                       76,956,000                 60,603,000

             NSR CUT-OFF ($C/t)                                                                   Tonnes                          Au (g/t)                        Bi (%)                        Co (%)                                                                          2

             $100                                                                            1,031,735                              8.19                           0.21                            0.15
             $70                                                                             2,924,869                              5.02                           0.23                            0.17                                                                             1.   Grinding circuit for Fortune’s pilot plant at SGS
             $50                                                                             6,088,021                              3.26                           0.22                            0.17                                                                                  Lakefield Research in Ontario.

             $20                                                                            29,819,415                              1.09                           0.14                            0.12
                                                                                                                                                                                                                                                                                    2.   3-dimensional structural model of the proposed
             $10                                                                            57,225,948                              0.65                           0.10                            0.09
                                                                                                                                                                                                                                                                                         NICO grinding plant that was previously in use at
             The Mineral Reserve and Resources for the NICO deposit were estimated by Micon International Limited and P&E Mining Consultants Inc. based on NSR cut-off values and base price assumptions of                                                                              the Golden Giant Mine at Hemlo.
             US$525/oz for gold, US$16.50/lb for cobalt and US$4.50/lb for bismuth. Details of the Mineral Reserve and Resource estimates are contained in Fortune’s Annual Information Form available on the
             Sedar Website ( Mr. Terrence Hennessey, P.Geo. and Mr. Eugene Puritch, P.Eng. are the Qualified Persons for this work in accordance with National Instrument 43-101.

FORTUNE MINERALS LIMITED                                                                                                                                                                                                                                                                                                                                ANNUAL REPORT 2008
10                                                                                                                                                                                                                                                                       11

             Feasibility Study: The economics for the NICO development was assessed in a definitive feasibility study completed in January 2007
                                       by Micon International Limited (Micon) and a number of additional engineering and metallurgical consultants. This study concluded that
                  the project will generate a very attractive rate of return for the development at conservative base case metal                price assumptions. In 2008 Micon, prepared an update to this study as a result of the materially improved metal
                  recoveries achieved in the flotation part of the Company’s pilot plant test at SGS Lakefield Research. The                    2008 study did not include updates for the capital and operating costs for the project as these are being updated
                  in the Front-End Engineering and Design work currently being conducted by Aker Metals, a division of Aker                     Solutions Canada Inc. Results of the Micon studies are summarized in the table below.

             Sensitivity Scenario               FX rate   Au Price   Co Price   Bi Price        Pre-Tax 8%          Pre-Tax   Initial Capital
                                                US$/C$    US$/oz     US$/lb     US$/lb            NPV C$             IRR           C$
             2007 Feasibility Base Case          0.84      525.00     16.50       4.50        143.7 million         18.3%     215 million
             2008 Updated Base Case              0.97      750.00     20.00     10.00         360.7 million         32.3%     215 million
             April 2008 Metal Prices             0.97      900.00     50.00     16.00        1,499.7 million        97.2%     215 million

             Sensitivity                                                            Unit                 Change               NPV impact
             Gold price                                                            US$/oz                  25.00               5,407,000
             Cobalt price                                                          US$/lb                  1.00               21,827,000
             Bismuth price                                                         US$/lb                  1.00               20,611,000
             Exchange Rate                                                        US cents                  1.0                7,666,000
             Initial Capital Cost                                               US$ million                    25             16,969,000
             Operating Cost                                                          %                     10%                36,785,000

                                                                                                                                                         1.   Plan of the NICO minesite, plant, and surface facilities, open pit,
                                                                                                                                                              and waste rock and tailings impoundment areas.

                                                                                                                                                         2.   Tlicho employees constructing test cells for the monitoring of
                                                                                                                                                              runoff from pilot plant tailings and waste rock at the NICO site.

                                                                                                                                                         3.   Fortune President Robin Goad and 2006 Site Superintendent
                                                                                                                                                              Charlie Sobey inspect the ore during underground test                                           3
                                                                                                                                                              mining at NICO.


FORTUNE MINERALS LIMITED                                                                                                                                                                                                                                  ANNUAL REPORT 2008
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             Metal Markets: Using the increased project feed rate of 4,650 tonnes/day, NICO will have an estimated average annual production
                            annual production of 81,200 ounces of gold in the first two years, and then 27,840 ounces for the remainder of the mine life.
                    Average annual production of cobalt and bismuth will be 4 million pounds and 4.2 million pounds, respectively.                                                Notably, NICO will be the largest producer of bismuth in the world. Copper and nickel will also be produced as

