Business@Night, News Talk Radio CFRA AM 580 (Ottawa, Ontario)
November 14, 2007
Host: Greg Hebert

GREG HEBERT: It's time for the midweek mining segment. Every Wednesday I profile the operations of a metal or mining firm right after the closing market report, and sometimes those companies are operating on the other side of the world and sometimes they're right here at home. Adex Mining Inc. is a junior mining firm with operations not far away - in fact right in the province of New Brunswick, near Fredericton. Joining me now with more information on the operations at Adex is Kabir Ahmed, the CEO of firm. Kabir how are you today?

KABIR AHMED: Great. Thank you very much Greg for inviting to your radio program.

Hebert: Well it's great to have you here and always nice to profile the operations of a somewhat local company. You have a multi-metal deposit in your Mount Pleasant operation, which I understand is your flagship operation. Tell our listeners first of all a little bit more about the nature of the property.

Ahmed: Sure. As you mentioned Adex Mining Inc. is listed on the TSX Venture Exchange, is a junior mining company trading under the symbol ADE. We were listed on July 16th of this year. Adex Mining owns the Mount Pleasant Mine property, which is located in southwestern New Brunswick. The property is the site of a past producing tungsten mine which also happens to host three other in-demand metals: molybdenum, tin and indium. All of those metals are in great demand today, and as a result of that demand management has decided to revive the Mount Pleasant mine property.

Hebert: We've talked to a number of moly miners on the show and certainly I think regular Business@Night listeners will know that molybdenum is…certainly to say that it's in great demand is almost an understatement these days. We'll get more into the details of the operation itself in just a moment, but I know as well this week you have some big finance news that's just out, fresh off the presses, so maybe you can give us more of the details on that.

Ahmed: Sure. In May of 2007 we did a gross 9 million dollar financing and yesterday we added to our treasury by another 3 million dollars of an equity financing which we were able to do at higher successive valuations than in our prior financing. So again it's consistent with our management's philosophy, which is that we're creating shareholder value at each stage and each round of financing which we hope to do at higher valuations.

Hebert: So maybe you can give us a better idea on where Adex falls on the scale between discovery and eventual production and furthermore how your financial structure is set up to get you from where you are to where you want to be.

Ahmed: Sure. We're actually in a very unique situation, as I mentioned to you, Greg, because the company owns a property which was in fact a past-producing tungsten mine, so we're actually further down the development curve than perhaps a junior exploration play. What we're really hoping to do is basically upgrade the resource estimates that we have with regards to our various deposits. At the Mount Pleasant mine, there are two specific delineated multi-metal deposits. In one zone of our property, which is called the Fire Tower Zone, we have very successfully delineated a tungsten and molybdenum deposit, and in fact that was the site of the underground operations between 1982-85. Operations were discontinued in '85 because world metal prices, specifically for tungsten and moly, had collapsed at that time.

Hebert: As happened with so many mines and again we've spoken to a number of companies that have picked up the existing operations that were abandoned in the early to mid eighties. I didn't mean to interrupt but certainly it's a familiar theme we've heard of from many companies.

Ahmed: Yes, in fact it's nice to be in that situation because everyone seems to know specifically with our project where the resources are. It's just a matter of expanding upon the development and bringing up those resource estimates to current national instrument 43-101 standards. And as you mentioned, Greg, in terms of our development program for the next 12 months with the new financing that we've put into place as of yesterday we really have a well-funded treasury to expand upon the development of both the Fire Tower Zone which holds the tungsten and molybdenum deposit, as well as the second mineralized zone on our property which is known as the North Zone, and which in fact hosts a very significant tin and indium deposit. We expect drilling to commence March 2008 and by enabling the company to enhance the resource estimates to 43-101-standard "indicated" and eventually to "measured," we're in the position to commission a feasibility study on both deposits. This will eventually lead to a mine development plan and ultimately to a mining license from the province of New Brunswick, which will allow the company to resume mineral production.

Hebert: Now to get into some of the technical finds you've posted so far Kabir, I wanted to ask you in specific about molybdenum and tungsten as well, but when you compare those metals to the more traditional mining firm's gold and silver finds which typically run in long narrow veins, molybdenum in specific tends to be discovered in large concentrated deposits. Has that been the case for you so far?

Ahmed: Yes it has. In fact we have done an upgraded 43-101 inferred resource estimate which was done by Watts Griffith and McQuat in August 2006 on the tungsten-molybdenum resource and the Watts Griffith report indicated that there were 13 million tones of a combined tungsten molybdenum ore at depth and the grade of the tungsten was at 0.35% and the molybdenum was at 0.21%. Again, significantly high values in relation to our competitors. What that ultimately means in terms of a resource estimate under inferred category is that we have approximately 60 million pounds of molybdenum inferred resource on our site and approximately 100 million pounds of tungsten in an inferred resource. Now looking at the historical prices of tungsten, back in '85 tungsten was approximately $50/tonne. Today it's $185/tonne. Molybdenum was at $7/kilogram back in 1985. Today it's a ten fold increase at $70/kilogram. So just the in-ground value, and I'm not talking about recovery rates, but just the in ground value of tungsten and molybdenum on the Mount Pleasant site is probably in excess of $2 billion.

