Fortune Minerals Ltd. and Posco Canada Ltd.'s Klappan coal joint venture has retained Marston Canada Ltd., a division of Golder Associates Ltd., to update the geological model, coal reserves and feasibility study for the Lost Fox deposit area at the Mount Klappan anthracite metallurgical coal project in northwest British Columbia. KCJV is a joint venture between Fortune (80 per cent) and Poscan (20 per cent), the Canadian subsidiary of Korean steel producer Posco, the world's third-largest steel producer. Fortune has also engaged Deloitte & Touche Corporate Finance Canada Ltd. to help attract additional strategic and financing partners for the project. The updated Marston study will incorporate the results of additional drilling and survey data that were conducted earlier by Fortune as well as updated coal price assumptions that are anticipated to materially impact the reserves for the proposed mine. The new reserves and updated feasibility study are expected to be completed in mid-2012.

Fortune conducted additional drilling at the Lost Fox deposit area in 2005. This work was done to verify the geological model and coal resources in an area that had previously been classified as inferred within the former pit shell and were therefore excluded from the reserves and financial model. Drilling was also carried out to test for lateral extensions to the coal seams beyond the former pit shell, as well as to collect geotechnical and environmental information to support project permitting. The results of this work were very successful in confirming the coal and its geometry within the former pit configuration, and also in extending the Lost Fox deposit beyond the pit limits. Fortune also conducted a detailed airborne LIDAR laser topographic survey of the Lost Fox deposit area and proposed mine site that was not incorporated into the previous geological model. This more detailed survey information will improve the accuracy of calculating the waste to coal ratios and strip volumes. The previous Lost Fox reserves were also based on lower coal price assumptions in 2005 and are now out of date. Marston is updating the geological model and the in situ and clean coal reserves to reflect the results of the new drilling and survey data and more up-to-date coal price assumptions.

Based on the updated Lost Fox geological model and reserve estimates, Marston will reoptimize the open-pit shell and develop new production schedules. Marston will also redesign the mine rock stockpiles, and locations for the wash plant and site infrastructure based on the revised pit limits. The initial planned annual production rate will remain at three million tonnes per year and the design of the process plant and railway infrastructure will not be changed from the previous Lost Fox feasibility study that was conducted by Marston in 2010. However, the capital and operating costs and financial model and sensitivities will be updated based on current information. Ted Minnes, PE, at Marston is the qualified person responsible for the new reserve estimates and feasibility study update.

The Mount Klappan project consists of 15,866 hectares of coal exploration licences, located 330 kilometres northeast of the port of Prince Rupert. The licences straddle the existing BC Rail right-of-way and its largely completed railbed, 150 kilometres north of the current terminus of track at Minaret where the Canadian National Railway is operating under a long-term lease. KCJV and CN are collaborating on an upgrade and extension of this railway to the project site.

Mount Klappan is an advanced development project with previous exploration expenditures of more than $87-million. It is one of the world's premier anthracite metallurgical coal projects with measured resources of 107.9 million tonnes, indicated resources of 123.0 million tonnes and inferred resources of 359.5 million tonnes(1) (see news release dated June 22, 2004). The 2010 Lost Fox feasibility study was based on an open-pit mine and wash plant producing three million tonnes of premium ultralow-volatile pulverized coal injection product per year for export to the overseas steel industry and an ability to diversify production with other metallurgical coal products. The study was based on railway transportation of clean coal to the port of Prince Rupert for loading onto ocean vessels at the Ridley coal terminal. The study demonstrated robust economics with run-of-mine coal reserves of 106.3 million with a 25-per-cent pretax internal rate of returns and $1.03-billion pretax net present value at a base case price of $175 (U.S.) per tonne of 10-per-cent ash PCI product (see news release dated Nov. 4, 2010)(2).

(1) The Mount Klappan mineral resource and mineral reserve estimates were prepared in 2004, 2005 and 2010, by Marston, in compliance with National Instrument 43-101. Richard Marston, PE, is the qualified person responsible for the estimates and supervising the preparation of the 2010 Lost Fox feasibility study.

(2) Further information regarding the Mount Klappan mineral resource and mineral reserve estimates and feasibility studies is available from the company's disclosures under the company's profile on SEDAR.