New Molybdenum Mine Hopes to Open in 2009 in the Yukon

The high price of molybdenum may finally take the Ruby Creek molybdenum deposit the final steps on its way to becoming a mine. By then, it will have been about 40 years since it was first discovered, and another 30 years since it was nearly ready to become a

But, it may be more than the high price of molybdenum which could officially make Ruby Creek one of Canada’s newest molybdenum mines. Perseverance by Larry Reaugh, executive chairman of the Adanac Molybdenum Corporation, who with a bit of luck and 44 years in the mining experience – not to mention of few mines he’s brought home, all add up to what it takes, these days, in pushing a project through to completion.

We talked to Larry Reaugh over three telephone interviews to find out how he got this far and what steps he needs to take to bring the Yukon’s Ruby Creek to her final destination: a moly mine producing some 14 million pounds of molybdenum every year. The Ruby Creek Molybdenum Deposit is a low-grade bulk type of molybdenum deposit located, at the headwaters of Ruby Creek in the floor of an alpine cirque. It is located about 22 kilometers northeast of Atlin, British Columbia; 124 kilometers southeast of Whitehorse, Yukon Territory in the extreme north western corner of British, Columbia, Canada.

Larry Reaugh: Kerr Addison, a subsidiary of the Noranda Corporation, took the property on so they could earn a 60-percent interest for bringing it into production. They had to contend with the 3.5-percent NSR, but they were also trying to do this when molybdenum was selling at $1.80/pound. Eventually, they dropped the property. Placer had a base metals business as well as gold mining. They took this to a stage two feasibility whereby they were in the permit stage. Molybdenum slipped back to $6/pound. Placer put it on the shelf and eventually went out of the base metals business. We restaked the property and expanded the ground.

Larry Reaugh: The bankable feasibility is saying it should go into production. The payback would be three years, based upon a sliding scale of molybdenum from US$22 dropping to $15 over the first five years. We feel that’s conservative. We have a much stronger outlook on molybdenum, and this outlook has been really reinforced in recent years. A 20-percent increase in reserves and grades would reflect in the payoff period, bringing it down to twenty months.

StockInterview: Let’s set the record straight now. How big is the Ruby Creek deposit, how much is it worth and does your deposit pass muster with the U.S. Securities and Exchange (SEC) definition of reserves? Larry Reaugh: The bankable feasibility gives us reserves. It is a reserve. It’s passed muster. I can actually tell you it’s worth US$4.2 billion and, with a possible 20-percent increase in grade, it could be worth over US$5 billion. With this increase in grade, costs could drop to US$4.70/pound. There are 167 million pounds, of which at least 100 million more are under measured and indicated.

Larry Reaugh: Recent drilling is telling us there actually another deposit west. First off, we needed the sample to get a molybdenum concentrate to go to other companies that are off-taking our material. They have to know the specs, and we had to produce a concentrate. We had to drill for it, send down a ton of core and run it through the laboratory, G&T Metallurgical Services (Kamloops, British Columbia). We got a 92.5 percent recovery doing that, which is 3.5 percent greater than the bankable feasibility at 89 percent. This is a huge plus for us – greater recovery and a coarser grind.

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