Hebert: So that is the technical aspect of the resource itself. Let's talk about some of the technical aspect of your finances. I wanted to get your thoughts on what type of advantage financially you've enjoyed from having a property that has already been in production, that has already been proven. It certainly saved you a lot of time exploring the potential of the property. How much does this put you ahead of your competition?

Ahmed: Well, the competitive advantages are numerous. First of all, it's been easier to finance this project as I mentioned to you. We started off, right out of the gate, at doing a $9 million financing back in May just prior to our listing in July. So that was a significant amount of funds to have raised for a company that just recently listed and moreover it was that much simpler to raise additional funds at a higher valuation, which we did yesterday. So obviously we have a competitive advantage in that sense. Moreover in terms of the infrastructure, we've got a significant competitive advantage because there are a number of infrastructure facilities that are on site which are still usable today and have great economical and capital value. Just to give you one example, the tailings pond which is on site - if we had to construct a brand new tailings pond today it would take us approximately 2 years in regulatory approvals and perhaps cost $20 million. The only thing we are required to do is some minor upgrades to make sure the tailings pond is in environmental compliance under today's standard. But that is a fraction of the cost we would have had to spend, had we not had that tailings pond in place already.

Hebert: Further on the issue of financial advantage, geography plays a lot into this, Kabir. I wanted to get your thoughts on just enjoying the advantage of operating right here in Canada and as well having the American market and the American investing base in arm's reach.

Ahmed: I think that is a very, very pertinent question Greg and in fact we're just blessed by the logistics of geography here. The Mount Pleasant mine property itself is approximately just an hour south by road from Fredericton, which is the provincial capital. It's approximately one hour away from the US border, as well as one hour away from Saint John, New Brunswick which has a deep-water port. So obviously access to international markets is very easy through Saint John and to the US through the Calais-St. Stephen border to the US via Maine. So I think that's very significant. More importantly of course just being in Canada we deal with a regulatory and also mining environment which is very transparent. Once the government gives you a determination on how to proceed we simply meet the requirements and we expect that regulatory approvals will be handed out if we meet the requirements. So everything is transparent. Third of course there's very little country risk. We're talking about Canada and New Brunswick in particular so for investors there's very little country risk. Just to give you an example, China has just recently indicated that they will not allow foreign ownership of their molybdenum and tungsten resources. So what that means is that there is more demand for the products that we will hopefully be able to produce from our site.

Hebert: Well you almost read my mind there because my final question for you, Kabir, has to do with in a broader sense with global markets for your resources in particular molybdenum and tungsten most commonly used in high grade alloys and high grade steels as well as some electronics applications. The uses seem to be expanding on an almost daily basis and you mentioned the elephant in the room. China is one of the big consumers and it is a growing consumer of a lot of these alloys and the uses for them. For example I know moly is used in oil pipeline metals as well. What are your thoughts on the global market for what you've got on your property?

Ahmed: I think the long-term economics are to be determined in terms of the demand that is out there and I think the long term demand in the foreseeable future will be significantly high. We're not only talking about China - I was in India last year, where I saw that they are achieving 21st Century economic status, but their infrastructure is still in the 19th century. So there's an enormous amount I think over the next 20-30 years of infrastructure development that is going on in India right now in all the major cities and also linking the cities to the rural areas as well by way of transportation, roads, bridges and also airplane and air routes as well. I was also in Dubai, in the United Arab Emirates, and also saw there incredible infrastructure development. The size of the office towers there are unparalleled even by western standards. So it looks like the demand for anything to do with steel production, which certainly tungsten and molybdenum are key components of, as you mentioned strengthening of alloys, will continue. There seems to be a continued demand for these metals.

Hebert: Certainly seems like there is a lot to be excited about at Adex. Kabir, I sense a cautious optimism in your answer to that question.

Ahmed: Yes, we're talking about the metals market and obviously, we're in a long term cyclical demand curve. I think we're all old enough to know that the market is cyclical, but from everything that I can see, the long term demands are going to be sustainable and will be for the foreseeable future.

Hebert: Once again, for interested investors the stock symbol is ADE on the TSX Venture Exchange and the stock is performing quite nicely in recent days. So go and get more information on that if you are interested. Kabir Ahmed, CEO of Adex Mining, thanks so much for your time today and congratulations on your success so far. It sounds to me like we'll have plenty of opportunity to have you back in the near future for some updates.

Ahmed: Well, thank you Greg, it was a pleasure to be on your show.