Adanac - Ruby Creek UpdateProperty Overview
The Ruby Creek Molybdenum Deposit is a low-grade bulk type of molybdenum deposit at the headwaters of Ruby Creek in the floor of an alpine cirque. The location is about 22 km northeast of Atlin, British Columbia and 124 km southeast of Whitehorse, Yukon in the extreme north-western corner of British Columbia.
The property is accessible from Atlin by 39 km of road (45 minutes of travel). The first 19 km to Surprise Lake – where the province has recently constructed a million dollar steel, load-bearing bridge – is a public graded road in fair condition.
The road distance to Whitehorse is 190 km (2-1/2 hours of travel). The first section is 93 km of paved Alaska Highway from Whitehorse to Jakes Corners. The remaining road from Jakes Corners to Atlin is well maintained gravel.
The deep-sea port at Skagway is 3-1/2 hours away by road.
Historical Overview
The occurrence of molybdenum on the property was first discovered in 1905 but serious and systematic development didn’t get underway until the late-1960’s.
In April 14,1971, Chapman, Wood & Griswold Ltd. submitted a feasibility report (104,234,000 tons with an average grade of 0.16% MoS2) on the on the Ruby Creek Molybdenum Deposit.
In 1978 an access road to the deposit, a camp, surface exploration and initial diamond drilling were completed prior to winter shutdown.
Low molybdenum prices resulted in no significant work on the Ruby Creek Molybdenum deposit after 1982 till Adanac Molybdenum Corporation (formerly Stirrup Creek Gold Corp) announced the acquisition of mineral claims covering the entire area giving them 100% interest in the property.
Resource Overview
Adanac Molybdenum Corp. continued exploration to provide, along with much of the earlier exploration work, a sufficient and reliable basis to establish a National Instrument Policy 43-101 compliant resource calculation in April 2005.
Based on a 0.04% Mo cut-off the 2005 resource estimate is:
Measured tonnes: 31.5 Mt at 0.081% Mo
Indicated tonnes: 173.6 Mt at 0.058% Mo
Inferred tonnes: 20.7 Mt at 0.057% Mo
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Total tonnes: 225.8 Mt at 0.061% Mo
On-going exploration has provided additional data. The 2006 results are currently providing the most up to date basis for Golder Associates to revise their earlier resource estimate on February 22, 2006 as shown below (with 0.04% cut-off):
Measured tonnes: 38.9 Mt at 0.079% Mo
Indicated tonnes: 167.4 Mt at 0.059% Mo
Inferred tonnes: 33.1 Mt at 0.060% Mo
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Total tonnes: 239.4 Mt at 0.063% Mo
The 2007 exploration programme will include further work to test the new zone of molybdenum mineralization discovered to the southwest in the 2006 field-work.
Golder Associates is currently completing a statistical NI 43-101 grade study in the high grade pit area (5 year pit averaging .084% Mo) which is expected by the end of February.
Below is a chart comparing Ruby Creek to other molybdenum projects of similar size and scope.
Project Overview
Adanac announced a feasibility study on April 7, 2006 with the following mineable reserves summary:
Proven tonnes: 38.9 Mt at 0.077% Mo
1.20 Mt at 0.035% Mo (stockpile)
Probable tonnes: 73.5 Mt at 0.060% Mo
30.1 Mt at 0.034% Mo (stockpile)
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Total tonnes 143.7 Mt at 0.059% Mo
The basis for the study included a provision for electrical power, in the first 3 - 5 years, from diesel generators because of the cost of installing 100 km of transmission line to the Yukon power grid along with 150 km of necessary upgrades to the existing line.
However, on November 23, 2006, BC Hydro and the Taku Land Corporation announced plans to build a $10-million 2.0 MW “run-of-river” hydro power plant on Pine Creek below Surprise Lake. The plant will be connected to the existing BC Hydro power grid. The Province is contributing $1.4 million to the project. Atlin currently runs on generators and burns about 1.2 million litres of diesel annually. Construction on the hydro plant is scheduled to begin next summer.
