Since we spoke with Mr. Larry Reaugh, President & CEO of Adanac Moly Corp. www.adanacmoly.com just over a year ago at the PDAC 2005, much has happened with what promises to become the first major producing 'Primary' Molybdenum open pit mine in 25 years.
"The bankable feasibility has been received, and we have a $430 million capex to bring it into production," said Reaugh, noting that Ruby Creek's operating costs for the first five years of the plus twenty year mine life are calculated at C $5.87/lb Mo., with current prices around $27.50 a pound for Molybdenum. "I don't see that demand declining." The first five years of production will have a grade of .08+% Mo.
Reaugh emphasized that the Taku River Tlingit First Nations (TRTFN), the native group from the area that has the historical land claims, has been and will continue to be part of the socio-economic and environmental process, along with the residents and stake holders of Atlin and the provincial government of B.C.
"TRTFN sat down at the table with us and Klohn (Klohn Crippen Berger Ltd. which has provided geotechnical engineering services for site water management, tailings storage and waste rock storage), and we've addressed their concerns," said Reaugh. In July of 2005, the corporation entered into an agreement and signed a work plan initiative presented by the TRTFN.
Permits for the project have been accepted for filing and the formal 180 day approval period began on August 4, 2006. "The one thing that's not within our control is the process of the permits going through the government," he explained. "At least four major departments have to be involved, and each one has concerns they want addressed in the permit application. They always seem to come in piecemeal, which also slows down the process. It's a matter of just keeping abreast of what they want and turning it back as quickly as we can."
"The next part of the puzzle is to line up the money," said Reaugh. "We were approached by a very significant fund here in Canada that has over $100 billion under management. One of their subsidiaries feels there is enough interest in the project to secure debt financing, so they are working on that now. At the same time, we are working with a couple of mining groups in Ontario for the equity side of the financing. That's going to go a little slow because we've experienced -- along with everybody else -- a big correction in the stock market. But, with supply and demand the way it is -- commodities [generally] turn around first, then the stocks turn around and the interest comes back in the market -- whether it's in the fall or early winter I couldn't say."
The Company awarded the 8,000 - 10,000 meter (26,240 - 32,800 feet) drilling contract to E. Caron Diamond Drilling of Whitehorse, Yukon. Drilling commenced on June 28, 2006 and two drills have accomplished twelve -45º angle holes in the high grade section of the proposed open pit.
According to a July 11, 2006 news release, "These holes are required for metallurgical testing but will also determine whether vertical fractures contain a significant amount of Molybdenum, as indicated by the 10,000 tonne bulk sample test performed by Kerr Addison in 1970. Their work increased the grade over the drill holes by up to 25%. The Ruby Creek deposit is currently defined by vertical drill holes that may not have adequately tested the vertical fractures. They may have been better represented in Kerr Addison's larger bulk sample. Results from the first Adanac angled pit hole indicate increased grades over the previous vertical holes by a substantial amount. If the Kerr Addison bulk sample results hold true and are re-proven by the angled hole drill testing we may see a very substantial increase in grades, reserves and a substantial lowering of production costs.
"Three angle holes will be drilled to the southeast to define the extent of the deposit further and two angle holes will be drilled to the northwest, north of the Adera Fault, a northeast trending structure that down-drops the deposit to the north. They will be drilled as step-out holes on either side of a hole (#310) drilled by Adanac Moly Corp. in 2004 that returned .11% Mo over 113 meters at the foot of the hole."
Scheduled to operate at 20,000 tonnes per day for more than twenty years, the Ruby Creek Molybdenum Project is designed to produce high grade premium product through conventional crushing, grinding (HPGRS) (high pressure grinding roll system) and chemical free flotation to produce a Molybdenite (MoS2) concentrate.
