November 29, 2000
Listing: TSE, symbol “FT”
Issued Capital: 17,586,669
NEWS RELEASE
2000 THIRD QUARTER INTERIM REPORT
Fortune Minerals is pleased to present its third quarter report, together with unaudited, interim financial statements for the nine months ended September 30, 2000. Operations during this period were concentrated on the Company’s 80% owned NICO cobalt-gold-bismuth deposit in the Northwest Territories and completion of a 34-hole drill program recommended by Strathcona Mineral Services Limited (Strathcona). Results of this work were very positive with the accomplishment of all of the objectives of the program, including reduction of waste rock stripping, lateral expansion of the gold zone, and verification of the continuity and evenness of grade within the deposit. Recent developments in the bismuth market may also have an impact on deposit economics with growing consumption in various lead replacement applications because of lead-toxicity and related environmental issues. One new market in particular is an alloy developed for the hot-dip galvanizing sector, which is already having an impact on consumption with anticipated significant growth potential. NICO is one of the largest bismuth resources in the world, however, its recovery as a by-product of cobalt and gold was not initially contemplated in the most recent economic analysis, largely because of the impact production would have on the market. The new resource estimates and economic analysis in preparation by Strathcona is reconsidering bismuth recovery. Work was also carried out on the Company’s nearby Sue-Dianne copper-silver deposit 20km north of NICO. Notably, all of the adjoining mining claims between NICO and Sue-Dianne were recently purchased by Phelps Dodge Corporation, the second largest copper producer in the world.
Fortune is also the managing partner and holds a 30% interest in Formosa Environmental Aggregates Ltd., an industrial mineral development company. Formosa recently received a decision from the Ontario Municipal Board (OMB) with respect to its application for an extraction license from the Ministry of Natural Resources at the proposed Greenock high calcium limestone quarry in southwestern Ontario. The main issue at the hearing held earlier this year was the impact dewatering would have on a brook trout inhabited coldwater stream traversing the property. Fisheries are a federal jurisdiction and this issue was referred to the Department of Fisheries and Oceans (DFO) shortly before the hearing. The decision rendered by the OMB Member recognized “the existence of a high priority resource on the site and the evident utility of its extraction for public benefit”. However, he also recognized the “superior jurisdiction of the DFO in the matter of Fisheries and Fishery Habitats”. Further, “should the DFO having satisfied itself on the construction and management of the extraction process as it affects fishery habitats provide such an evaluation to the Minister, such a clearance could be determinative of this application”. All of the remaining issues can be dealt with as conditions to the license. Consequently, Formosa is in discussions with the DFO in order to resolve their requests for additional information about the site.
With respect to the financial statements for the period, Fortune expended $867,607 in exploration. The Company had revenues of $169,775, while incurring administrative expenses of $207,298, resulting in an operating loss of $37,523. However, a recovery of deferred income taxes resulted in net income for the period of $112,373 contributing to positive retained earnings of $608,444. The recovery is due to a change in accounting policy for income taxes adopted by Fortune in 2000 pursuant to recommendations by the Canadian Institute of Chartered Accountants. Fortune had working capital in the amount of $4,300,106 at the end of the period from which to fund exploration and development projects and pursue new ventures.
Fortune Minerals Limited
[signed]
Robin E. Goad,
President.
Further information can be obtained from Fortune Minerals at: Tel: 519-858-888, Fax:519-858-8155, Email: info@fortuneminerals.com , and Website:www.fortuneminerals.com
CONSOLIDATED BALANCE SHEET
As at September 30
2000 1999
$ $
ASSETS
Current assets
Cash and cash equivalents 1,424,277 4,638,860
Short-term investments 2,654,308 606,075
Accounts receivable 272,639 372,957
Income taxes recoverable 52,345 —
4,403,569 5,617,892
Investment in and advances to affiliated company 333,453 272,968
Capital assets 16,362 14,204
Interests in mining properties 30,164 30,164
Deferred exploration expenditures 7,403,080 6,370,661
Total assets 12,186,628 12,305,889
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued liabilities 103,463 41,353
Total current liabilities 103,463 41,353
Future income taxes 2,625,422 —
Total liabilities 2,728,885 41,353
SHAREHOLDERS' EQUITY
Share capital
Authorized
Unlimited number of common shares
Issued
17,586,669 common shares [1999 - 17,586,669] 8,849,299 11,253,573
Retained earnings 608,444 1,010,963
9,457,743 12,264,536
Total liabilities and shareholders' equity 12,186,628 12,305,889
CONSOLIDATED STATEMENT OF INCOME
AND RETAINED EARNINGS
For the nine month period ended September 30
2000 1999
$ $
REVENUE
Interest and other income 169,775 73,248
Gain on sale of Securities — 1,355,116
169,775 1,428,364
EXPENSES
Administrative expenses 143,966 228,013
Public relations 58,888 40,209
Amortization 4,444 3,260
207,298 271,482
Income (loss) before income taxes (37,523) 1,156,882
Provision for current income taxes 22,682 —
Recovery of deferred income taxes (172,578) —
(149,896) —
Net income for the period 112,373 1,156,882
Retained earnings (deficit), beginning of period 560,071 (145,919)
Change in policy [see note] (64,000) —
Retained earnings, end of period 608,444 1,010,963
CONSOLIDATED STATEMENT OF CASH FLOWS
For the nine month period ended September 30
2000 1999
$ $
OPERATING ACTIVITIES
Net income for the period 112,373 1,156,882
Add (deduct) items not involving cash
Amortization 4,444 3,260
Gain on sale of marketable securities — (1,355,116)
Deferred income tax recovery (172,578) —
(55,761) (194,974)
Changes in non-cash working capital items
Accounts receivable 42,666 (27,490)
Accounts payable 65,003 (88,702)
Taxes payable (129,345) —
Cash used in operating activities (77,437) (311,166)
INVESTING ACTIVITIES
Advances to affiliated company (48,768) (22,203)
Net decrease in short-term investments 645,692 177,250
Net proceeds on sale of long-term investment — 3,405,116
Purchase of capital assets (7,910) —
Increase in deferred exploration expenditures (877,607) (288,243)
Cash provided by (used in) investing activities (288,593) 3,271,920
FINANCING ACTIVITY
Purchase of shares — (162,242)
Net increase (decrease) in cash during the period (366,030) 2,798,512
Cash and cash equivalents, beginning of period 1,790,307 1,840,348
Cash and cash equivalents, end of period 1,424,277 4,638,860 |