           Gold is a significant co-product in the NICO deposit and represents a counter cyclical hedge, particularly with the                                                                 Cobalt is a high-strength, magnetic metal that has had a relatively steady 20-year increase in demand
           current economic and geo-political uncertainties, which is driving investors to gold as a store of wealth. The price of                                                             in both chemical and metallurgical applications. The greatest market growth has been in chemicals, and primarily those
           gold at the time of writing this report is more than US$ 950/ounce. NICO also presents an opportunity to participate in two specialty metals whose consumption                      used in the manufacture of high performance nickel metal hydride and lithium ion rechargeable batteries used to power portable electronic
           is growing as a result of increasing use in traditional applications as well as new technologies, including markets resulting from concerns for the environment.                    devices, such as cellular telephones, computers, power tools, MP3 players, and toys. Approximately five to seven pounds of cobalt is also contained
                                                                                                                                                                                               in the batteries used to power each hybrid-electric and plug-in-electric car whose popularity is growing with concerns over rising fuel costs and
             AVERAGE GOLD PRICE (US$/oz)                                                                                                                                                       air quality emissions. Cobalt catalysts are also required in petroleum refining, liquid natural gas, and the manufacture of automobile tires and

             2004                    $410                                                                                                                                                      plastics. Metallurgical uses for cobalt include super-alloys for the aerospace industry, cutting tools, cemented carbides and industrial magnets.
                                                                                                                                                                                               Cobalt is a food additive (vitamin B12), and is used for pigments and audio recording tape. The market for cobalt in 2008 was approximately 65,000
             2005                       $445
                                                                                                                                                                                               tonnes with annual compounded growth at approximately 8% over the past five years. Consumption is expected to nearly double to 120,000
             2006                                   $603
                                                                                                                                                                                               tonnes in the next few years, as a result of Asian economic growth and the demand for electric cars. The price for 99.8% cobalt metal is currently
             2007                                            $695                                                                                                                              approximately US$ 17/pound and prices in April 2008 reached more than US$ 50/pound.
             2008                                                          $872
             2009 Q1                                                          $908                                                                                                               COBALT MARKET (Tonnes)
                                                                                                                                                                                                 2004                                      49,000
                                                                                                                                                                                                 2005                                              55,000
           Bismuth is a relatively uncommon metal, recognized by scientists as one of the safest metals. This, together
                                                                                                                                                                                                 2006                                                   60,000
           with its other physical and chemical properties makes bismuth ideal for numerous pharmaceuticals and medicines, including Pepto-bismol®, bandage
           dressings, cosmetics, and medical devices. Bismuth’s other unusual properties include its very high density, low melting temperature, and the fact that, like                         2007                                                         65,000
           water, it expands upon cooling, making it ideal for a variety of chemicals, fusible alloys, and dimensionally stable alloys and compounds. Although similar                           2008                                                         65,000
           to lead in its physical properties, bismuth is not toxic and is replacing lead in solders for plumbing and electronics, brasses, alloys used in hot-dip galvanizing,
           paint pigments, ceramic glazes, ammunition, radiation shielding and free-cutting steel. A growing use for bismuth is in the production of bismuth-tellurium                           AVERAGE COBALT PRICE (US$/lb)
           alloys for electricity generation from heat recovery, and coolants for compact discs. Bismuth consumption is about 15,000 tonnes with annual growth                                   2004                            $24.28
           of about 10%. Again, much of this growing demand has come from Asia. However, supply constraints have held back the bismuth market, an issue being
                                                                                                                                                                                                 2005           $15.67
           exacerbated by the fact that most bismuth production comes as a by-product from lead mining. Thus, as lead consumption is constrained by concerns
                                                                                                                                                                                                 2006                   $17.72
           over toxicity, bismuth is expected to remain in tight supply. Bismuth is currently selling for about US$ 10/pound and prices reached US$ 20/pound in
           2008.                                                                                                                                                                                 2007                                     $29.69
                                                                                                                                                                                                 2008                                                         $40.22

             AVERAGE BISMUTH PRICE (US$/lb)                                                                                                                                                      2009 Q1           $16.40

             2004 $3.39
             2005        $4.08
             2006           $4.89
             2007                                                           $13.76
             2008                                            $11.19
             2009 Q1                            $8.44                                                                                                                                                                               Cobalt-bearing lithium ion and nickel
                                                                                                                                                                                                                                    metal hydride batteries are used to power
                      Bismuth is used in Pepto-bismol® and other medicines, coatings on                                                                                                                                             personal portable electronic devices and
                      compact discs, and lead-free solders for electronics and plumbing.                                                                                                                                            hybrid-electric and plug-in electric vehicles.

