Acadian Mining Corporation ADAIF

10 million ounces of gold is the target poten

[maldoror]

We posted our review of ADA on 6/14/2006 and we wish to make a number of substantial changes-all for the better-. ADA is in our opinion one of the most undervalued junior exploration companies in Canada. THE SITUATION IS MUCH, MUCH BETTER THAN REPORTED ON JUNE 14. Today we attended a presentation on ADA, made by ADA's president Will Felderhof to 25 investment types at a private luncheon. For starters, what stays the same is the $50 million replacement cost for the zinc mill and the tailings operation. Add to this that the zinc tailings are environmentally friendly as they are PH neutral (non acidic) and therefore flora and fauna friendly. 1)A number of qualified people have applied and interviews for the filing the post of Chief Operating Officer will take place next week. 2)Filling positions for staff and operating people for the open pit zinc mining operation will pose no problems as the zinc mine is in close proximity to Halifax which is a very nice place to live (It beats Zambia anytime where the workers are paid in KWATCHAS ). 3)ADA will operate the open pit operation themselves rather than contracting it out.4) The $15 million debt financing following the feasability study is expected to alleviate the need for any equity financing.5) The internal rate of return on the zinc property will really impress people as it is most likely going to be above 25% (25%is very much a minimum figure). 6) The zinc property acquisition could take place any day now as Hudbay is waiting for a government paper that will clear up their tax situation. Both Hudbay and ADA are anxious to close the deal as soon as possible but in any case regardless of government hold ups the deal will close no later than July 6, 2006.7) The option agreement to acquire the 2%NSR for $1.5 million is a beaut as the payback is estimated to be less than a year.8) The government of Nova Scotia is very mining friendly and any remaining approvals to start up the zinc operation are expected to be forthcoming in a timely manner. 9) The overburden that needs to be removed in order to get at the zinc contains at least 50 million tons of high quality gypsum rock which ADA expects to be able to sell to the National Gypsum operation, which is located nearby.10) The price per ton is still to be negotiated but a figure of $3 per ton was mentioned (Do the math). 11) The zinc operation is expected to have an operating cost of $35 per ton. 12) In a previous posting we estimated that the zinc operation might generate 8 to 12 cents per share cashflow for 5 years. 13) Our current estimate is a lot higher than that: we are now estimating that the zinc mine will generate 16 to 20 cents cash flow per share and that estimate is based on 100 million shares outstanding.14) Applying a very conservative multiple of 6 times cashflow means that the zinc mine should add 96 cents to $1.20 to the value of ADA's stockprice!!!. 15) We would like to repeat that number: Applying a very conservative multiple of 6 times cashflow means that the zinc mine should add 96 cents to $1.20 to the value of ADA's stockprice!! 16) The zinc mine is now estimated to have a mine life of 8 to 10 years instead of the previous estiamted mine life of 5 years. 17) ADA has hired 2 persons to do community liason for the zinc mine as well as the gold mining operations. 18)The gold operations, Beaver Dam, Goldenville, Forest Hill and Tangier, currently have an estimated gold resource of 1,354,2006 ounces of gold. In the past drill holes have gone to deeper levels and ADA's management believes that the target potential for gold in EACH of these locations to depth is 2.5 million ounces for a total of 10 million ounces. 19) Estimated initial production for the combined four locations is 120,000 ounces per year. At $550 gold this would generate cashflow of about $33 million per year. Gold cashflow sells in the market place at 15 times and that would establish a market capitalization of $495 million. Divide that number by 120 million shares outstanding (up from the current s/o of 100 million) and you can come up with a nice round target number for ADA of $4.13 per share by the time gold production rolls around. You can play with these numbers if gold goes up from current levels, which is not an unreasonable number. Every $100 up in the price of gold would add $12 million to the cashflow numbers but that is probably is a bit on the rich side as other costs would go up also.20) On the Beaver Dam location there are two drills operating. ADA is waiting for assay results on at least 60 holes (drilled on several locations). Several of these are in step out locations that could add substantially to the resource potential of Beaver Dam. 21) There is lots of news to come and it looks as if July is going to be a very busy month for receiving news from ADA.Up first are the zinc acquisition and its feasability study followed by drill results on the gold property. Stay tuned! Maldoror, your faithful servant and penitent sinner.