With numerous companies constantly inquiring about purchasing our future concentrate, Reaugh commented that the Moly market is strong. "There have been maybe half a dozen or more companies that have been interested and approached us so far. We have a good, clean concentrate that runs about 54 to 55 percent, so it's readily capable and should be used in the chemical side applications for Moly, ie: lubricants & catalysts, as well as in metal alloys. That's where Molymet sees the shortfall coming, (in catalysts/lubricants) because there are not many pure primary Molybdenum producers, from which this product is used. That's why they'd like to lock us down for ten years or so with off-take agreements"
Molymet is a Chilean corporation that processes Molybdenum concentrates in its production facilities in Chile, Mexico, Belgium and Germany. Molybdenum concentrates are treated at the plants for the production of technical Molybdic oxide, Ferromolybdenum, high purity Molybdenum chemicals and Molybdenum metal powders. These products are supplied to the steel, catalyst and specialty metal manufacturing industries worldwide. According to Reaugh, Molymet met with Adanac earlier this year. "They're interested in a long-term contract, for 20 to 30 percent of our production, and others are in line as well."
Reaugh noted that the Ruby Creek project has been delayed due to the permits. "We're going to have to look at the timeline as being about eight months out of date, because we can't and we won't be starting construction this year. We're not going to get construction started on the ground until 2007, which will put us behind by about eight months."
In other news, there's a lot of excitement happening in Goldrea at the moment. Larry Reaugh is also President & CEO of Goldrea Resources Corp. www.goldrea.com a Gold & Base Metals exploration company, which has been focusing on becoming a Gold producer in China.
"We have discovered two new zones down dip from the existing open pit operation at Daye Mine, and we're currently sinking a 300 meter, 5 compartment concrete-lined shaft (currently down 115 meters) into that area to develop resources and raise ore to the existing mill" said Reaugh, noting that the mill is rated at 1,750 tonnes, but it's currently doing 2,400 tonnes a day.
"It's an operating mine," he said, "with extensive modern infrastructure and facilities." "With everything falling into place for us, we should be able to finalize the purchase of the Daye mine by the end of October of this year, which would make us a Gold producer for China in 1st Q 2007. That's key -- people have to focus on the shallow open pit mining material that has been mined. These types of deposits dip into the ground for 1,000-plus meters; that's never been exploited, and we've certainly proven that it's out at least 800 or 900 meters down dip now." "The Daye mine has repeatedly produced an average of 65,000 oz/p/yr from their open pit operation for some years now."
The reality is they've only been open pit mining the near surface tip of the iceberg, and most of the richer mineralization will probably be down dip," he continued, adding that the location for that type of facility is crucial. "It's in an area that currently has about 20 to 30 deposits being mined, with no facility to process it all. So, while we're developing tonnage, we'll be able to run at maximum capacity by actually toll milling ore. They're now tolling about two-thirds of the ore from other existing operations in the area. It gives us the leverage on all these other deposits in the area."
Reaugh said he can envision joint venture milling being pursued on an equal basis. "Because we have the facilities for processing the mineral, and they have the mineral. Once we're up to full capacity on our own ground, tolling somebone else's ore may not be of great interest unless we own it."
Another company which Reaugh has a vested interest in is Molycor Gold Corp. www.molycor.com. He is the President & CEO of this company, which currently holds, explores and is developing resource properties in the United States and Canada.
According to Reaugh, Molycor has assembled some excellent properties in the Cortez area and Ely areas of Nevada. "Past small production on some of those properties has been open pitted and as we're aware, they're finding that the real high grade ore is at a greater depth than the open pit limits. With Cortez, Placer, Barrick, and just lately, Staccato Gold, they've drilled underneath their pit operations and they've cut significant ore material. We're actually quite close to that area; we have half a dozen properties now, with several very significant showings on them, and we'll be drilling multiple targets there this year also. There's always the potential of making a significant discovery. The Nevada Gold trends hold some of the world's richest Gold reserves"
"With Goldrea Resources as to 50/50 JV, Molycor will be drilling this September on their Dobbin 1 Platinum/Palladium/Copper property discovery where previous drilling returned a 50' section grading .54% Cu, and 2.5g/t Platinum,/Palladium within a longer 365 foot section of mineralized core." All in all Mr. Reaugh now has multiple exciting projects well in hand. *Note: No fees or remunerations were paid with regard to this editorial.
Dr. Allen Alper
ALPER CONSULTING Inc.
Metalsnews.com Website: www.metalsnews.com
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