Fortune Bay (FRR) - Uranium and Gold Tier 1 Exploration

Fortune Bay Corp. is an exploration and development company with 100% ownership in two advanced gold exploration projects, and two uranium exploration projects in Canada, Saskatchewan (Goldfields Project), and Mexico, Chiapas (Ixhuatán Project), both with exploration and development potential. The company is also advancing the 100% owned Strike and Murmac uranium exploration projects, located near the Goldfields Project, which have high-grade potential that is typical of the Athabasca Basin.

Fortune Bay has a goal of building a mid-tier exploration and development company through the advancement of its existing projects and the strategic acquisition of new projects to create a pipeline of growth opportunities. The company’s corporate strategy is driven by a Board and Management team with a proven track record of discovery, project development, and value creation.

Matt Gordon caught up with Dale Verran, CEO, Fortune Bay. Mr. Verran has over 20 years of international experience in the mining and mineral exploration industry. He is a recognized business and technical leader with a proven track record of project generation, discovery, and project advancement, in both Africa and Canada. Most recently, Mr. Verran served as Vice President, Exploration for Denison Mines Corp, a Lundin Group company.

He has previously served as Executive Technical Director for a large independent exploration group operating in Africa, Remote Exploration Services (Pty) Ltd (Mineral Services Group), and as Exploration Manager for Manica Minerals Limited, a private prospect generator company with an extensive multi-commodity portfolio of projects in Africa. Mr. Verran holds a Bachelor of Science degree in Geology from the University of KwaZulu-Natal, a Bachelor of Science in Geology (Honors) from the University of Cape Town, and a Master of Science in Exploration Geology from Rhodes University. Mr. Verran is a registered P.Geo (APEGS) and Professional Natural Scientist (SACNASP).

Company Overview

Fortune Bay is targeting shallow, high-grade uranium on the northern end of Canada’s prolific Athabasca Basin. Geophysical surveying is in progress, which will be followed up by drilling in 2022. The company has two large-scale Athabasca Basin uranium projects. It is fully funded for drilling in 2022. The company is led by an experienced team with a track record of uranium discoveries. The company was founded in 2016 and is headquartered in Nova Scotia, Canada. It is listed on the Toronto Stock Exchange (TSX-V: FRR), the Frankfurt Stock Exchange (FWB: 5QN), and the OTC Markets (OTCQX: FTBYF).

Fortune Bay is a junior mining company that was recently listed on the OTC markets. It has 2 advanced gold projects, namely the Goldfields project in Saskatchewan and the Ixhuatan project in Mexico. Both projects feature 3Moz gold across the categories. The company is focused on the Goldfields project which is currently under a PEA (Preliminary Economic Assessment). It is also advancing 2 uranium projects that are located near the Goldfields project in Saskatchewan. The uranium projects have the potential for high-grade, Athabasca basin-related uranium deposits.

The company initiated drill operations on its uranium assets in late spring which continued into the summer months. It has 2 uranium projects, namely the Strike and the Murmac projects. Drilling was initiated on the Strike project. The company also carried out ground gravity surveys through the winter and into early spring in order to test the EM conductors. Notably, EM conductors are favourable graphitic rocks that are typically hosted in Athabasca-related deposits. The company conducted gravity surveys which led to the identification of some really nice gravity targets. The new data was consolidated with the historical data, including the Cameco data sets where the past operator had carried out detailed boots-on-the-ground prospecting. Fortune Bay is looking to drill the targets in the spring.

The company was looking to test out EM conductors that hadn’t been drilled before and identified the hallmark features that define uranium deposits. The company drilled 9 holes and found highly favourable results. In all 9 holes, the company intersected the rock tubs that featured graphitic rocks. It was able to confirm the presence of graphite in these rocks. The company identified the structures that are conducive to fluid movement. Additionally, It also saw the alteration and found elevated radioactivity, indicating the presence of uranium. The assay results are still awaited. The company is really excited by the results so far as they indicate the presence of a mineralized system on the property. As per the company, the right geological processes have been in play, and there’s a high chance of discovering a nearby uranium deposit in the area through elevated counts of radioactivity.

Notably, these uranium structures are being tested for the first time. The company anticipates that the market reaction will follow once it can drill some high-grade uranium. The assay results from the drill campaign are expected over the next 3-6 weeks. Once the results are in, the company will be able to see the actual numbers in terms of U₃O₈ (Triuranium Octoxide) in the rock and it will be in the position to report the findings. The results will also allow the company to start looking for the right types of pathfinders and the right settings for the deposits. Initial results confirm the presence of mineralization.

