Autumn of Indecision & Questions
Adanac Molybdenum Corp
Ken ReserWell here we are in October already. Summers gone, and we appear to have so far survived all the credit crunch hype and fear mongering that shook markets for the last few weeks. Gold is climbing constantly to find its real un-manipulated value, base metals are continuing to show the world they are finite, that few new mines have come forth for many years and that the demand from emerging growth nations is not wavering. Interestingly we, as always, get a daily plethora of conflicting views from writers and analysts on everything from Gold to Base Metals, to Oil, to Wars, etc, etc. One is overly optimistic, another is overly cautious. Another says nothing worth reading. Yes even the odd doom & gloom writer has an audience awaiting financial armageddon. In retrospect it seems I've been reading various books & writings on the great financial collapse for the last 20 years or more. Let's hope we're still only reading them and not experiencing it for a long time yet.
October 17, 2007
One day the wealth & dollars created from airy nothing will pay the piper and those who hold or owe airy nothings will pay dearly, but not until the masters of the universe have chosen the time and event for the great unwinding. Never in history have there been so many financial instruments to play the games of money, nor has there ever before in history been such obsfucation of the realities concerning Governmental financial affairs (debt), Central Bank activities (Gold lending), Gold & Silver markets & their respective trading instruments (derivatives), as well as many Corporations and financial markets around the globe. One could go on and on with this topic for ever it seems. BTW, "Obsfucation" means (I must admit even tho I knew roughly what the word meant I still had to look it up) "To totally obscure with non-germane information in a verbose manner, with the intent to provide a non-answer, and provide total befuddlement."
Sounds like all heads of state, Politicians, Bankers, and many Fund Managers, Corp CEO's and CNBC TV talking heads have also looked this word up at some point or at the very least know the meaning and the purpose it's definition serves. Obsfucation was always a good word for many junior mining Companies news releases as well. For many years now shades of Alan Greenspan & the US Fed, the "Masters of obsfucation" set the stage for an investors nightmare or dream come true depending on where your money was parked.
Most of us all know of these things and yet we still strive to find sound and potentially profitable investment opportunities in the stock market. Many like myself and you my respected readers look to the world of mining for those opportunistic ventures to arise and when they do we invest for a myriad of reasons. Be it via info from newsletter writers, a stock broker's hot tip, advice from a trusted source, gut feelings, hot hyped projects or even sound and experienced management at the helm, many things can attract our investment money. What attracts my money and why do I write of the value building investments that I have for the last couple years? A real miner! I have always leaned towards investing in a Jr company with a CEO who actually has had mining experience AND then I tried to combine that with his/her having past mine building successes.
Three years ago thanks to a long time friend and my broker of many years, my search culminated in one man. He had the hard rock miners experiences of many years, he had even owned a multi-drill rig core drilling company at one time and then he realized the real money and success lie in owning the mine, or at the very least a good portion of the public company that owned the mine. The rest is a 40 year long history of multiple mine successes for one Larry Reaugh, the miner's miner whose group of value building mining companies I picked & thankfully was accepted to become involved with.
