Fortune Minerals : 2020 Annual Information Form (PDF 1.70 MB)

ANNUAL INFORMATION FORM Fiscal year ended December 31, 2020

March 29, 2021

TABLE OF CONTENTS
CORPORATE STRUCTURE .......................................................................................................................................	3
Name, Address and Incorporation...................................................................................................................	3
Intercorporate Relationships ...........................................................................................................................	3
GENERAL DEVELOPMENT OF THE BUSINESS ...................................................................................................	5
Three Year History..........................................................................................................................................	5
Year Ended December 31, 2018 ..........................................................................................................	5
Year Ended December 31, 2019 ..........................................................................................................	6
Year Ended December 31, 2020 ..........................................................................................................	7
Significant Acquisitions ..................................................................................................................................	9
DESCRIPTION OF THE BUSINESS ..........................................................................................................................	9
General ............................................................................................................................................................	9
Risk Factors.....................................................................................................................................................	9
Mineral Projects ............................................................................................................................................	13
NICO Gold-Cobalt-Bismuth-Copper Deposit ...................................................................................	13
Other Northwest Territories Properties..............................................................................................	34
DIVIDENDS ...............................................................................................................................................................	35
DESCRIPTION OF CAPITAL STRUCTURE ...........................................................................................................	35
MARKET FOR SECURITIES....................................................................................................................................	35
Trading Price and Volume ............................................................................................................................	35
Prior Sales .....................................................................................................................................................	35
ESCROWED SECURITIES........................................................................................................................................	36
DIRECTORS AND OFFICERS..................................................................................................................................	36
Name, Occupation and Security Holding......................................................................................................	36
Cease Trade Orders, Bankruptcies, Penalties or Sanctions ...........................................................................	39
Conflicts of Interest.......................................................................................................................................	40
LEGAL PROCEEDINGS ...........................................................................................................................................	40
INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS ..........................................	40
TRANSFER AGENTS AND REGISTRARS .............................................................................................................	41
MATERIAL CONTRACTS........................................................................................................................................	41
INTERESTS OF EXPERTS........................................................................................................................................	41
AUDIT COMMITTEE................................................................................................................................................	41
Relevant Education and Experience..............................................................................................................	41
Pre-Approval Policies and Procedures ..........................................................................................................	42
External Auditor Service Fees.......................................................................................................................	42
Audit Fees..........................................................................................................................................	42
Audit-Related Fees ............................................................................................................................	42
Tax Fees.............................................................................................................................................	42
All Other Fees....................................................................................................................................	42
ADDITIONAL INFORMATION ...............................................................................................................................	42
SCHEDULE "A" - AUDIT COMMITTEE CHARTER ...........................................................................................	A-1
SCHEDULE "B" - GLOSSARY OF MINING TERMS...........................................................................................	B-1
In this Annual Information Form, unless otherwise specified, all dollar amounts are expressed in Canadian
dollars.

2

This document contains certain forward-looking information. This forward-looking information includes, or may be based upon, estimates, forecasts, and statements as to management's expectations with respect to, among other things, the size and quality of the Company's mineral resources, progress in permitting and 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 future metal prices. Forward-looking information is based on the opinions and estimates of management as well as certain assumptions at the date the information is given (including, in respect of the forward-looking information contained in this document, assumptions regarding the Company's ability to arrange necessary financing and obtain all necessary permits for its projects and the capital and operating costs of its projects). However, such forward-looking information is subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking information. These factors include the inherent risks involved in the exploration and development of mineral properties, uncertainties with respect to the receipt or timing of required permits and regulatory approvals, the uncertainties involved in interpreting drilling results and other geological data, fluctuating metal prices, the possibility of project cost overruns or unanticipated costs and expenses, uncertainties relating to the availability and costs of financing needed in the future, uncertainties related to metal recoveries and other factors. See "Description of the Business - Risk Factors". Mineral resources that are not mineral reserves do not have demonstrated economic viability. Inferred mineral resources are considered too speculative geologically to have economic considerations applied to them that would enable them to be categorized as mineral reserves. There is no certainty that mineral resources will be converted into mineral reserves. Readers are cautioned to not place undue reliance on forward-looking information because it is possible that 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 responsibility to update them or revise it to reflect new events or circumstances, except as required by law.

CORPORATE STRUCTURE

Name, Address and Incorporation

Fortune Minerals Limited ("FML", "the Company", or "Fortune") was incorporated pursuant to the Business Corporations Act (Ontario) by certificate of incorporation dated August 2, 1988. By certificate and articles of amendment dated March 2, 1989, FML amended its articles to remove the private company restrictions from its articles. By certificate and articles of amendment dated July 28, 1997, FML amended its articles to subdivide the common shares in the capital of the Company (the "Common Shares") on a three-for-one basis.