FORTUNE MINERALS LIMITED                                                                                                                                                                                                                                                                                                                ANNUAL REPORT 2008
14                                                                                                                                                                                                                                                                                                               15

           Sustainable Development: Fortune has been actively collecting baseline                                                                                 Golden Giant Mine, Hemlo, Ontario: In 2006 and 2008, Fortune
                    environmental data at NICO and access road since 1998 through Golder                                                                                  purchased all of the buildings, equipment and an inventory of spare
               Associates Limited. Work has included traditional use, archaeology, socio-economics, vegetation, wildlife, habitat mapping,                          parts from the Golden Giant Mine at Hemlo Ontario for $3.3 million from
               hydrogeology, surface hydrology, water quality, fisheries, meteorology and geochemistry studies. In 2008, Fortune conducted a program to             Newmont Canada Ltd. (Newmont) and Mindecom Industrial Constructors
               consolidate the ore piles from its earlier test mining programs at the site and cover them to prevent metal leaching while the project undergoes     Limited (Mindecom). These assets will provide lower cost, used equipment for use at NICO to materially reduce the
               its environmental assessment. These ore piles will be the first ores processed in the proposed NICO plant.                                           capital costs. Fortune has a team of employees and contractors working at the Golden Giant site, including the principal contractor
                                                                                                                                                                    Tri-Venture FE&C. As of the date of this report, Fortune had completed approximately 80% of the dismantling and salvage of high value
               NICO is located on Crown lands that are surrounded by                                                                                                process, electrical and structural equipment from Golden Giant. It is being stored at the Hemlo site for eventual relocation to NICO and
               fee simple lands owned by the Tlicho Government that                                                                                                 Newmont recently agreed to extend the deadline for its removal to April 2011. Notably, Fortune is not responsible for environmental
               were established pursuant to a landmark agreement                                                                                                    liabilities at the Hemlo site other than to remove the assets to their foundations.
               with the governments of Canada and Northwest
               Territories. Fortune has been working collaboratively                                                                                                In addition to the equipment being salvaged for re-use at NICO, Fortune has been selling surplus equipment on the used equipment market.
               with the Tlicho since its first exploration programs and                                                                                             Fortune has also identified gold, silver and other valuable metals that are contained in materials and residues within the buildings and
               was the first company to establish an office in the Tlicho                                                                                           equipment it purchased. These materials have been collected and the metals are being recovered as part of two joint venture agreements.
               capital of Behchoko. The Company is in discussions with                                                                                              Fortune is further reducing its net cost of dismantling the Golden Giant Mine facilities through the sale of scrap and other high value
               the Tlicho Government for an impacts and benefits                                                                                                    materials, including stainless and structural steels, aluminum and copper.
               agreement for mutual respect, cooperation and eco-
               nomic benefits.


                                                                                                     1.   Tlicho citizens listen to a company presentation in
                                                                                                          the community of Whatì.

                                                                                                     2.   The NICO development presents many opportunities
                                                                                                          for northern and aboriginal businesses in providing
                                                                                                          employment and demand for services during
                                                                                                          construction and operations for the mine.
                                                                                         2                                                                                                                                         1

                                                                                                                                                                    1.   Fortune is recovering gold and silver from residues and
                                                                                                                                                                         other materials contained in the Hemlo equipment.

                                                                                                                                                                    2.   Sunset at Golden Giant with the crusher building in the
                                                                                                                                                                         process of being dismantled for relocation to NICO.

                                                                                                                                                                    3.   The ball mills at Golden Giant are being reconfigured
                                                                                                                                                                         for reuse at NICO allowing for a 16% increase in                                      3
                                                                                                                                                                         production rate to 4,650 tonnes of ore per day.

FORTUNE MINERALS LIMITED                                                                                                                                                                                                                                                                          ANNUAL REPORT 2008
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                    Fortune’s 100% owned Sue-Dianne copper-silver-gold deposit contains a near-surface Mineral Resource
                          that is amenable to low-cost, open pit mining with a low waste to ore strip ratio. The current Mineral Resource                                                                                                        #
                           contains 177.4 million pounds of copper, 977,000 ounces of silver and 22,600 ounces of gold and the          deposit remains open for expansion to the east at depth. Sue-Dianne
                           is located only 25 kilometres north of Fortune’s NICO deposit and proposed mill and concentrator.            Metallurgical tests carried out at SGS Lakefield indicate high recov-
                           eries can be achieved for copper, silver and gold from this deposit using simple flotation. A high value     cathode copper product can also be produced by pressure acid leach
                           and electro-winning in a similar plant to that which is proposed for NICO. Sue-Dianne, therefore, presents   an excellent opportunity to supply incremental mill feed to extend the
                           life of the NICO process plant.

                                                                                                                                                           MINERAL RESOURCE ESTIMATES (0.40% Cu Cut-Off Grade)
                                                                                                                                                           Classification         Tonnes            Cu (%)               Au (g/t)        Ag (g/t)        Cu (millions lbs)   Au (oz)      Ag (oz)
                                                                                                                                                           Indicated            8,444,000               0.80              0.07             3.2                 149.1         19,000       855,000
                                                                                                                                                           Inferred             1,620,000               0.79              0.07             2.4                  28.3          3,600       122,000

                                                                                                                                                           The Mineral Resources for the Sue-Dianne deposit were estimated B. Terrence Hennessey, P.Geo. of Micon and Eugene J. Puritch,
                                                                                                                                                           P.Eng. of P&E Mining Consultants, using a 0.40% copper cut-off grade.

