Adanac extends hunt for moly (September 02, 2004)

Vancouver – Continued buoyant molybdenum prices have Adanac Gold (AUA-V) expanding its drill program on the wholly owned Ruby Creek project, located just northeast of Atlin in northern British Columbia.

Adanac has been focused on the Ruby Creek molybdenum project since mid-2001, but activity on the project has really been accelerated over the past year as the price for the metal has surged from the US$2.40 per pound level in early-2002 to the present US$18.00 per pound level for molybdenum oxide.

The company is looking at expanding its drill program south and west of its present program, across the Adera fault where a previous hole encountered significant moly mineralization.

Drill hole 04-09, which is reported to have encountered significant mineralization through the fault zone, is situated 300 metres northeast of a 1973-74 Climax Molybdenum hole that intersected 452 metres (from 60 metres) grading 0.132 MoS2 (0.079% Mo).

Adanac is currently drilling holes 19 and 20 on the deposit with about 4,500 metres in 18 holes having been completed by the company to date.

Earlier this year, the company initiated a pre-feasibility study, being conducted by AMEC, on the project sighting a positive scoping study on possible economics for the deposit.

Ruby Creek has a historic, non NI43-101 compliant, resource estimate of 152 million tonnes grading 0.063% molybdenum.

Previous work on the project was conducted by Kerr Addison Mines (now part of Noranda (NRD-T)) in 1970, who initiated an underground bulk sampling program and pilot milling operation on route to a feasibility study outlining a proposed open pit operation.

Climax Molybdenum worked the property from 1972-75 conducting further drilling.

In 1978, Placer Development (a predecessor company to Placer Dome (PDG-T) optioned the ground, from owner Adanac Mining and Exploration, and completed a preliminary economic evaluation. Through to 1981, Placer submitted development studies and proposals to the Provincial government to advance the project towards development, but in 1982, the claims were allowed to lapse.

The recent surge in molybdenum prices has been attributed to supply shortages and soaring demand in China, who are one of the world’s top producers of the metal. Molybdenum is primarily used in the steel industry as a hardening alloy. Additionally, much of the molybdenum produced as by-product from copper production has been effected by the shut-downs and closures of major copper mines over the last few years. The shift toward lower cost SX-EW copper extraction has also impacted moly production, as the by-product metal is not recovered through the process.

Adanac reports 22.2 million shares outstanding and has recently traded in the 65-70 per share range.