May 30, 2001
FORTUNE MINERALS ANNOUNCES FIRST QUARTER FINANCIAL RESULTS
Fortune Minerals is pleased to present its First Quarter report, together with unaudited interim financial statements for the three months ended March 31, 2001. During the period, Fortune continued engineering and metallurgy towards advancing the Company’s 80% owned NICO cobalt-gold-bismuth deposit, located in the Northwest Territories. NICO is a large, low-grade deposit amenable to open pit extraction and concentration of metals by simple flotation to produce sulphide concentrates for sale and/or subsequent processing to higher value products. The deposit is located near infrastructure associated with the Snare hydro complex (20km) and past producing Rayrock mine (8km). Current work is being carried out under the supervision of Strathcona Mineral Services Limited for their updated economic assessment of the deposit, which is expected to be completed shortly.
During the first quarter of 2001, Fortune had net income of $11,746 compared to $59,525 in 2000, and is primarily due to the recovery of future income taxes in 2000. Interest income for the period was $67,317 consistent with the previous year, while administrative expenses decreased to $48,011 from $67,110. Deferred exploration expenses for the quarter were $44,618. As at March 31, 2001 Fortune had cash equivalents of $1,933,310, short-term investments of $2,099,643, and working capital in the amount of $4,215,712, sufficient to continue funding exploration of the Company’s core assets and the pursuit of new ventures.
Effective January 1, 2001, Fortune adopted the new recommendations of The Canadian Institute of Chartered Accountants with respect to accounting for research and development costs. The exemptions from these recommendations for enterprises in the development stage were removed for fiscal periods beginning on or after April 1, 2000. As permitted under the rules, prior year financial statements have not been restated. The effect of adopting the recommendations is further described in Note 1 a) to the attached interim financial statements. Primarily due to this change in accounting policy, retained earnings went from $477,997 at the beginning of the period to a deficit of $805,750 at March 31, 2001.
Fortune Minerals is an exploration company with diverse interests in projects in the Northwest Territories and Ontario. It is the operating partner in the NICO and Sue-Dianne deposits and has interests in other base and precious metals and diamond exploration projects. Fortune is the operating partner in Formosa Environmental Aggregates Ltd., an industrial mineral development company.
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 SHEETS
Unaudited
As at March 31, December 31,
2001 2000
$ $
ASSETS
Current assets
Cash and cash equivalents 1,933,310 1,236,855
Short-term investments 2,099,643 2,708,621
Accounts receivable 134,894 297,835
Income tax recoverable 105,576 99,278
4,273,423 4,342,589
Investment in and advances to affiliated company 336,172 335,139
Capital assets 14,530 15,617
Interests in mining properties 30,164 30,164
Deferred exploration expenditures 5,052,971 7,253,846
Total assets 9,707,260 11,977,355
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Accounts payable and accrued liabilities 57,711 94,059
Total current liabilities 57,711 94,059
Future income taxes 1,606,000 2,556,000
Total liabilities 1,663,711 2,650,059
SHAREHOLDERS’ EQUITY
Share capital
Authorized
Unlimited number of common shares
Issued
17,586,669 common shares 8,849,299 8,849,299
Retained earnings (deficit) (805,750) 477,997
8,043,549 9,327,296
Total liabilities and shareholders’ equity 9,707,260 11,977,355
See accompanying note
CONSOLIDATED STATEMENTS OF INCOME AND
RETAINED EARNINGS (DEFICIT)
Unaudited For the three month period ended March 31
2001 2000
$ $
REVENUE
Interest and other income 67,317 64,635
EXPENSES
Administrative expenses 43,381 37,956
Public relations 3,036 27,705
Amortization 1,594 1,449
48,011 67,110
Income (loss) before income taxes 19,306 (2,475)
Provision for (recovery of) income taxes
Current 7,560 
Future — (62,000)
7,560 (62,000)
Net income for the period 11,746 59,525
Retained earnings, beginning of period 477,997 560,071
Change in accounting policy [see note 1[a]] (1,295,493) (64,000)
Retained earnings (deficit), end of period (805,750) 555,596
Net income per common share — 
CONSOLIDATED STATEMENTS OF CASH FLOWS
Unaudited For the three month period ended March 31
2001 2000
$ $
OPERATING ACTIVITIES
Net income for the period 11,746 59,525
Add (deduct) items not involving cash
Amortization 1,594 1,449
Deferred income tax recovery — (62,000)
13,340 (1,026)
Changes in non-cash working capital items
Accounts receivable 162,941 (59,985)
Accounts payable and accrued liabilities (36,348) 91,412
Taxes payable/recoverable (6,298) 
Cash provided by operating activities 133,635 30,401
INVESTING ACTIVITIES
Advances to affiliated company (1,033) (24,798)
Net decrease in short-term investments 608,978 253,147
Purchase of capital assets (507) (5,058)
Increase in deferred exploration expenditures (44,618) (103,987)
Cash provided by investing activities 562,820 119,304
Net increase in cash and cash equivalents 696,455 149,705
Cash and cash equivalents, beginning of period 1,236,855 1,790,307
Cash and cash equivalents, end of period 1,933,310 1,940,012
See accompanying note
NOTE TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2001
1. SIGNIFICANT ACCOUNTING POLICIES
These interim consolidated financial statements follow the same significant accounting policies and methods summarized in the most recent annual financial statements, except for the accounting of deferred exploration expenditures as further mentioned in note 1[a].
[a] Deferred exploration expenditures
Effective January 1, 2001, the Company adopted the recommendations of The Canadian Institute of Chartered Accountants with respect to accounting for research and development costs. The exemptions from these recommendations for enterprises in the development stage, such as the Company, were removed for fiscal periods beginning on or after April 1, 2000. As permitted under the rules, prior year financial statements have not been restated. The effect of adopting the recommendations was to decrease deferred exploration expenditures by $2,245,493, decrease future tax liabilities by $950,000, and decrease retained earnings by $1,295,493.
Under the recommendations, the Company defers exploration expenditures relating to mineral properties where the economic feasibility of the property has been reasonably determined until the properties are brought into production. At this time, properties will be amortized over the estimated life of the ore body to which they relate or until the properties are abandoned or sold or management determines that the mineral property is no longer economically feasible or there is a permanent impairment in value, at which time the deferred costs will be written off. Payments received for exploration rights on the Company’s mineral properties are treated as cost recoveries and are credited to the cost and deferred exploration expenditures related to the mineral claims. |