                                                                                                                                                             AVERAGE COPPER PRICE (US$/lb)
                                                                                                                                                             2004                                              $1.40
                                                                                                                                                             2005                                                                         $2.10
                                                                                                                                                             2006                                                                                                                 $3.06
                                                                                                                                                             2007                                                                                                                           $3.29
                                                                                                                                                             2008                                                                                                                           $3.29
                                                                                                                                                             2009 Q1                                            $1.54

                                                                                                                                                                                                                1.     Block model of the Sue-Dianne
                                                                                                                                                                                                                       copper-silver-gold deposit (red) with
                                                                                                                                                                                                                       drill holes and conceptual open pit.

                                                                                                                                                                                                                2.     Mineralized drill core from the
                                                                                                                                                                                                                       Sue-Dianne deposit.


                    COPPER-SILVER-GOLD DEPOSIT
FORTUNE MINERALS LIMITED                                                                                                                                                                                                                                                                   ANNUAL REPORT 2008
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                    Introduction: Fortune’s wholly-ownedmaking Klappan
                                                              Mount                                                               project in northwest British Columbia contains 2.8 billion
                         tonnes of high rank anthracite coal,       this the                                                      largest undeveloped deposit in North America and one of
                           of the largest in the world. More than $85 million of work has been carried out                        at Mount Klappan by Fortune Minerals and also by Gulf Canada Resources Limited prior to being
                           taken over by ConocoPhillips. This included test mining of more than 200,000 tonnes of coal for        processing in a pilot plant test at the site and producing 100,000 tonnes of various coal products
                           for trial cargos to customers in North America, Asia and Europe. Mount Klappan is the only near-term   anthracite development in the western world and is in the environmental assessment process to
                           permit a mine, process plant and related infrastructure to sell metallurgical coal products to the     overseas steel industry. Fortune is actively pursuing a strategy to partner the project.

                                                                                                                                                  Fortune’s coal licenses cover more than 150 square
                                                                                                                                                  kilometres of lands straddling the B.C. Railway right-of-                           #
                                                                                                                                                  way, 150 kilometres northeast of the port of Stewart and
                                                                                                                                                  330 kilometres northeast of the port of Prince Rupert.
                                                                                                                                                  The rail bed provides road access to the site from
                                                                                                                                                  Highway 37, and track has been installed to within 150
                                                                                                                                                  kilometres south of the proposed mine.


                              MOUNT KLAPPAN
                    ANTHRACITE COAL PROJECT

                                                                                                                                                                                                                   3-dimensional model of the proposed Lost Fox
                                                                                                                                                                                                                   mine pit and waste roack dumps.

                                                                                                                                                                                                                   Pilot plant for the 1985-86 test mining and
                                                                                                                                                                                                                   trial cargo of 100,000 tonnes of clean
                                                                                                                                                                                                                   coal products.

FORTUNE MINERALS LIMITED                                                                                                                                                                                                                                          ANNUAL REPORT 2008
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             Mineral Reserves and Resources: Several Mineral Resource and Mineral Reserve estimates have been prepared for Mount Klappan
                                  by Marston & Marston Inc. (Marston). Coal has been identified in more than                                                                                                          30 seams to a depth of 300 metres in four deposit areas referred to as the Lost Fox, Hobbit-Broatch, Summit and
                     Nass deposits. Global resources are more than 2.8 billion tonnes of in-situ anthracite coal, 108 million tonnes                                                                                  of which are classified as Measured, 123 million tonnes as Indicated, and 2.6 billion tonnes in the Inferred and
                     Speculative classes. In 2005, Marston updated the Mineral Resources and Mineral Reserves for the Lost                                                                                            Fox deposit area identifying Proven and Probable Reserves of 102 million in-situ tonnes for the initial open pit mine.
                     In 2007, Marston completed a pre-feasibility economic assessment of a thermal coal option, which identified                                                                                      reserves of 106 million in-situ tonnes.

             Area                                               Measured (MT)                   Indicated (MT)              Demonstrated (MT)                Inferred (MT)               Speculative (MT)
             Lost Fox                                                        107.9                         109.5                              217.4                     91.5                           749.6
             Hobbit-Broatch                                                        –                         13.5                              13.5                    258.4                           753.0
             Summit                                                                –                             –                                  –                      9.6                         508.9                                                                                       1.   Lost Fox mine plan for the open pit, waste rock
             Nass                                                                  –                             –                                  –                        –                         201.5                                                                                            dumps and process plant.

             Total                                                           107.9                         123.0                              230.9                    359.5                         2,213.0                                                                                       2.   Coal processing in the 1985-86 pilot plant.