Many of us have watched, sweated, cheered at times even, following along the path of Adanac Molybdenum Corporation and Ruby Creek as Larry took it from old news to a new reality. I said some time back that the Adanac train was about to leave the station and I still hold strong to that knowledge. It's just that trains in the complex and slow world of mining projects don't always leave on time or move as fast as we would like. My personal opinion with regards to Adanac stock is hold on, accumulate and don't be swayed into selling before it's time. Adanac will get this mine financed and I personally believe it will be largely by debt. Of that I have no doubt whatsoever. Mr Reaugh and his team have had a habit of surprising the market when it was/is least expected. This is one tireless miner who works probably an average of sixteen hours a day. Every time I think I have some pertinent piece of info on Moly, Manganese, Niobium or other aspects of mining knowledge whether it be about a peer mining company/property itself or whatever, he usually already has either done the reading or has first hand experience a/o knowledge. We've seen him stand aside and place an extremely competent Mining Engineer in his position of CEO & President of Adanac because it was in the best interest of rapidly forwarding the project and the company. Together he and the new Pres/CEO Mike MacLeod have assembled an incredible team of mining people and are moving fast to bring Ruby Creek to fruition in 2009. (see my previous piece on AUA-TSX with updates & pictures from Atlin & mine-site etc here) www.gold-eagle.com/editorials_05/reser091407.html
Over the last couple years the market has been brutal at times with respect to Adanac's recognition and the wild swings in share value but then as Reaugh says, "When you're building a mine you cannot control the market valuation of the company to any great degree and you cannot let that stall your project from progressing. Even with a lagging share value you still must get out there and raise the necessary capital in order for the project to proceed. You have to tell the story and be a good honest promoter yes, but sometimes even then you will not have the real value realized until you're near the end of the road. Ultimately if you do everything right and in a timely fashion the fundamentals will take over and then the institutions and the retail investors get a wake up call and your stock value will finally come to life and trade at a more realistic and reflective valuation"
October 17, 2007
Back at the keyboard again today. Don't let the title of this editorial fool you, because it's only some investors, brokerages and investment funds out there that have a bad case of indecision and a multitude of questions with regards to Adanac. Many investors like myself, do not. They have followed the Adanac/Ruby Creek fundamentals & news releases from day one and have not been swayed from their original convictions, nor have almost any of the largest shareholders ever complained over the previous EAO Certificate delay or the slow permit approvals by Government agencies.
Questions regarding financing the Capex costs, yes many shareholders both large and small have had questions in that vein, and rightly & justifiably so. I know they will soon have the answer to that major unknown revealed. That answer should finally and totally dispel all doubts of the Ruby Creek Mine going forward as scheduled.
I see absolutely NO indecision from Adanac's Ruby Creek Management team, nor have I ever, and then of course they pay world class mine engineering firms top dollar to answer any of the questions they may have. I keep reading others talking about Ruby Creek grades of .056% Mo. Folks this number is from the BFS 2 years ago. A lot has changed since then. Milling equipment capable of higher though-put, bulk sample tests have revealed higher recovery rates, drilling 45 degree test holes vs; the original vertical holes revealed much more Moly present than originally outlined in the BFS. This information is all in past news releases and in the updated Company PowerPoint. Now we see new test holes showing up outside the defined open pit with grades of 0.15% up to 0.555% Mo (NOT MoS2) Drill Results so far, from beyond the Adera Fault, on the N side of pit are spectacular. (news link below) More summer drill results to come soon btw, as well as a winter drill program continuing thru /07 into /08. www.adanacmoly.com/adanac_news_detail.php?newsid=160
Stay focused on what Adanac calls the "5 year starter portion" of the open pit grading .084% Mo. Here below is the breakdown of the (full) production of Ruby Creek over the first 5 years from the 5 year high grade portion of the pit. The yearly Molybdenum prices quoted are also those used by MolyMines & General Moly in their own projection estimates. The Adanac production figures were taken from the Power Point presentation on Adanac's website.
MOLYBDENUM PRICE PROJECTIONS
2009 $31.80 lb.
2010 $28.70 lb.
2011 $24.60 lb.
2012 $22.60 lb
2013 $20.00 lb
ADANAC MOLYBDENUM CORPORATION
Years 2009-2013 starter pit @ .084 MO.
2009 13,943 million lbs x $31.30 lb. = $443 Million*
2010 13,228 million lbs x $28.70 lb. = $379 Million*
2011 9,818 million lbs x $24.60 lb = $241 Million*
2012 10,664 million lbs x $22.60 lb = $241 Million*
2013 10,668 million lbs x $20.00 lb = $214 Million*
Adanac Molybdenum Gross proceeds over 1st 5 Years
*$1,518,000,000 ($1.5 Billion) @ 20,000 tonnes a day
*not including operating costs to bring out of the ground - Estimated @ $7.50 lb
*My personal comment - This breakdown also does not include the potential for an up to 20% recovery increase as shown by previous bulk tests, nor the capacity of milling & recovery systems now being built for the project to potentially increase output to 26000 tonnes p/day.
Note: Personally, I expect these projected production figures to be far greater when we see the first quarter production numbers after the mill is commissioned and in full production in 2009.