The Company has three subsidiaries, Fortune Minerals Saskatchewan Inc. ("FMSI"), Fortune Minerals NWT Inc. ("FMNWT"), and Fortune Coal Limited ("FCL") all of which are wholly-owned by FML. All such subsidiaries were incorporated pursuant to the Business Corporations Act (Ontario). Unless the context otherwise requires, the terms "Fortune" and "the Company" where used herein refer to FML, FMSI, FMNWT, and FCL on a consolidated basis. In 2011, FCL entered into an unincorporated joint venture, the Arctos Anthracite Joint Venture ("Arctos JV") with POSCO Canada Ltd. ("POSCAN") and POSCO Klappan Coal Ltd. ("POSCO Klappan"), a wholly owned subsidiary of POSCAN. FCL's 50% interest in the Arctos JV is accounted for by the Company as a joint operation using proportionate consolidation.

FML's registered and head office is located at 617 Wellington Street, London, Ontario, N6A 3R6, its telephone number is [phone] and its fax number is [phone]. FML is a reporting issuer in each of the provinces and territories of Canada.

Intercorporate Relationships

The following diagram sets forth the organizational structure of FML and its affiliates:

3

Fortune Minerals Limited

(Ontario)

	Fortune Coal			Fortune			Fortune Minerals
	Limited			Minerals NWT			Saskatchewan
	(Ontario)			Inc.			Inc.
	100%			(Ontario)			(Ontario)
					100%		100%
	Arctos Anthracite
	Joint Venture
(Unincorporated Joint
Venture with POSCO
	Klappan Coal Ltd.)
50%

4

GENERAL DEVELOPMENT OF THE BUSINESS

Three Year History

Fortune is a mining and resource development company with mineral deposits in the advanced exploration and development stage, all of which are located in Canada. The Company is currently focused on development of the NICO cobalt-gold-bismuth-copper deposit ("NICO Deposit") in the Northwest Territories ("NWT"). Fortune had purchased lands near Saskatoon, Saskatchewan, where it proposed to construct a hydrometallurgical refinery to process metal concentrates produced from milling ores from the NICO Deposit and produce cobalt sulphate, gold doré, bismuth ingots and oxide and copper precipitate. The municipal zoning change required to construct and operate this hydrothermal refinery was denied by the Rural Municipality of Corman Park and Fortune sold the property. The Company subsequently entered into an option to purchase an alternative site in Saskatchewan, but is also considering a number of other sites in western Canada, three of which are brownfield with existing facilities that could materially reduce the capital costs for the hydrometallurgical refinery (the "Refinery"). The vertically integrated project consisting of the planned mine, mill and the refinery are collectively referred to as the "NICO Project". Based on a completed feasibility study, the NICO Deposit contains reserves to support mining operations for more than 20 years. In addition, the Company owns the Sue-Diannecopper-silver-gold deposit ("Sue-Dianne") and the Salkeld Lake exploration project in the NWT. The Company, together with POSCAN also has a right to repurchase the licenses containing the Arctos anthracite metallurgical coal project in British Columbia ("Arctos"), within a 10-year option period, from the British Columbia Railway Company, which purchased these licenses on behalf of the British Columbia Government on May 1, 2015. Fortune is pursuing growth of shareholder value through assembly, development and operation of high quality mineral resource projects. The Company's strategy is currently focused on the NICO Project.

In pursuit of its strategy, Fortune is: (i) building and enhancing existing relationships with First Nations, local communities, governments and other stakeholders who may be impacted by and benefit from the NICO project and its proposed Refinery; (ii) obtaining environmental and operational permits for NICO; (iii) investigating potential greenfield and brownfield sites for the NICO Refinery and potential partnerships, and (iv) engaging with potential strategic and financing partners, evaluating potential transactions and acquiring the funding for the development, construction and successful commercial production of the NICO Project.

Year Ended December 31, 2018

During 2018, exploration and evaluation cash expenditures by the Company on its properties were $2,463,277, of which $2,460,366 was spent on the NICO Project and $2,911 was spent on other projects. Expenditures on plant and equipment for mining properties and corporate assets were $1,278,877.

During 2018 the Company continued to work with Hatch Ltd. ("Hatch"), P&E Mining Consultants Inc. ("P&E") and Micon International Limited ("Micon") to update the technical report on the 2014 Feasibility Study for the NICO Project. The Company had expected to issue the completed feasibility study update by the end of the second quarter of 2018, but changed the scope of the updated technical report to include options for producing metal concentrates after the Company was contacted by major diversified mining companies interested in purchasing metal concentrates directly from the NICO mine. As a result of this interest, the Company was presented with several new development scenario opportunities that the Company felt could be attractive and were worth investigating. In order to allow the flexibility of selling metal concentrates directly from the mine, the Company instructed Hatch to adjust engineering designs in order to allow for the flexibility of proceeding with, or deferring, the downstream Refinery, which resulted in a delay in the issuance of the completed feasibility study update.

On March 29, 2018, the Impact Review Board recommended that an all-season road between Highway 3 and the community of Whati ("the Tlicho Road") be approved subject to measures designed to mitigate potential environmental, social and cultural impacts. On October 26, 2018, the Government of the Northwest Territories ("GNWT") announced that the responsible ministers of the Government of Canada and the GNWT had accepted the environmental assessment approval for the Tlicho Road incorporating the modified measures

5