                                                                                                                                                                                                                                                                                                   3.   The “I” coal seam at Lost Fox was test mined
                                                                                                                                                                                                                                                                                                        in 1985-86.
                                  In Situ Coal Reserves (MT)                                                                                      10% Ash Product Reserves (MT)
             Measured                         Indicated                     Total In-Situ                                       Proven                           Probable                     Total Product
             85.6                                16.1                               101.7                                       51.6                                 9.2                                 60.8

             LOST FOX THERMAL COAL RESERVES                                                                                                                                                                                  1
                  In-Situ Coal Reserves (MT)
             Proven                             Probable                                                               TOTAL RESERVES (MT)                          ROM COAL STRIP RATIO (bcm/t)
             89.5                                    16.8                                                                                     106.3              6.6 - life of mine (5.9 - 1st 25 yrs)

             MT = millions of tonnes, ROM = Run-of-Mine, Bcm/t = bank cubic metres/tonne
             The Mount Klappan Mineral Resource and Mineral Reserve estimates were prepared in 2002, 2005, and 2007, respectively, by Marston Canada Ltd. in compliance with National Instrument 43-101.
             Richard Marston, P.E. is the Qualified Person responsible for the estimates. For further information on the details of these estimates, please refer to the Company’s disclosures on the Sedar website



FORTUNE MINERALS LIMITED                                                                                                                                                                                                                                                                                                                              ANNUAL REPORT 2008
22                                                                                                                                                                                                                                                                                                                                                                      23

                              Bankable Feasibility Study:
             Marston has completed several feasibility studies for the Lost Fox deposit area, including the 2005 bankable feasibility study that was
              updated in 2008. This 2008 study assessed an open pit mine, wash plant and infrastructure to support 3 million tonnes of annual clean coal production over a minimum 20 year mine-life. The product was
                    assumed to be 10% ash pulverized coal injection (PCI) coal for sale to the overseas steel industry with                                           potential to diversify into additional metallurgical and thermal coal products. A new 100 kilometre short-cut haul
                    road between the mine and Highway 37 has been engineered in order to truck the coal to the port of                                                Stewart, as well as improvements to the Stewart loading terminal. Alternatives have also been assessed for the
                    transportation of coal to the loading ports by rail or a slurry pipeline. In 2009, the town of Stewart conducted                                  a study on an alternative port development that would be suitable for shipping coal from Mount Klappan.

                                                                         Charge Carbon                  PCI               Sinter / Thermal            Thermal                UPDATED 2008 ECONOMICS AT COAL PRICE SENSITIVITIES
                                                                             Product                 Product                  Product                 Product                FOBT PRICE                                                   PRE-TAX                  PRE-TAX NPV                    AFTER-TAX             AFTER-TAX NPV                    CASH
             Size                                                           35X6mm                   50X0mm                  50X0mm                  0.5X0mm                                                                                     IRR            (8%) DISCOUNT                               IRR         (8%) DISCOUNT               COST/TONNE
             Fixed Carbon (%)                                                 84.8                     82.6                    77.5                     67.4                                                                                                         (C$ millions)                                          (C$ millions)                 US$
             Ash (%)                                                            8                       10                      15                       25                  US$ 110                                                           7.8%                             ($8)                      4.2%                      ($119)                 $85
             Volatiles (%)                                                     6.4                      6.5                     6.2                      6.6                 US$ 120                                                         14.8%                            $280                      10.5%                          $83                 $85
             Sulphur (%)                                                       0.5                      0.5                     0.5                      0.6                 US$ 130                                                         20.6%                            $536                      15.3%                        $256                  $87
             Residual Moisture (%)                                             0.9                      0.9                     1.1                      1.1                 US$ 140                                                         26.0%                            $790                      19.9%                        $428                  $89
             Total Moisture (%)                                                 9                        9                      10                       10                  US$ 150                                                         31.3%                         $1,052                       24.2%                        $599                  $90
             HGI                                                              40-45                   40-45                    40-45                   40-45                 US$ 175                                                         43.6%                         $1,690                       33.9%                      $1,013                  $94
             Energy Kcal/Kg                                                   7,639                   7,423                    6,830                   5,957                 US$ 200                                                         55.9%                         $2,346                       43.2%                      $1,436                  $97
             Energy GJ/t                                                      32.0                     31.1                    28.6                     25.0                 US$ 225                                                         67.8%                         $2,991                       52.1%                      $1,852                 $100
             Energy Btu/lb                                                   13,741                   13,352                  12,285                   10,716                US$ 250                                                         79.3%                         $3,636                       60.8%                      $2,268                 $103
                                                                                                                                                                             US$ 275                                                         90.7%                         $4,281                       69.1%                      $2,684                 $107
             The 2008 feasibility study showed attractive rates of return for the development at base case prices of US$175 per tonne for the first 5 years, and             US$ 300                                                       101.9%                          $4,921                       76.9%                      $3,096                 $110
             then US$150 per tonne for the remainder of the 20-year mine life. Coal price sensitivities were also assessed between US$100 to US$300 per tonne,
                                                                                                                                                                             Note: The cash cost per tonne of coal includes government production royalties, which escalate with higher revenues resulting from increased coal price sensitivity.
             the latter being the price for ultra-low volatile PCI contracts in 2008. The study was initially conducted using a Canadian to U.S. dollar exchange
             rate of C$1.00 = US$ 0.97 (C$ 1.03 = US$ 1.00). This currency exchange rate became rapidly out of date and the economics was subsequently
             re-assessed using C$1.00 = US$0.83 (C$ 1.20 = US$ 1.00). The base case economics shows a 40.9 % pre-tax internal rate of return (IRR) and 8%
             discounted net present value (NPV) of C$ 1.28 billion. The economics at coal price sensitivities are up to 101.9% in pre-tax IRR and C$ 4.9 billion at                                                                                      1.     B.C. Rail right-of-way and roadbed provides access to the Mount Klappan site.
             US$300 per tonne of coal product.
                                                                                                                                                                                                                                                         2.     Coal from the Mount Klappan trial cargo being loaded at the terminal in Stewart.

