Acadian Mining Corporation ADAIF

Due diligence on ADA and a price of $4 in 3 y

[maldoror]

Shares outstanding fully diluted: 125,829,069. Insiders own 24.4%. Zinc annual production-start up Q2 2007. Annual production: 39,800,000 lbs zinc and 16,500,000 lbs lead. CASH COST TO PRODUCE: ZINC-EQUIVALENT LBS $0.36 (US). NET PRESENT VALUE OF ZINC MINE: $127 MILIION @8% DISCOUNT RATE OR $1.00 PER SHARE.Payback 17 months. CASH FLOW NET OF TAXES, INTERST AND GOVT. ROALTY CAD$ 23 MILLION at $1.50 zinc. CASH FLOW PER FULLY DILUTED SHARE CAD $0.21 per share.At current prices of lead ($0.70) and zinc ($1.98) annual cash flow would be CAD $0.355 per share. For the zinc mine alone assuming a P/CASH FLOW multiple OF 4 MAKES A STOCKPRICE OF 84 CENTS TO $1.40 ACHIEVABLE in 2007. OTHER DYNAMICS:Zinc mine life is expected to be 5 years open pit and 21/2 years underground.The Getty deposit next to the Gays River deposit potentially adds another 5 years of mine life. The Getty property contains several high potential targets for adding reserves. The Getty property will be subjected to drilling. : ADA has drilled 126 holes on their gold properties with 6 to go. There are at least 75 holes that have been drilled and not yet reported on. A number of these will be reported on prior to year end 2006. : An updated gold reserve number for Beaver Dam will be announced during 1st quarter 2007. : The joint venture results with Atlantic Resources will be announced in the near term. : Modification potential might bring the zinc plant to 2500 tons a day from 2000 tons/day. :$15 million debt financing to bring zinc plant into production is imminent. Payback of the loan is expected to be less than the above mentioned 17 months as zinc and lead prices are higher and a certain percentage of the production during the financing period will be sold in the spot market rather than in the forward market. : Royal Roads (RRO.V 28 cents per share) subsidiary has raised $3 million and their Buchan property in Newfoundland will be drilled during 2007. This property has very high exploration potential. : Eventual START UP OF GOLD PRODUCTION at 120,000 per year would be able to GENERATE AT LEAST $40 MILLION CASH FLOW PER YEAR based on current prices of gold. : A senior mining executive (not associated with ADA) told Maldoror that a selfstanding gold mill to produce 120,000 ounces of gold would have a capital cost of $75 million which could be financed by the zinc mine's cash flow. SUMMARY: THE ZINC MINE CASHFLOW ALONE JUSTIFIES TARGETING THE STOCK PRICE TO AT LEAST $1.40 IN 2007 . ADD 50 cents PER SHARE FOR THE GOLD PROPERTIES AND 20 CENTS FOR ROYAL ROAD AND YOU CAN COME UP WITH A TARGET OF $1.90 DURING 2007. Further out in time the gold properties will add substantially to the price of the stock as price to gold cash flow multiples are at least 10 and $40 million cash flow multiplied by 10 adds $400 million of market capitalization setting up a price target for the combined zinc and gold producer of at least $4 per share in 3 years time. Maldoror, your obedient servant and penitent sinner.