Fortune Bay Eyes a Faster, Lower Cost Start at Goldfields

0:15Today, Fortune Bay released a study from Asenko comparing a Dory plant with a lower capital concentrate option. Dory recovers modestly more gold, concentrate is simpler to build and could be staged. So how does the company decide on what option is best? Dale Varan, he is CEO of Fortune Bay. Dale, welcome back to Money Stock Daily. Hi, Michael. Thanks very much. Good to be here. Now, Dale, you released a PA last fall where you outlined a 4 ,950 ton per day Doré plant with$301 million Canadian initial capital, delivering$610 million in after-tax NPV at$2 ,600 gold. Now, you released a study today that looks at producing a gold concentrate for sale offsite instead.

1:03Simpler plant, lower upfront capital. But tell us your own words. What are the key tradeoffs that you're looking at between the two approaches? Yeah, so, I mean, firstly, there's nothing wrong with that PEA plan we produced. You know, it produces fantastic economics. It's a really robust development option for the project, which we still like and know it's feasible. But we are, you know, during this, as we build up toward PFS here, we are looking at better ways to build the project. You know, the project offers a lot of optionality. And, you know, the key tradeoffs there is really, you know, if one goes a concentrate route instead of producing a Doria on site, we're looking at a slightly lower gold recovery.

1:48Obviously, we've got to transport the concentrates, but the significant savings in initial capex. And obviously, that's a key thing to get projects going. Once the project's going under a smaller concentrate scenario with low capex, there's always the ability to build out the rest of the plant and at a later stage, start to produce dores. So we're just looking at the best way to go about getting this project in production. And obviously, a key advantage for us is our approved EIS for the project, which does contemplate an open pit mine at the box deposit of 5 ,000 ton per day mill. There's a permitted tailings there already.

2:28So under this concentrate scenario, there's also ability to scope that so it conforms to the existing approval. And that helps also not only in less capital up front, but also more timely path toward actually building this. So really excited by the results and obviously a lot to consider here as we move the project forward. Now, that EIS that you have, the approval, is something that you have flagged in your deck as kind of a key value. Maybe you could talk a little bit more about that in terms of conforming that. Do you think that that is likely if you go down the concentrate route? But also, do you have some numbers on that?

3:08But what's the cost advantages and also what's the timeline advantages in terms of actually being able to make it fit within those enviro permits? Yeah. So, obviously, you know, it's all subject to regulatory approval where this concentrate scenario actually conforms. But, you know, the way we're looking at it in terms of certainly the throughput 5 ,000 ton per day is permitted. So, you know, we got lots of room there to do that. where there's a permanent tailings already at the old, it's, you know, there's a little bit of production around the World War II era and there's a tailing storage facility right next to the box deposit.

3:43That's approved for future. So we're looking at using that initially in production. And obviously from a timing point of view, with an approved EIS, if it conforms, then we're really moving directly into approvals to construct and approvals to operate. There are certain things the government will ask for. They'll say, well, the existing EIS approval dates back to 2008. Has anything changed in the baseline conditions? Well, we've already been collecting data for that. We've been doing ongoing baseline studies. So we already have that data in hand. So we're looking at a very, you know, I don't want to commit to exact timeline, but it could be a year or so before we actually in a position to get the approvals to construct and operate and move the project forward.

4:33So it's a really exciting option. Obviously, gold prices have moved up considerably since our PEA in late 2025. Our base case there, as you mentioned, was$2 ,600 an ounce. So there's lots of optionality, and we're just looking at the best and quickest path forward to develop this mine. And obviously, CapEx is a key feature for us, and obviously looking at ways to get it going with lower upfront requirements. Now, you did note that with the Dore, that was the option in the PEA, that there was modestly higher recovery. Gold, of course, was priced at$2 ,600 in that PEA. Now we're looking at, I think probably people are putting in a base of about$3 ,600, but we're still north of$4 ,000.

5:23What would you describe as modest? Because obviously, I think you're looking at about an extra$100 per move for every point of recovery in the PEA. Yeah, so the gold recovery, it's really a few percent lower if we go the concentrate route. Because we do get a lot of the gold out through gravity. We do need to do some more metallurgical work there. So, you know, we haven't outlined exact numbers there yet, but we've got certainly a firm indication that the gold recovery from the concentrate is very good. And, you know, almost half of it coming up just through the initial gravity circuit. So it's very good gold recovery, but that is obviously a bit of a trade-off there.

6:05But certainly, you know, the concentrate scenario looks very compelling, very competitive, and has some distinct advantages, you know, in terms of that capex, in terms of that existing environmental approval, a much simpler plant and the ability to get it in production within the options to expand the plant, increase capacity, look at mining of the Athona deposit, which is not currently covered by that existing EIS approval. So lots of optionality. But, you know, we're looking at, you know, the box deposit. It sticks out of the ground. It's outcropping. cropping. There's some really nice grades on surface.

6:42So how do we access that quickly with low capital and get this into a production asset that can then produce cash flow and then expand the operation? So certainly exciting time for us in a still a very good gold market. Now, today's release says that Asenko produced capital and operating cost estimates for going down the concentrate route. You didn't disclose those numbers. Is there a reason why? Yeah, you know, you can't disclose, you know, it's not a PEA, it's a scoping study. So, you know, it's not, it's benchmarked. It's to provide the company with an indication of the trade-offs and the results from that.