According to Fortune Bay, timing the market is often tricky. The company devised a plan, conducted drilling, and shared the initial results. It has plans to publish the assay results once they are back. The uranium market prices remain strong at $50/lb, but the equity markets are generally down. The company is hopeful that the markets will improve later this year, which, in turn, will enable it to raise capital at better prices.

Fortune Bay’s initial plan was to test the 9 drilled targets across the strike length and interpret the initial results in order to take the project forward. This was the first pass on testing the targets. The company also announced high-potential targets for the Murmac project last month. The Murmac project has the right ingredients for a high-prospect project and the company is planning to test it out. It is looking to determine the most favourable areas across the 2 projects in order to highlight focus areas.

The company anticipates the presence of a high-grade intercept from Murmac, which will be confirmed through generated results. Overall, it seeks to test the conductors across its properties and determine the best follow-up areas. The historical data suggests that the deposits have the right ingredients for a potential discovery.

Financial Considerations

Fortune Bay had its last capital raise in December 2021. The investors have insisted that the company pursues both gold and uranium as it offers diversification. The gold assets help the company underpin the project. It has an advanced project in Goldfields with 1Moz indicated and 200,000oz inferred resource. The Goldfields project has a well-developed infrastructure along with a development permit. A PEA is also in progress.

At the same time, the company also has a significant upside in uranium exploration. It has plans to eventually spin the uranium assets as a separate business. The 2 uranium projects could stand up really well as a standalone company, enabling Fortune Bay to add other projects to the portfolio. However, this decision will largely be based on market movement during the fall or the end of 2022. During this time, the company will seek to raise additional capital.

The Uranium Market

The uranium market has seen limited M&A (Mergers and Acquisition) activity in recent times. Smaller companies are coming in and are hoping to advance the projects into a positive market. The market pricing has come down from $60/lb to $50/lb range in the last 12 months, however, the current pricing is still considered strong for uranium.

Kazakhstan is responsible for 40% of the world’s uranium production. The growing security of supply fears has had a definite impact on the uranium market. People are looking for safer jurisdictions to source uranium. The US has seen an increase in uranium activity, and some companies are performing really well. Meanwhile, the EU is pushing for green nuclear projects, which is also a contributing factor to the current market conditions. The uranium pricing remains fairly strong.

Since the end of last year, the uranium juniors have come off from previous highs. According to Fortune Bay, this is a great time to invest in the commodity. There are hopes that the extensive exploration will help advance a lot of development projects. US and Canadian uranium projects are likely to move forward, enter production and come online.

The Ixhuatán Project

Fortune Bay’s Ixhuatán project in Mexico is a pipeline asset. It has a 50-year mining concession on the project and believes holding it won’t be a problem. It is important to note that holding the project would have an associated cost. The company has plans to turn the Ixhuatán into a pipeline asset sometime in the future. The project has tremendous exploration potential. It has a 1.7Moz gold resource across categories.

The company has found nice grades near surface, which can potentially generate revenue. Additionally, the project also has a big porphyry system that offers exploration potential at depth. The system is giving rise to the epithermal system, similar to Campamento, which is a resource featuring skarn mineralization. The porphyry itself has drill holes that offer significant potential.

The company has plans to either make the project a pipeline asset or spin it out in the near term in order to unlock some value. It has been in discussions with various interested parties, however, the company is yet to come across the right transaction. It is seeking the right partner for the shorter term in order to unlock value or potentially develop it into a pipeline asset in the future. The technical team recognizes the project’s potential. In order to initiate work, the company would need to raise additional capital. The company has determined the technical work and the budget required to move the project forward.

The Ixhuatán project is located in Southern Mexico and Chiapas, which isn’t a well-established mining space. On the community level, additional work is needed in order to establish access. The company needs to negotiate with the local community in order to gain access. Notably, the company has had successful negotiations in the past and is confident that this success can be replicated. Developing these relationships and entering negotiations will require quite a bit of work, and the company intends to start working on the community side of the equation before initiating the groundwork.