                                                                                                                             PRE-TAX                 AFTER-TAX
             IRR                                                                                                              40.9%                    31.2%
             NPV (8% DISCOUNT)                                                                                              C$ 1,281 M               C$ 749 M
             CAPITAL (1ST 3 YEARS)                                                                                                       C$ 656 M

FORTUNE MINERALS LIMITED                                                                                                                                                                                                                                                                                                                                 ANNUAL REPORT 2008
24                                                                                                                                                                                                                                                                                                                             25

             Anthracite Market: Anthracite is a very high quality, premium coal with the highest rank, carbon and energy content of all coals and
                            accounts for only about 1% of world coal reserves. Unique properties                                                          make anthracite suitable for use in a broad range of premium metallurgical, thermal, water purification and
                  composite materials products, including fuels used to manufacture cement and generate electricity.
                                                                                                                                                                           Thermal uses for anthracite include smokeless fuels used for space heating, the manufacture of heating and cooking briquettes, and kiln
                                                                                                                                                                           fuels used to make cement and lime. Approximately 40% of the world’s electricity is generated from coal-fired thermal power plants,
               World annual production of anthracite is approximately 400 million tonnes, most of which is                                                                 many of which are configured to burn anthracite, including new “clean coal” technologies that reduce greenhouse gas emissions. The
               consumed locally for power generation. Notably, China produces half of the world’s anthracite                                                               rising cost of oil is also making gasification and coal-to-oil liquefaction technologies economically attractive. This technology has been
               and, as a result of increasing domestic use, has recently become a net importer. Vietnam, the                                                               used for decades to make superior quality synthetic diesel and jet fuels in South Africa, and new plants are now being constructed in
               world’s second largest producer, is also now curtailing exports in order to satisfy its own domestic                                                        China, the U.S.A. and other parts of the world. Notably, a recent study prepared by the Massachusetts Institute of Technology on the
               energy requirements. This, combined with increasing consumption and depletion of other                                                                      future of coal concluded that its use will increase for both power consumption and as an alternative source of synthetic fuels. The study
               deposits, are restricting supply in traditional global markets. Mount Klappan is one of only three                                                          also concluded that even with the additional of carbon capture and sequestration of greenhouse gasses, coal will be cheaper and
               significant new anthracite projects in the development stream, and the other two, located in                                                                represents a more secure source of energy supply than other fossil fuels, including oil and natural gas.
               Russia and China, are unlikely to be able to service the export market due to domestic demand.
               Prices for anthracite products currently range from US$80 to more than US$300 per tonne
               depending on the quality and market application.                                                                                                        Joint Venture Discussions: In 2008, Fortune retained CIBC World Markets as its
                                                                                                                                                                                   financial advisor to assess various alternatives for advancing the Mount Klappan project.
               Anthracite use is growing, particularly for pulverized coal injection (PCI) products used in the                                                            This engagement has now expired, however, the Company continues to conduct discussions with a number of companies interested in
               manufacture of steel. Injection of finely powdered coal directly into the blast furnace, reduces the   Above: Briquettes
                                                                                                                                                                           participating in the development of Mount Klappan, including companies introduced under the CIBC engagement.
                                                                                                                      Below: Lump coal and filter media
               consumption of coke making it a more efficient and cost effective method of manufacturing steel over
               conventional blast furnace technology. Notably, injection processes favour the high carbon and low
               volatile content of anthracite, which allows for higher injection rates over PCI produced from lower                                                    Sustainable Development: Fortune has been actively collecting baseline envi-
               rank bituminous coals. The natural high carbon content of anthracite also makes it suitable as a                                                                  ronmental data at Mount Klappan and its access corridors since 2004 through Rescan
               blend coal to reduce consumption of coke in conventional steel industry blast furnaces, in sintering                                                        Environmental Services Ltd. and Rescan Tahltan Environmental Consultants (RTEC). In addition to the
               plants, and as a binding agent to make iron ore pellets. Coarse, low-ash anthracite is used as a                                                            recent work, the project has benefited from studies undertaken in the 1980’s and 1990’s by Gulf. Work has included traditional use,
               reducing agent in aluminium and titanium processing and for charge carbon used in electric arc                                                              archaeology, socio-economics, human health/country foods, land use, soils, vegetation, wildlife, habitat mapping, hydrogeology, surface
               furnace steel manufacturing processes. Sized, low-ash anthracite is also used to make carbon                                                                hydrology, water quality, wetlands, fisheries, meteorology and metal leaching/acid rock drainage potential studies. The project is currently in
               filters for water purification and carbon composite materials.                                                                                              the environmental assessment pre-screening process to permit the mine and was recently given major project status to streamline the
                                                                                                                                                                           permitting of the mine.