7:24So we're not in a position to disclose those numbers because it's not a 43-101 PEA study, but did want to inform the market that we're busy, that we're looking at the best path forward here for the project and give them an update on really in a more sort of qualitative sense where the project could go. Now, you also said in the news released that when you produce a concentrate, there is an established market for Canadian international markets for gold bearing concentrates. What are the trade-offs? How many of them are there and what are the trade-offs? Is it just logistics in terms of a truck, in terms of how long shipping is, or what are the other factors?

8:05Yeah, you know, once you get concentrates a rail, you can really move it anywhere, anywhere in the world at relatively low cost compared to the value of that product. So certainly, you know, in Canada, there's, you know, the Horn Smelter owned by Glencore in Quebec, and there's a lot of Chinese offtakers as well. So we've had some initial discussions, you know, as one should at this stage, just around the logistics, the costs, you know, things like prepayments of the concentrates. It's also financing, project financing available if one can provide that concentrate. And those are at a very preliminary stage, but it has allowed us to broadly assess the viability of that.

8:47Obviously, there's more work to be done here, but it really also spells out the demand at the stage for particularly a concentrate like ours, which is very, very clean in terms of it. There's very few other elements or minerals in this concentrate. It's low sulfide and really just gold in the concentrate. So we're a very desirable product. And obviously we've had some interest on that from these offtakers and smelters. Dale, let's step back and just talk about other developments right now at Fortune Bay. Could we talk about Palmarosa, your other project right now? There was some community agreements, legal issues you're working for right now.

9:32What's the status? The status there is, you know, we had been working toward community agreements. We'd have some really positive meetings. And then later last year, our projects in the state of Chiapas and the government declared a protected area over a portion of our concession. And unfortunately, that does affect where our resource is. We have around 2 million ounces of historical resource there and some of our exploration targets. So we have had an ongoing case running in the state of Chiapas where we've initiated an amparo. It's a constitutional hearing. And we're waiting for outcomes there on that.

10:11So we have continued to pursue that. That's an important asset for the company. It's got resource. It's got terrific exploration potential. So we are looking to unlock that and we do need and just need to resolve this matter with the state HAPAs before we can go back to the community, establish agreements and get to work on the project again. And obviously, being worked very successfully in the past by our predecessor, Linear Gold, who delineated that resource and did some of the exploration, but still lots to do there in terms of the potential, not only in the shallow lithar cap where the epithermals are, but deeper down, we know there's a big porphyry system there that's really not explored and a lot of copper gold potential associated with that.

10:52Talking about another asset, but this is closer to you. This is in Saskatchewan. You did have a partnership with Manhattan Uranium. You were looking at the Murmac Uranium project. What was the status on drilling over the summer? Yeah, so that partnership's still ongoing. The projects are optioned out to Manhattan Uranium, and they've continued to spend on those assets. We act as the operator. so we we run the programs we you know collect a management fee there we also rent assets and things to help them run those programs so that you know we've drilled around 5 000 meters over the summer there that project's just wrapped up i'm looking forward to reporting some results there but that's ongoing you know it's those are uranium opportunities on the in the Athabasca basin with this high grade potential that doesn't cost our shareholders anything In fact, it brings in some money for us, but still provides some upside in terms of, you know, for discoveries made where we can then contribute under a JV scenario.

11:58So another extra plus for the company, you know, it's not a focus for us, our gold fields project is, but provide some non-dilutive optionality and upside for our shareholders. What's your cash position today and are you potentially doing a raise? yeah we've we've been um as always very disciplined with our cash um you know cash position has stayed roughly neutral over the summer due to revenues from from the uranium assets um but you know we've continued to obviously work at gold fields we have around four million dollars in cash just below that now um so no in no panic or anything to have to raise money you know we can certainly advance gold fields and the studies needed to order pfs here and it won't be told sometime perhaps next year that we'll be in need of another raise.

12:48Lastly, milestones over in the next 12 months and that PFS, Dale. Yeah, the key one would be that PFS. Obviously, some more studies needed, Chad, before we finalize how this development is going to look at the initial stage and how it's going to get built. So there's going to be some key studies along the way which will provide some milestones. but the PFS providing a key milestone. And who knows, that might even turn into an FS. You know, we have all our resources in indicator pretty much for the open pit. We have lots of legacy data. We're in a position where we could decide to go straight to FS to speed up the process here.

13:29So, you know, we look forward to, you know, the next few months as things evolve, getting more work done. Some of that will be a metallurgical study and then taking the next steps and look forward to keeping the market informed and there will be some news coming along. So that's really exciting.

13:48Dale Verran: Dale, thanks for speaking with Mining Stock Daily. Thanks, Michael. Thanks for having us. The information presented should not be considered investment advice. Mining Stock Daily and its affiliates are not responsible for any loss arising from any investment decision in connection with the material presented herein. Please do your own research or speak with a licensed financial representative before making any investment decisions.