Saskatchewan is a top-ranked jurisdiction which makes operating much easier. During the covid times, the company chose to focus on the Saskatchewan asset. Meanwhile, the Mexican asset remains a strong pipeline asset that can unlock value. Mexico has had its fair share of challenges when it comes to mining companies. The operational risk in the jurisdiction is comparatively higher. While states such as Chihuahua and Sonora have a well-established mining history, the states in southern Mexico need more awareness regarding the mining and exploration process. Overall, the company believes that Mexico has a strong resources sector despite the challenges.

The Goldfields Project

The Goldfields project has a long history of past exploration. The project is based 25km from Uranium City. It benefits from a well-developed infrastructure along with road access to Uranium City which also has an airport. A power line runs from the Charlotte River power station to the project. Notably, this power line is responsible for supplying power to Uranium City as well. The Goldfields project has a valid development permit in place. In 2008, the previous owner conducted an EIA (Environment Impact Assessment) that was approved by the Government of Saskatchewan. The EIA is for an open pit mining and mill operation with a 5,000t daily capacity.

The Goldfields project has a 1Moz gold indicated and a 200,000oz inferred resource. The indicated resource has between 1.3g/t-1.4g/t grades.  It is an open pit project. The company has developed a new resource model which incorporates a geological model. It has already identified some high-grade spots near the surface which can be utilised early in the mine’s life.

From a metallurgical perspective, the project is a pure gold deposit. Based on the flow sheet, around half of the gold comes through gravity. Notably, the initial flow sheet envisaged flotation followed by a leaching process. The company is looking at a gravity process, followed by leaching, and finally a carbon and pulp process. Overall, the project’s metallurgy is very simple and straightforward.

The company is looking at around 93%-94% recoveries, a major improvement from the 2011 PFS (Preliminary Feasibility Study). Currently, the Goldfields project is undergoing a PEA which was announced in April 2022. The PEA features 2 main phases. The first one comprises mine-to-mill optimization. The company is exploring different business case scenarios for the project and is looking to choose the most preferred option that would be a part of the PEA. It is also considering various permitting conditions and social factors.

Fortune Bay is looking at 3 potential scenarios. Having a permit in hand is an advantage for the company as it can start operating and eventually decide to expand operations through amendments to the permit. As part of the PEA, the company is exploring different mining scenarios and has plans to choose the ideal path that will be taken through a detailed PEA.

The company is working on 2 major aspects. On the development side, a PEA is underway. It is looking to demonstrate the project’s value and production capability to the market. On the exploration front, the company has already carried out drilling in 2021. In the first phase of operations, the company found really good results. Through drill operations, the company stepped out of the current resources at Ifeona’s 2 deposit spots and successfully expanded the mineralization footprint.

It hit some really promising intersections at the Box deposit, which is located right outside the resource. It found grades of 8g/t at 12m. The company also hit 13.22g/t over 8m. It is looking to evaluate whether the deposit is open-pitiable or has underground potential as part of the ongoing PEA. It anticipates that the deposits could be expanded in order to build a bigger project.

Fortune Bay is currently looking to determine the project’s true value in its current state and is also exploring expansion possibilities. The PEA can be used to determine the project’s economic viability and resource potential. This would guide the company in its future exploration efforts while expending funds in the best way possible.

The PEA will be key in determining the true worth of the Goldfield project. Based on the findings, the company will decide whether to continue de-risking and go to a PFS-level study while simultaneously working on further exploration. It has already identified a few areas of interest it is looking to follow up. This process, however, would largely be guided by broader project economics. Once the project’s worth is determined, the company will be in a position to update the resource through a PFS or a Feasibility Study in the future.

Fortune Bay’s management team consists of geologists with extensive experience in exploration and development. Based on the project’s parameters, the company might turn to production, but that is only one of the possible scenarios. It is also open to monetizing the asset through a sale or a partnership opportunity. There is a market for such projects as gold mining companies often look to replenish their reserves by picking up projects that are based in safer jurisdictions.

The company’s project stands out as it has robust economics and differentiating qualities. The Goldfields project is based in Saskatchewan, which was recently ranked the number one jurisdiction in Canada by the Fraser Institute. It has a strong infrastructure with on-site power lines, road access, and a nearby airport in Uranium City. The environmental screening has already been done along with the permitting side of the social considerations. The area has a strong mining history. In fact, Uranium City was previously a mining town. Based on conversations with the First Nations community, there’s a strong desire for mining projects in the region.

To find out more, go to the Fortune Bay website