Wednesday, April 8, 2009

Adex hits $2.5B worth of resources

Metals Firm taking 'wait-and-see approach' due to low metal prices, tight markets

A Toronto junior miner believes it has $2.5 billion worth of resources in its two zones in southern New Brunswick.

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Kabir Ahmed, president and chief executive of Adex Mining Inc., holds a a tin-indium-zinc rich rock sample collected from the Mount Pleasant property.

Adex Mining Inc. (TSX.V:ADE) has released the results of a mineral resource estimate of the north zone of Mount Pleasant, 80 kilometres south of Fredericton. The report showed 10.88 million tonnes of tin-indium-zinc based on sample analysis and geologic projections and another 7.6 million tonnes of the resources from projections alone.

Based on "back of envelope calculations," the company said the partially sample-based resources estimates could be worth about $900 million and the projected resources could be worth $600 million.

"The results from our drill program, a 43-101 compliant mineral resource estimate, has not only significantly increased the size of the resource but it also has upgraded the quality of the resource," Adex president and chief executive Kabir Ahmed said. A 1997 report had estimated 3.65 million tonnes of resources in the north zone.

"Because of the dramatic increase in the size of the resource we have most likely increased the economic viability of this project," Ahmed said.

But Adex is holding back on development given the current low metal prices and tight credit markets.

"We are sort of taking a wait-and-see approach," Ahmed said. "The moment we see a revival of metal prices and a relaxing of the capital markets we would then proceed to feasibility, because feasibility would cost anywhere between three and five million dollars."

He said a 20 to 30 per cent increase on the current prices would be enough incentive to move ahead.

Tin is currently trading just under $11 per kilogram on the London Metal Exchange but last spring was at a high of $26 per kilogram. Indium is currently trading at around $300 per kilogram but was at about $700 per kilogram last spring.

When Adex came up with the $1.5 billion estimation it was based on a $12 per kilogram tin price and a $500 per kilogram indium price, which the company believed to be conservative given the prices were $17 and $675, respectively, at the time.

Though current prices are below Adex's estimates University of New Brunswick economic geology professor David Lentz said the company had the right approach considering "metal prices are still fluctuating much more than they ever have before." Read more...

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