                  AVERAGE COAL PRICES (US$/tonne)                                                                                                                                                                                              In the early 2009, Fortune completed an environmental assessment
                  2004 - ULV PCI      $46                                                                                                                                                                                                      cooperation agreement with the Tahltan Nation. This agreement sets
                  2004 - Coking          $57                                                                                                                                                                                                   out the mutual respect of each others interests and the framework for
                                                                                                                                                                                                                                               efficient navigation through the environmental assessment process.
                  2005 - ULV PCI                         $100
                                                                                                                                                                                                                                               Fortune is in discussions with all First Nations that may be affected by
                  2005 - Coking                                    $125
                                                                                                                                                                                                                                               the development.
                  2006 - ULV PCI                   $88
                  2006 - Coking                                  $115
                  2007 - ULV PCI                 $80
                  2007 - Coking                          $100
                  2008 - ULV PCI                                                                                                       $275                                                                                                    1.    January 2009 execution of the Environmental
                  2008 - Coking                                                                                                                  $300                                                                                                Assessment Cooperation Agreement between
                                                                                                                                                                                                                                                     Fortune and the Tahltan Central Council. Pictured
                  2009 Q1 - ULV PCI                      $100
                                                                                                                                                                                                                           1                         here are Anita McPhee, TCC Chair and George
                  2009 Q1 - Coking                                   $130                                                                                                                                                                            Doumet, Fortune Chairman.

FORTUNE MINERALS LIMITED                                                                                                                                                                                                                                                                                        ANNUAL REPORT 2008
26                                                                                                                                                                                                                                                                                                                    27