Mine Life: 21 years
Milling Rate: 20,000 tonnes per day
Strip Ratio: 0.95 (waste) /1.0 (ore)
Proven & Probable: 113.4 Mt @ 0.066% Mo
30.3 Mt @ 0.034% Mo (stockpile)
Grade first 5 yrs: 0.084% Mo
Mill recovery: 92-93%
Mo in concentrate: 75.9 million kg (167.4 million lbs)
Pre-Production capital: CDN$434.4 million
Avg. Cash Cost: US$5.87/lb Mo for first 5 yrs
Base Cost: IRR equals 28.85%
NPV @ 8% equals $305.1 million
Capital Payback: 2.9 years
An recently completed independent review of the geo-technical basis for the tailings impoundment, waste dumps & site water management found no significant errors/flaws in the feasibility work completed.
Adanac has contracted with Amec Americas Ltd. (AMEC) to provide the detailed engineering and procurement services for the Ruby Creek Project. The contract is expected to be completed in 13 months.
The Company has had several meetings with potential strategic partners, funds and banks regarding possible strategic partnerships, joint ventures partnerships, debt and equity financings.
Adanac signed a Phase 2 Collaborative Relationship Memorandum of Agreement with the Taku River Tlingit First Nation (TRTFN) in October of 2006.
First Quarter Projections
The receipt of Mining and Environmental Permits submitted in August 2006 are expected by the end of first quarter to be followed with a production decision.
Second Quarter Projections
Major financing is expected completed in the second quarter along with an Impacts Benefit Agreement (IBA) for Taku River Tlingit First Nations. Start of construction is expected by May when winter precipitation is clear of the property.
Molybdenum Outlook
Indications are for a steadily increasing demand for molybdenum.
Deep-Well Oil Drilling. Stainless steel alloys with 13-16% Mo are used for very deep reservoirs which are often contaminated with corrosive sulphides, brines and carbon dioxide.
Coal Liquefaction Plants. Molybdenum catalysts are used to convert coal into oil products. In early February 2006, China Oil News reported that China plans to spend US$15 billion to build coal liquefaction plants to draw from its enormous coal deposits.
Double-Hull Tankers. Following the Exxon Valdez accident in 1989, the United States adopted the Oil Pollution Act in 1990. With this Act, the United States unilaterally imposed double hull requirements through plans to phase out all single-hull tankers by 2010 and 2015. In 1992, the International Maritime Organisation (IMO) took similar action during the 1992 International Convention for the Prevention of Pollution from Ships (MARPOL). Molybdenum is often used in the steel alloy used in ship-building.
Building Construction. Larger buildings requires stronger, more resistant types of steel. Malaysia’s Petronas Towers, the worlds tallest buildings, are clad in an exterior made from a Type 316 stainless steel, containing 3% Molybdenum. This metal is also used in the construction of the Olympic Stadium in Beijing and in throughout the some 28 city metro systems China is currently constructing.
Nuclear Power Plants and Waste Facilities. According to the International Molybdenum Association (IMOA), “The most corrosion resistant stainless steels contain 6 to 7.3 percent molybdenum. These grades are used for power plant condensers, offshore piping, and critical components in nuclear power plants such as service water piping.” The proposed Yucca Mountain nuclear waste storage facility located 100 miles northwest of Las Vegas, Nevada could require as much as 33 million pounds of molybdenum.
Pipelines. Over 100,000 kilometres of pipelines are currently planned around the world over the next two decades. For a standard pipeline 30 inches wide by 1 inch thick, about 1,100 pounds of molybdenum is used per kilometre. Larger pipelines, such as the proposed 4,000 km long Trans-Siberian and 2,250 km long Trans-Alaskan pipeline, measure 52 inches across and have a thickness of 3 inches.
Published originally on Dollardaze.org on Jan 28, 2006.