People make no mistakes here, this mine is being built and it will be hugely profitable for those who own part of the company. This train may not be of the futuristic fast bullet design but it definitely does have an "in ground" engine worth many Billions of dollars and I as well as many others own our shareholder portion of it for all the reasons I've now given you.
As "The Man" says, sometimes in mining you can be just a bit too early to the party and Adanac was definitely that. In 2004 they were basically alone in the field of Moly exploration, and today there are somewhere between 400 to 500 companies chasing Molybdenum projects worldwide. Consider that on Mar. 21/05 in the first a of a few Molybdenum & Adanac editorials penned since then, I wrote about the widespread and upcoming uses and demands of Moly. Way back then I spoke to many of the 21st century demand aspects like pipelines, oil rigs, nuclear reactors, oil tankers, refinery catalysts, turbines etc and the list goes on. Was I early as well? Probably so, because we are still seeing other writers realizing and expanding on those uses in current research papers and editorials. Remember this one? It may still give you some fresh ideas as to where Molybdenum is headed. (even tho the smcurl links no longer work)
Molybdenum "The 21st Century & Beyond Metal" www.321gold.com/editorials/reser/reser032105.html
Stay tuned for news of the Ruby Creek Molybdenum mine in Atlin BC being largely debt financed soon and also being completed far ahead of the two so called peers who claim to be fast on Adanac's coat-tails. Also the two peers I mentioned (or didn't mention)? I don't view either of them as competitors, just simply peers because the rapidly expanding worldwide growth of the Molybdenum market will absorb the production of all three new mines by the time the other two become permitted, designed and their final construction is completed if and when they make the final cut. As the old tried and true saying goes, "Mines are built, not found" and usually by a miner!
NEWS FLASH: just as I am fine tuning my editorial spelling errors etc I just now see Adanac has a news release dealing with the financing of the mine. This is the beginning of what we have waited so long for, IMHO….KR
Adanac Molybdenum Arranges Debt Financing:
Adanac Molybdenum Corp (C:AUA)
Shares Issued 97,818,186
Last Close 10/16/2007 $1.55
Wednesday October 17 2007 - News Release
Mr. Michael MacLeod reports:
ADANAC ENGAGES INVESTMENT BANK FOR RUBY CREEK DEBT FINANCING
Adanac Molybdenum Corporation (TSX:AUA)(PINK SHEETS:AUAYF)(FRANKFURT:A9N) is pleased to announce it has entered into an engagement letter with a U.S. investment bank to act as the Company's exclusive agent and manager in respect of a proposed financing of debt and convertible debt securities.
As currently contemplated, the debt financing transaction would involve approximately US$450 million of senior notes and US$150 million of convertible debentures. The aggregate amount and composition of the securities to be sold may vary from those currently contemplated. Technical and commercial due diligence work is under way. The engagement letter is not a commitment by the U.S. investment bank to purchase any securities and there can be no assurance that the debt financing transaction can be completed in the amounts currently contemplated or at all.
The engagement letter provides that, in the event of a change of control of the Company prior to the completion of the contemplated debt financing transaction, a sliding scale break-up fee of 15% of the difference between the market capitalization of the Company as of October 15, 2007 and the date of the change of control transaction will be payable by the Company. The break-up fee will not be greater than US$12,500,000 or less than US$2,500,000.
The securities to be offered and sold have not been be registered under the United States Securities Act of 1933, as amended, or any state securities laws, and may not be offered or sold in the United States, unless registered thereunder or unless an exemption from registration is available.
On Behalf of Management
ADANAC MOLYBDENUM CORPORATION
Michael MacLeod, President and Chief Executive Officer
As always thanks for reading;
Best Regards: Ken Reser
Metals Research & Investor Relations Consultant:
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Disclaimer: I am an independent Investor Relations & Metals Research Consultant, currently contracted to Goldrea Resources Corp, Adanac Molybdenum Corp. and Molycor Gold Corp. I may own shares in these or other Reaugh Group companies from time to time a/o hold options of said companies. This editorial is not a recommendation to own or buy shares of said companies as I am not an accredited investment adviser, nor were any fees paid for the writing of this editorial. The opinions expressed in this editorial are entirely my own…KR.
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