           Board of Directors:                                                                                                                                    Officers and Managers:
                           William A. Breukelman, M.B.A., B.A.Sc., P.Eng., Mississauga, Ontario.                                                                  OFFICERS                                                              MANAGERS
                           Bill is Chairman and Principal of Gedex Inc., a unique company with a high definition airborne gravity gradiometer technology that
                                                                                                                                                                  George M. Doumet, M.Sc. M.B.A., Chairman of the Board                            Michael T. Samuels, B.Eng.
                           will empower a new discovery industry. Bill is also Chairman and Principal of Business Arts Inc., a technology incubation firm. Bill
                           previously Chaired Imax Corporation and helped it grow into a multinational entertainment company.
                                                                                                                                                                  (Profile under Board of Directors)                                               Director of Technical Services
                                                                                                                                                                                                                                                   Mike is a graduate chemical engineer with 12 years
                           James Currie, B.Sc. (Hons.), P.Eng., Abbotsford, British Columbia.                                                                     Robin E. Goad, M.Sc., P.Geo., President and C.E.O.                               experience in mine operations and management,
                                                                                                                                                                  (Profile under Board of Directors)                                               including as Plant Superintendent at the Ekati Diamond Mine
                           Jim is Executive Vice President Operations and COO for New Gold Inc. With 30 years of mining engineering and management
                                                                                                                                                                                                                                                   and Chief Metallurgist at the Miramar Con Gold Mine.
                           experience, Jim has worked on gold, base metals, coal and industrial minerals projects. Jim was previously Vice President
                                                                                                                                                                  David A. Knight, B.A., LL.B., Secretary
                           Operations with Miramar Mining Corp., General Manager in Mauritania for First Quantum Minerals Ltd., and has worked for major
                                                                                                                                                                  (Profile under Board of Directors)                                               Richard P. Schryer, M.Sc., Ph.D.
                           mining companies, including Placer-Dome Inc., Noranda Inc. and Fording Coal Limited.
                                                                                                                                                                                                                                                   Director of Regulatory and Environmental Affairs
                           Carl L. Clouter, Gander, Newfoundland.                                                                                                                  Julian B. Kemp, BBA, C.A.                                       Rick is an aquatic scientist with more than 20 years of
                           Carl is a commercial pilot and former owner of a charter airline in the Northwest Territories. He has been active in mineral
                                                                                                                                                                                   Vice President Finance and C.F.O.                               experience in mine permitting, environmental assessments,
                                                                                                                                                                                   Julian is a Chartered Accountant with 20 years                  environmental studies and monitoring, primarily with Golder
                           exploration in conjunction with more than 35 years of flying in Canada. Carl previously served as a Sentencing Justice of the Peace
                                                                                                                                                                                   of mining company experience, including senior                  Associates Ltd.
                           and on the board for the mineral development assistance program for the Government of the Northwest Territories.
                                                                                                                                                                                   financial roles in William Resources, Hillsborough
                           George M. Doumet, M.Sc., M.B.A., Vancouver, B.C. (Chairman of the Board)                                                                                Resources and Canadian Mine Development.                        Edward Farrell
                           George is a chemical and nuclear engineer and President and CEO of Federal White Cement Ltd., a specialty cement manufacturer.
                                                                                                                                                                                                                                                   Hemlo Site Superintendent
                                                                                                                                                                                   Thomas R. Rinaldi, B.Sc.                                        Ed has 29 years of project management and mine
                           George is also a principal in other businesses involved in the mining, production, marketing and distribution of specialty building
                           products, chemicals and industrial minerals. George also serves as a director of the Portland Cement Association.
                                                                                                                                                                                   Vice President Operations                                       maintenance experience including at the Ekati Diamond
                                                                                                                                                                                   Tom is a mining engineer with 26 years of                       Mine and Endako Molybdenum Mine in Canada and William
                           James D. Excell, B.A.Sc., Kelowna, B.C.                                                                                                                 management and engineering experience with gold,                Resources’ gold operations in Mexico.
                                                                                                                                                                                   copper and industrial mineral producers including,
                           Jim is a metallurgical engineer and President of Narego Solutions Inc. Jim was previously President and CEO of North American
                                                                                                                                                                                   Magma Copper, USMX and United Salt.                             Adam G.J. Jean, H.B.A., C.A.
                           Palladium Inc., and a senior executive at BHP-Billiton. With more than 35 years of mining experience, Jim has managed coal
                           operations in Australia and the USA, and the Ekati Diamond and Island Copper mines in Canada. Jim is also a director of Diamondex
                                                                                                                                                                                                                                                   Adam is a Chartered Accountant with seven years of
                           Resources Ltd. and the Prospectors and Developers Association of Canada.
                                                                                                                                                                                                                                                   experience in audit, financial assurance and risk advisory
                                                                                                                                                                                                                                                   roles with Ernst & Young LLP.
                           Robin E. Goad, M.Sc., P.Geo., Arva, Ontario. (President and CEO)
                           Robin is a geologist and President and CEO of Fortune Minerals Limited. With 28 years of experience in the mining and exploration
                           industries in Canada and internationally, Robin has worked for major mining companies and as a consultant to resource
                                                                                                                                                                                                                                                   James P. Mucklow, M.E.Sc., P.Eng.
                           companies and government. Robin is a director of the NWT and Nunavut Chamber of Mines and has served as President and
                                                                                                                                                                                                                                                   Environment and Community Affairs Manager
                           director of other TSX listed mineral exploration and development companies.
                                                                                                                                                                                                                                                   Jim is a geological and environmental engineer with 20
                                                                                                                                                                                                                                                   years of experience including, as Environmental Manager
                           David A. Knight, B.A., LL.B., Oakville, Ontario.
                                                                                                                                                                                                                                                   and Senior Hydrogeologist with Wardrop Engineering, Trow
                           David is a partner with Macleod Dixon LLP, Barristers and Solicitors, a major Canadian law firm with extensive experience in the
                                                                                                                                                                                                                                                   Consultants, and Golder Associates.
                           resource sector. David specializes in securities law, including public and private financings, take-overs, stock exchange listings,
                           mergers and acquisitions and regulatory compliance and acts for investment dealers and issuers. David is a member of the Law
                                                                                                                                                                                                                                                   Patrick J. Moloney, B.Sc., B.Ed.
                           Society of Upper Canada.
                                                                                                                                                                                                                                                   Human Resources Manager
                                                                                                                                                                                                                                                   Pat has 11 years of human resources, labour relations and
                           Mahendra Naik, B.Comm., C.A., Unionville, Ontario.
                                                                                                                                                                                                                                                   negotiations experience, including HR management roles
                           Mahendra is a Chartered Accountant and CFO of Fundeco Inc., a private investment company. Mahendra is a founding director of
                                                                                                                                                                                                                                                   with Keiper Limited, Coca-Cola Bottling Company and
                           IAMGOLD Corporation, a TSX and NYSE listed mid-tier gold mining company. As former CFO, Mahendra led negotiations for the              Administration in London from left to right:
                                                                                                                                                                                                                                                   Philips Lighting.
                           Sadiola Mine and Yatela Mine joint ventures with Anglo American and was responsible for raising more than US$ 550 million in           Rena Zhu, Jennifer Kraemer, Ursula Carr
                           project debt and equity financings. Mahendra is also a director of several private companies.                                          and Susan Andersen.

FORTUNE MINERALS LIMITED                                                                                                                                                                                                                                                                               ANNUAL REPORT 2008

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